Document:

Exhibit 10.17

LOGO

To:                                      FROM:
Rich Widdicombe                          Suzanne A. Spantidos

COMPANY:                                 DATE:
American Vehicle Insurance Co            DECEMBER 6, 2000

FAX NUMBER:                              TOTAL NO. OF PAGES INCLUDING COVER:
954-308-1211                             TWO

PHONE NUMBER:                            SENDER'S REFERENCE NUMBER:
954-308-1254                             TBD

RE: Replacement of State National Treaty with American Vehicle Treaty

Dear Rich:

Below please find a summary of the terms and conditions for the American Vehicle
Treaty.  As you are aware, this treaty is replacing the State National/Federated
treaty.  The terms follow the State National treaty, including the commission
structure.  As you may remember, Teddy initially stated he would reduce the
front fee, but then decided that he could not make this change.

Please note that the wording will be more closely related to the existing
Federated treaty as I expect American Vehicle to assume all Insurance and
Business risk.  There will be no Hold Harmless provisions and LAE and ECO/XPL
are limited within the treaty terms.

I will be forwarding the wordings sometime in February.  Please sign one of the
copies enclosed and return it to my attention.  Please keep the other copy for
your files.

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Company:                        American Vehicle Insurance Company
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Business Covered:               Private Passenger Auto
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Territory:                      Florida
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Commencement                    Effective 11/1/2001, on new and renewal business
& Termination                   Losses Occurring Basis.

                                The treaty may be cancelled at semi annually by
                                giving 90 days prior written notice by certified
                                mail.

                                Special Termination Clause (see attached)

                                Company has option to elect Runoff or Cutoff.
                                Election must be made within 30 days of notice
                                of cancellation/termination.
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Coverage:                       80% Quota Share
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Ceding Commission:              Minimum/Provisional:  26.5% @ 68.5% LR 0.8:1
                                Pivot:  30.0% @ 63.5% LR 1:1
                                Maximum:  36.5% @ 57.5% LR
                                Deficit/Credit Carryforward to extinction.
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Definitions:                    Written Premium: Gross Written Premium for the
                                policy, less cancellations and return premium.
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<PAGE>

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Page 2
American Vehicle Terms

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Definitions Continued           Collected Premium: Premium actually collected by
                                producer/agent or MGA from the insureds policy
                                payment schedule.

                                Earned Premium: Earned Portion of the Written
                                Premium (as defined above), using the Daily Pro
                                Rata calculation method or other accepted
                                calculation method as agreed to.
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Commission Adjustment           24 months from inception, with 6.5% IBNR.
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Loss Adjustment Exp:            Treaty Limitation of ALAE: Total allocated loss
                                adjustment expense, including outside legal
                                counsel, shall be the lesser of actual ALAE or
                                8% of Earned Premium.
                                Allocated loss adjustment expense and legal
                                expense shall be reported separately.
                                Payment of ALAE: Superior Adjusting Inc. will
                                receive, through the monthly accounts, 7.5% of
                                Earned Premium.  An adjustment for Actual ALAE
                                will be made at the time of the Commission
                                Adjustment.
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Limits:                         Basic Limits Policies Only
                                BI  10,000/20,000
                                PD  10,000
                                APD  30,000
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Reports & Remittances:          Monthly reports within 30 days and remittance
                                within 60 days.
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Warranty:                       No rate decreases or discount increases without
                                prior reinsurer written approval.
                                Premium Cap of $15MM
                                MGA cannot write additional programs without
                                prior reinsurer approval
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Exclusions:                     Guaranty funds, insolvency funds, pools,
                                pollution BRMA 39A and 39B, and attached auto
                                specific list.
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ECO/XPL                         ECO/XPL will be covered at 80% with a total per
                                claim limitation of $500,000 inclusive of policy
                                limits.  Annual Aggregate limit of $1.5MM
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Terrorism                       In the event of a terrorist act, this treaty
                                will be subject to an Annual Aggregate Limit of
                                $1.5M for all losses incurred by a terrorist
                                act. This condition will be re-addressed when
                                the ISO PPA Terrorist wording has been
                                developed and distributed.
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General Conditions:             General conditions to include wording attached
                                for: offset clause, salvage and subrogation
                                clause, arbitration clause and access to
                                records.
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Informational:                  Underwriting guidelines and rates to be filed
                                with Reinsurer.  Ceding Commission to be paid on
                                a Collected basis.
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/s/Suzanne A. Spantidos    Date 12-7-01      /s/Rich Widdicombe  Date 2/12/02
-----------------------                      ------------------
Suzanne A. Spantidos                         Rich Widdicombe
Transatlantic Reinsurance Company            American Vehicle Insurance Company

<PAGE>

                           Special Termination Clause

Either party to this Agreement shall have the right to cancel this Agreement
immediately by giving 10 days written notice to the other party by registered
mail in the event that one party:

1.   has its financial condition impaired by a reduction of surplus as regards
     policyholders of 15% or more in any twelve month period from the inception
     date of this Agreement;

2.   Has it's A.M. Best rating reduced to B or lower or its S&P rating reduced
     to BB+ or lower;

3.   is declared insolvent or put in liquidation by any competent regulatory
     authority or court of competent jurisdiction;

4.   Loses its operating license, or has its operating license suspended, in any
     jurisdiction;

5.   ceases writing new or renewal business;

6.   has any change in ownership, which is considered to be 10% or more of its
     stock and/or a change in managment;

7.   fails to remit premiums/losses in accordance with the terms of this
     Agreement.
     The coverage afforded by this Agreement shall cease as of the date of
     termination except in the case of failure to remit premium, termination
     shall be effective as at the date through which premium has been paid.

Subject to the Special Termination items above, the party giving notice shall
have the option to return or request the return of the unearned premium, if any,
on the business in force at the date of cancellation, less any commission
allowed thereon.  Thereby terminating this agreement on a cutoff basis.

If the Reinsurer requests termination on a Cutoff basis, such termination shall
not apply to business written restricted by the state regulatory authority.

<PAGE>

                       Private Passenger Auto Exclusions

A.   This Agreement does not apply to and specifically excludes the following:

1.   Financial Guarantee and insolvency;

2.   Business written to apply in excess of a deductible of more than $5,000,
     and business issued to apply specifically in excess over underlying
     insurance;

3.   Liability as a member, subscriber or reinsurer of any Pool, Syndicate or
     Association, but this exclusion shall not apply to Assigned Risk Plans or
     similar plans.

4.   Automobile Liability insurance relating to the ownership, maintenance or
     use of:

     A.   A Taxicab, public livery conveyance or bus;

     B.   An ambulance, fire department or law enforcement, private emergency
          vehicle or other municipal equipment;

     C.   A racing or exhibition vehicle;

     D.   Rental and leasing of all motor vehicles;

     E.   Commercial automobiles, except service vehicles used by Craftsmen and
          Artisans up to a maximum of one ton;

     F.   Risks engaged in the transportation or distribution of munitions and
          explosives such as, but not limited to: liquid hydrogen, nitrogen,
          chlorine, fireworks, fuses, dynamite, nitroglycerine, ammonia nitrate,
          anhydrous ammonia, celluloid, pryroxline, or their derivatives, LGP,
          butane, propane and gasoline;

     G.   Recreational and high performance vehicles.

     H.   Policies sold to celebrity persons.

5.   Any automobile not classified as private passenger automobile.

6.   Business written on a co-surety or co-indemnity basis not controlled by the
     Company.

7.   Loss or damage arising from pollution and environment impairment.

8.   Loss or damage resulting from any of the following lines of business; Ocean
     Marine, Accident and Health, Worker's Compensation, Aircraft (all perils),
     Fidelity, Surety, Glass, Boiler and Machinery, Credit, Title, and/or Life.

If any business falling within the scope of one or more of the exclusions is
assigned to the Company under an Assigned Risk Plan, such exclusion(s) shall not
apply, it being understood and agreed that the limits of liability prescribed in
such Assigned Risk Plan

Definitions:
------------

Recreational Vehicles include: road buggies, dune buggies, caravans, motor
coaches and motor homes.

Celebrity Persons include: actors (guild and/or association membership),
professional athletes (with league membership), olympic athletes, college
athletes, radio personalities, news broadcasters, musicians, authors/writers
(of published works), and models.Exhibit 10.18

                          State Board of Administration
                                   Of Florida

                              Post Office Box 13300
                                   32317-3300
                       1801 Hermitage Boulevard-Suite 100
                           Tallahassee, Florida 32308
                                 (850) 488-4406

                             REIMBURSEMENT CONTRACT
                             Effective: June 1, 2001
                                  ("Contract")

                                     between

                      FEDERATED NATIONAL INSURANCE COMPANY
                               Ft. Lauderdale, FL
                                 (the "Company")

                                   NAIC #27980

                                       and

    THE STATE BOARD OF ADMINISTRATION OF THE STATE OF FLORIDA ("SBA") WHICH
          ADMINISTERS THE FLORIDA HURRICANE CATASTROPHE FUND ("FHCF")

PREAMBLE

The Legislature of the State of Florida has enacted Section 215.555, Florida
Statutes, which directs the SBA to administer the FHCF. This Contract is subject
to the Statute and to any administrative rule adopted pursuant thereto, and is
not intended to be in conflict therewith.

In consideration of the promises set forth in this Contract, the parties agree
as follows:

ARTICLE 1 - SCOPE OF AGREEMENT

As a condition precedent to the SBA's obligations under this Contract, the
Company, an authorized insurer or any joint underwriting association or assigned
risk plan under Section 627.351, Florida Statutes, in the State of Florida,
shall report to the SBA in a specified format the business it writes which is
described in this Contract as Covered Policies.

The terms of this Contract shall determine the rights and obligations of the
parties. This Contract provides reimbursement to the Company under certain
circumstances, as described herein, and does not provide or extend insurance or
reinsurance coverage to any person, firm, corporation or other entity.

The SBA shall reimburse the Company for its Ultimate Net Loss on Covered
Policies in excess of the Company's Retention as a result of each Loss
Occurrence commencing during the Contract Year, to the extent funds are
available, all as hereinafter defined.

                                       1
<PAGE>

ARTICLE II - PARTIES TO THE CONTRACT

This Contract is solely between the Company and the SBA which administers the
FHCF. In no instance shall any insured of the Company or any claimant against an
insured of the Company, or any other third party, have any rights under this
Contract, except as provide in Article XIV.

ARTICLE III - TERM

This Contract shall apply to Loss Occurrences which commence during the period
from 12:01 a.m., Eastern Daylight Time, June 1, 2001, to 12:01 a.m., Eastern
Daylight Time, June 1, 2002 (the "Contract Year").

The SBA shall not be liable for Loss Occurrences which commence after the
effective time and date of expiration or termination. Should this Contract
expire or terminate while a Loss Occurrence covered hereunder is in progress,
the SBA shall be responsible for such Loss Occurrence in progress in the same
manner and to the same extent it would have been responsible had the Contract
expired the day following the conclusion of the Loss Occurrence in progress.

ARTICLE IV - LIABILITY OF THE FHCF

(1)    The SBA shall reimburse the Company, with respect to each Loss Occurrence
       commencing during the Contract Year for the "Reimbursement Percentage"
       elected, that percentage times the amount of Ultimate Net Loss paid by
       the Company in excess of the Company's Retention, plus 5% of the
       reimbursed losses for Loss Adjustment Expense Reimbursement.
(2)    The Reimbursement Percentage will be 45% or 75% or 90%, at the Company's
       option as elected under Schedule A attached to and forming part of this
       Contract, unless it must be adjusted for some or all Companies in the
       FHCF as provided in (3) below.
(3)    In determining reimbursements under this Article, the SBA shall:
       (a)    First, reimburse Companies qualified as limited apportionment
              companies under Section 627.351(2)(b)3., Florida Statutes, for the
              amount (if any) of reimbursement due under the individual
              company's reimbursement contract, but not to exceed the lesser of
              $10 million or an amount equal to 10 times the individual
              company's Reimbursement Premium for the Contract Year. This
              provision does not apply if the year-end projected balance of the
              FHCF, exclusive of any bonding capacity of the FHCF, exceeds $2
              billion. Further, if the Company is a member of a group, the
              Company may not receive reimbursement under this provision if any
              other member of the group has received reimbursement under this
              provision.
       (b)    Next, reimburse each of the Companies for the amount (if any) of
              reimbursement due under the individual company's reimbursement
              contract, but not to exceed an amount equal to the Projected
              Payout Multiple times the individual company's Reimbursement
              Premium for the Contract Year, provided, however, that entities
              created under Section 627.351, Florida Statutes, shall be further
              reimbursed in accordance with subsection (c) below. If the Company
              qualifies as a limited apportionment company under Section
              627.351(2)(b)3., Florida Statutes, any amount payable under this
              provision shall be reduced by the amount (if any) payable under
              (a) above.

                                       2
<PAGE>

       (c)    Thereafter, reimburse each entity created by Section 627.351,
              Florida Statutes, for a pro rata share of any remaining Actual
              Claims-Paying Capacity of the FHCF based on the proportion that
              such entity's remaining reimbursable losses under Covered Policies
              from Covered Events for the Contract Year bear to the total
              remaining reimbursable losses under Covered Policies from Covered
              Events for the Contract Year, for which any remaining FHCF balance
              or bond proceeds are sufficient, up to a limit of $11 billion for
              any one Contract Year, in accordance with Section 215.555, Florida
              Statutes.
(4)    Reimbursement amounts shall not be reduced by reinsurance paid or payable
       to the Company from other sources; however, the Company shall not allow
       recoveries from such other sources, except reinsurance recoveries from
       affiliated insurers and/or reinsurers, taken together with reimbursements
       under this Contract, to exceed 100% of the Company's losses under Covered
       Policies from Covered Events. If such recoveries and reimbursements
       exceed 100% of the Company's losses under Covered Policies from Covered
       Events, and if there is no agreement between the Company and its
       reinsurer(s) to the contrary, any amount in excess of 100% of the
       Company's losses under Covered Policies from Covered Events shall be
       returned to the SBA.
(5)    Annually, the SBA shall notify the Company of the FHCF's estimated
       Borrowing Capacity for the next contract year, the projected year-end
       balance of the FHCF, and the Company's estimated share of total
       reimbursement premium to be paid to the FHCF for the Contract Year. In
       May and October of each year, the SBA shall publish in the Florida
       Administrative Weekly a statement of the FHCF's estimated borrowing
       capacity and the projected year-end balance of the FHCF..
(6)    The obligation of the SBA with respect to all reimbursement contracts
       covering a particular year shall not exceed the balance of the FHCF as of
       December 31 of that contract year, together with the maximum amount the
       SBA is able to raise through the issuance of revenue bonds or other means
       available to the SBA under Section 215.555, Florida Statutes, up to a
       limit of $11 billion for any one contract year. The obligations and the
       liability of the SBA are more fully described in Rule 19-8.013, Florida
       Administrative Code (F.A.C.). If reimbursement premiums are used for debt
       service in the event of a temporary shortfall in the collection of
       emergency assessments, then the amount of the premiums so used will be
       reimbursed to the SBA when sufficient emergency assessments are received.

ARTICLE V - DEFINITIONS

(1)    Actual Claims-Paying Capacity of the FHCF
       This term means the sum of the balance of the FHCF as of December 31 of a
       Contract Year, plus any reinsurance purchased by the FHCF, plus the
       amount the SBA is able to raise through the issuance of revenue bonds up
       to a limit of $11 billion pursuant to Sections 215.555(4)(c) and (6),
       Florida Statutes.
(2)    Actuarially Indicated
       This term means, with respect to Premiums paid by insurers for
       reimbursement provided by the FHCF, an amount determined in accordance
       with the definition provided in Section 215.555(2)(a), Florida Statutes.
(3)    Administrator
       This term means the entity with which the SBA contracts to perform
       administrative tasks associated with the operations of the FHCF. The
       present Administrator is Paragon Reinsurance Risk Management Services,
       Inc., 3600 West 80th Street, Minneapolis, Minnesota 55431. The telephone
       number is (800) 689-3863, and the facsimile number is (800) 264-0492.

                                       3
<PAGE>

(4)    Authorized Insurer
       This term is defined in Section 624.09(1), Florida Statutes.
(5)    Borrowing Capacity
       This term means the amount of funds which are able to be raised by the
       issuance of revenue bonds or through other financial mechanisms.
(6)    Contract
       This term means this Reimbursement Contract for the current Contract
       Year.
(7)    Covered Event
       This term means any one storm declared to be a hurricane by the National
       Hurricane Center, which causes insured losses in Florida, both while it
       is still a hurricane and throughout any subsequent downgrades in storm
       status by the National Hurricane Center. Any storm, including a tropical
       storm, which does not become a hurricane is not a Covered Event.
(8)    Covered Policy
       (a)    This term means only that portion of a binder, policy or contract
              of insurance ("Policy Contract") that insures real or personal
              property located in the State of Florida to the extent of such
              Policy Contract insures a residential structure or the contents of
              a residential structure located in the State of Florida. For
              purposes of this Contract, "residential" means habitational
              structures and includes personal lines residential coverages,
              commercial lines residential coverages, and mobile home coverages.
              1.    The term "covered policy" does not include any excess policy
                    that contains coverage for non-habitational property or
                    non-Florida property. "Excess policy," for purposes of the
                    FHCF, means insurance protection for large commercial
                    property risks that provides a layer of coverage above a
                    primary layer that acts much the same as a very large
                    deductible. The primary layer is insured through another
                    policy. The excess policy does not reimburse losses unless
                    the losses exceed the primary layer. Several excess policies
                    may be used to cover high value properties, each with
                    different but coordinating primary layers.
              2.    For personal lines residential coverages report Coverage A
                    (dwelling), B (appurtenant structures), and/or C (contents)
                    exposure and any increases to these coverages.
              3.     For commercial lines residential coverages, include all
                     Coverage A (dwelling), B (appurtenant structures), and/or C
                     (contents) exposure which directly covers, or is used in
                     relation to, covered habitational structures and any
                     additional coverages or coverage extensions which increase
                     the limit of coverage for habitational structure. Some of
                     the coverages may include, but are not limited to, valuable
                     papers, signs, moneys and securities, outdoor property,
                     personal effects, and fine arts. Also report Coverage A, B,
                     and/or C exposure which directly covers, or is used in
                     relation to, habitational structures covered under a
                     farmowners policy. Additional coverages: Report exposure
                     from additional coverages and coverage extensions only if
                     such coverages increase the limit of coverage provided
                     under Coverages A, B, and C and is directly related to the
                     covered habitational structure.

                                       4
<PAGE>

       (b)    Residential structures (personal lines residential, commercial
              residential, and mobile home) are those dwelling units used as a
              home, residence or sleeping place for other than short-term,
              transient occupancy, as that term is defined in Sections 83.43(10)
              and 509.013(11), Florida Statutes. These include the primary
              structure and appurtenant structures, including the contents
              therein, insured under the same policy and any other structure or
              contents covered under endorsements associated with a policy
              covering a residential structure, the principal function of which
              at the time of loss was as a primary or secondary residence.
       (c)    Because of the specialized nature of the definition of Covered
              Policies, Covered Policies are not limited to only one line of
              business in the Company's annual statement required to be filed by
              Section 624.424, Florida Statutes. Instead, Covered Policies are
              found in several lines of business on the Company's annual
              statement. Covered Policies will at a minimum be reported in the
              Company's statutory annual statement as:
                                            -Fire
                                            -Allied Lines
                                            -Farmowners Multiple Peril
                                            -Homeowners Multiple Peril
                                            -Commercial Multiple Peril (non
                                             liability portion, covering
                                             condominiums and apartments)
                                            -Inland Marine
       (d)    Specific companies will report Covered Policies in other lines of
              business, as their specific situation requires. Note, however,
              that where particular insurance exposures are reported on an
              annual statement is not dispositive of whether or not the exposure
              is a Covered Policy. This definition applies only to the
              first-party property section of Policy Contracts pertaining
              strictly to the structure or its contents. Insured losses from
              coverages other than those pertaining strictly to damage to the
              structure or its contents, that may be afforded under Policy
              Contracts, are not reimbursable under this Contract.
(9)    Estimated Claims-Paying Capacity of the FHCF
       This term means the sum of the projected year-end balance of the FHCF as
       of December 31 of a contract year, plus any reinsurance if purchased by
       the FHCF, plus the most recent estimate of the borrowing capacity of the
       FHCF, determined pursuant to Section 215.555(4)(c), Florida Statutes.
(10)   Florida Department of Insurance (DOI)
       This term means that Florida regulatory agency charged with regulating
       the Florida insurance market which is established in Section 20.13,
       Florida Statutes, and administers the Florida Insurance Code.
(11)   Florida Insurance Code
       This term means those chapters in Section 624.01, Florida Statutes, which
       are designated as the Florida Insurance Code.
(12)   Florida Residential Property and Casualty Joint Underwriting Association
       (JUA) The term refers to an entity formed under Section 627.351(6),
       Florida Statutes.
(13)   Florida Windstorm Underwriting Association (FWUA)
       This term refers to an entity formed under Section 627.351(2), Florida
       Statutes.
(14)   Formula or the Premium Formula
       This term means the formula approved by the SBA for the purpose of
       determining the Actuarially Indicated Premium to be paid to the FHCF. The
       Premium Formula is defined as an approach or methodology which leads to
       the creation of premium rates. The resulting rates are therefore
       incorporated as part of the Premium Formula and are the result of the
       approach or methodology employed.

                                       5
<PAGE>

(15)   Fund Balance as of 12/31
       This term means the "Fund balance: Unrestricted" as indicated on the
       unconsolidated FHCF Balance Sheets for the then current Contract Year, to
       which is added: reported FHCF losses (including loss adjustment expense)
       for the then current Contract Year, whether paid or unpaid by FHCF, as of
       December 31, and from which is subtracted: any reinsurance recovered
       prior to, or recoverable as of, December 31; any obligations paid or
       expected to be paid with bonding proceeds or receipts from emergency
       assessments.
(16)   Ground-up Losses
       This term means all losses under the "Covered Policy" definition
       including losses which would otherwise be considered part of the
       Company's retention.
(17)   Insurer Group
       For purposes of the coverage option election in Section 215.555(4)(b),
       Florida Statutes, "Insurer Group" means the group designation assigned by
       the National Association of Insurance Commissioners (NAIC) for purposes
       of filing consolidated financial statements. An insurer is a member of a
       group as designated by the NAIC until such insurer is assigned another
       group designation or is no longer a member of a group recognized by the
       NAIC.
(18)   Joint Underwriting Association (JUA)
       This term means any entity created under Section 627.351, Florida
       Statutes, and which engages in the writing of Covered Policies.
(19)   Loss Occurrence
       This term means the sum of individual insured losses incurred under
       Covered Policies resulting from the same Covered Event. "Losses" means
       direct incurred losses under Covered Policies, excluding losses
       attributable to additional living expense and business interruption
       coverages and excluding Loss Adjustment Expenses.
(20)   Loss Adjustment Expense Reimbursement
       (a)    Loss Adjustment Expense Reimbursement shall be 5% of the
              reimbursed losses under this Contract as provided in Article IV,
              pursuant to subsection (4)(b)1. of Section 215.555, Florida
              Statutes.
       (b)    To the extent that loss reimbursements are limited to the payout
              multiple applied to each Company, the 5% Loss Adjustment Expense
              is included in the total payout multiple applied to each Company.
              The Loss Adjustment Expense Reimbursement will not be paid in
              addition to payments for other loss reimbursements.
(21)   Payout Multiple
       This term means the multiple derived by dividing the claims-paying
       capacity of the FHCF by the total industry Reimbursement Premium for the
       FHCF for the Contract Year billed as of 12/31 of the Contract Year. The
       multiple is finally determined once reimbursement premiums have been
       billed as of 12/31 and the amount of bond proceeds has been determined.
(22)   Premium
       This term means the same as Reimbursement Premium, which is the premium
       determined by multiplying each $1,000 of insured value reported by the
       Company in accordance with Section 215.555(5)(b), Florida Statutes, by
       the rate as derived from the Premium Formula.
(23)   Projected Payout Multiple
       The Projected Payout Multiple is used to calculate an insurer's projected
       payout pursuant to Section 215.555(4)(d)2.b., Florida Statutes. The
       Projected Payout Multiple is derived by dividing the estimated single
       season Claims-Paying Capacity of the FHCF by the estimated total industry
       Reimbursement Premium for the FHCF for the Contract year. The Company's
       Reimbursement Premium as paid to the SBA for the Contract Year is
       multiplied by the Projected Payout Multiple to estimate the Company's
       coverage from the FHCF for the Contract Year. The SBA will pay no
       reimbursement for any losses under this Contract unless the Company
       incurs losses from Covered Events for Covered Policies in excess of its
       FHCF retention.

                                       6
<PAGE>

(24)   Retention
       The Company's Retention means the amount of hurricane loss incurred by an
       insurer below which an insurer is not entitled to reimbursement from the
       FHCF. An insurer is eligible for reimbursement only after its paid
       covered losses exceed the retention level established for that insurer.
       An insurer's retention level is established in accordance with the
       provisions of subsection (2)(e) of Section 215.555, Florida Statutes. The
       Company's Retention shall be determined by multiplying the Retention
       Multiple by the Company's Reimbursement Premium for the Contract Year.
(25)   Retention Multiple
       (a)    The Retention Multiple is applied to the Company's Reimbursement
              Premium to determine the Company's Retention. The Retention
              Multiple for the Contract Year shall be equal to $3 billion,
              adjusted to reflect the percentage growth in FHCF exposure for
              covered policies since 1998, divided by the estimated total
              industry Reimbursement Premium at the 90% Reimbursement Percentage
              level for the Contract Year as determined by the SBA.
       (b)    The Retention Multiple as determined under (25)(a) above shall be
              adjusted to reflect the Reimbursement Percentage elected by the
              Company under this Contract as follows:
              1.     If the Company elects a 90% Reimbursement Percentage, the
                     adjusted Retention Multiple is 100% of the amount
                     determined under (25)(a) above;
              2.     If the Company elects 75% Reimbursement Percentage, the
                     adjusted Retention Multiple is 120% of the amount
                     determined under (25)(a) above; or
              3.     If the Company elects a 45% Reimbursement Percentage, the
                     adjusted Retention Multiple is 200% of the amount
                     determined under (25)(a) above.
(26)   Ultimate Net Loss
       (a)    The term means the Company's actual loss (excluding loss
              adjustment expense) arising from each Loss Occurrence during the
              Contract Year, provided, however, that the Company's loss shall be
              determined in accordance with the deductible levels reported to
              the FHCF for the exposure sustaining the loss.
       (b)    Salvages and all other recoveries, excluding reinsurance
              recoveries, shall be first deducted from such loss to arrive at
              the amount of liability attaching hereunder.
       (c)    All salvages, recoveries or payments recovered or received
              subsequent to a loss settlement under this Contract shall be
              applied as if recovered or received prior to the aforesaid
              settlement and all necessary adjustments shall be made by the
              parties hereto.
       (d)    Nothing in this clause shall be construed to mean that losses
              under this Contract are not recoverable until the Company's
              Ultimate Loss has been ascertained.
       (e)    The SBA shall be subrogated to the rights of the Company to the
              extent of its reimbursement of the Company. The Company agrees to
              assist and cooperate with the SBA in all respects as regards such
              subrogation. The Company further agrees to undertake such actions
              as may be necessary to enforce its rights of salvage and
              subrogation, and its rights, if any, against other insurers as
              respects any claim, loss, or payment arising out of a Covered
              Event.

                                       7
<PAGE>

ARTICLE VI - EXCLUSIONS

This Contract does not provide reimbursement for:
(1)    All business not defined as being within the scope of this Contract.
(2)    Any reinsurance assumed by the Company.
(3)    Any liability assumed by the Company from Pools, Associations and
       Syndicates. Exception: Covered Policies assumed from the JUA and from the
       FWUA under the terms and conditions of an executed assumption agreement
       between the authorized insurer and either such association are covered by
       this Contract.
(4)    All liability of the Company arising by contract, operation or law, or
       otherwise, from its participation or membership, whether voluntary or
       involuntary, in any insolvency fund. "Insolvency Fund" includes any
       guaranty fund, insolvency fund, plan, pool, association, fund or other
       arrangement, howsoever denominated, established or governed, which
       provides for any assessment of or payment or assumption by the Company of
       part of all of any claim, debt, charge, fee, or other obligation of an
       insurer, or its successors or assigns, which has been declared by any
       competent authority to be insolvent, or which is otherwise deemed unable
       to meet any claim, debt, charge, fee or other obligation in whole or in
       part.
(5)    Any liability of the Company for loss or damage caused by or resulting
       from nuclear reaction, nuclear radiation, or radioactive contamination
       from any cause, whether direct or indirect, proximate or remote, and
       regardless of any other cause or event contributing concurrently or in
       any other sequence to the loss.
(6)    Any liability of the Company for extra contractual obligations and excess
       of original policy limits liabilities.
(7)    Any policy meeting the definition contained in Section 624.6085, Florida
       Statutes, regarding collateral protection insurance.
(8)    Losses in excess of the sum of the funds which are available at 12/31 of
       the Contract Year and the amount the SBA is able to raise through the
       issuance of revenue bonds or by the use of other financial mechanisms, up
       to a limit of $11 billion, pursuant to Section 215.555(4)(c), Florida
       Statutes.
(9)    Any policy which excludes wind or hurricane coverage.
(10)   The FHCF provides coverage for losses caused by any one storm declared to
       be a hurricane by the National Hurricane Center which causes losses in
       the state which damages the primary structure, appurtenant structures,
       and/or contents, as provided in the definition of Covered Policy, and
       which causes an opening in a roof or wall through which the rain enters
       through this opening. The FHCF does not provide coverage for water damage
       which is generally excluded under property insurance contracts and has
       been defined to mean flood, surface water, waves, tidal water, overflow
       of a body of water, or spray from any of these whether or not driven by
       wind.
(11)   Any "excess policy" that contains coverage for non-habitational property
       or non-Florida property.

ARTICLE VII - MANAGEMENT OF CLAIMS AND LOSSES

The Company shall investigate and settle or defend all claims and losses. All
payments of claims or losses by the Company within the terms and limits of the
appropriate coverage parts of Covered Policies shall be binding on the SBA,
subject to the terms of this Contract, including the provision in Article XIII
relating to inspection of records and audits.

ARTICLE VIII - PAYMENT ADJUSTMENT

(1)    Offsets
       Section 215.555(4)(d)1., Florida Statutes, provides the SBA with the
       right to offset amounts due and payable to the SBA from the Company
       against any reimbursement amounts due and payable to the Company from the
       SBA as a result of the liability of the SBA.

                                       8
<PAGE>

(2)    Reimbursement Adjustments
       Section 215.555(4)(d)1., Florida Statutes, provides the SBA with the
       right to seek the return of excess loss reimbursements which have been
       paid to the Company. Excess loss reimbursement are those payments made to
       the Company by the SBA on the basis of incorrect exposure submissions or
       resubmissions, incorrect calculations of reimbursement premiums or
       retentions, incorrect proof of loss reports, incorrect calculation of
       reinsurance recoveries, or subsequent readjustment of policyholder
       claims, including subrogation and salvage, or any combination of the
       foregoing. Regarding incorrect reinsurance recoveries, please see also
       Article X(3)(b)4.

ARTICLE IX - REIMBURSEMENT PREMIUM

(1)    The Company shall, in a timely manner, pay the SBA its Reimbursement
       Premium for the Contract Year. The annual Reimbursement Premium for the
       Contract Year shall be calculated in accordance with Section 215.555,
       Florida Statutes with any rules promulgated thereunder, and with Article
       X(2).
(2)    Since the calculation of the actuarially-indicated premium assumes that
       the Companies will pay their reimbursement premiums timely, interest
       charges will accrue under the following circumstances. If a Company
       chooses to estimate its own premium installments, then an interest charge
       will accrue on any premium which is underestimated. No interest will
       accrue regarding any provisional premium, if paid as billed by the FHCF's
       Administrator. However, if the premium payment is not received from a
       Company when it is due, an interest charge will accrue on a daily basis
       until the payment is received. An interest credit will be applied for any
       premium which is overpaid as either an estimate or as a provisional
       premium. Interest shall not be credited past December 1 of any contract
       year. The applicable interest rate for interest credits will be the
       projected average rate earned by the SBA for the FHCF for the first six
       months of the Contract Year. The applicable interest rate for interest
       charges will accrue at this rate plus 3%.

ARTICLE X - REPORTS AND REMITTANCES

(1)     Exposures
        (a)    If the Company writes Covered Policies on or before June 1 of the
               Contract Year, the Company shall report to the SBA, unless
               otherwise provided in Rule 19-8.029, F.A.C., no later than the
               statutorily required date of September 1 of the Contract Year, by
               zip code or other limited geographical area as specified by the
               SBA, its insured values under Covered Policies as of June 30 of
               the Contract Year, and other data or information in the format
               specified by the SBA.
        (b)    If the Company first begins writing Covered Policies after June 1
               but prior to December 1 of the Contract Year, the Company shall
               report to the SBA, no later than March 1 of the Contract Year, by
               zip code or other limited geographical area as specified by the
               SBA, its insured values under Covered Policies as of December 31
               of the Contract Year, and other data or information in the format
               specified by the SBA.
        (c)    If the Company first begins writing Covered Policies on or after
               December 1 but through and including May 31 of the Contract Year,
               the Company shall not report its exposure data for the Contract
               Year to the SBA.

                                       9
<PAGE>

        (d)    The requirements in (a) and (b), above, that reports are due on
               September 1 and March 1, as applicable, means that the report
               shall be in the physical possession of the FHCF's Administrator
               in Minneapolis no later than 5 p.m., Central Time, on September
               1 or March 1, as applicable. If September 1 or March 1 is a
               Saturday, Sunday or legal holiday, and if September 1 or March
               1's being a Saturday, Sunday or legal holiday means that neither
               the United States Postal Service nor private delivery services
               are operating that day, then the applicable due date will be the
               day immediately following September 1 or March 1, as applicable,
               which is not a Saturday, Sunday or legal holiday. For purposes
               of the timeliness of the submission, neither United States
               Postal Service postmark nor a postage meter date is in any way
               determinative. Reports sent to the SBA in Tallahassee, Florida,
               will be returned to the sender. Reports not in the physical
               possession of the FHCF's Administrator by 5 p.m., Central Time,
               on the applicable due date are late.
        (e)    Confidentiality of exposure reports. Pursuant to the provisions
               of Section 215.557 Reports of insured values, the reports of
               insured values under covered policies by zip code submitted to
               the State Board of Administration pursuant to Section 215.555, as
               created by s. 1., ch. 93-409, Laws of Florida, or similar
               legislation, are confidential and exempt from the provisions of
               Section 119.07(1) and section 24(a), Art. I of the State
               Constitution. This exemption is subject to the Open Government
               Sunset Review Act in accordance with Section 119.04, Florida
               Statutes.
(2)     Reimbursement Premium
        (a)     If the Company writes Covered Policies on or before June 1 of
                the Contract Year, the Company shall pay the FHCF its
                Reimbursement Premium in installments due on or before August 1,
                October 1 and December 1 of the Contract Year in amounts to be
                determined by the FHCF. However, if the Company's Reimbursement
                Premium for the prior Contract Year was less than $5,000, the
                Company's full provisional Reimbursement Premium, in an amount
                equal to the Reimbursement Premium paid in the prior year, shall
                be due in full on or before August 1 of the Contract Year. The
                Company will be invoiced for amounts due, if any, beyond the
                provisional Reimbursement Premium payment, on or before 12/1 of
                the Contract Year.
        (b)     If the Company first begins writing Covered Policies after June
                1 but prior to December 1 of the Contract Year, the Company
                shall pay the FHCF a provisional Reimbursement Premium of $1,000
                upon execution of this Contract. The Administrator shall
                calculate the Company's actual reimbursement premium for the
                period after June 1 and through December 31 based on its actual
                exposure, as reported on March 1. To recognize that New
                Companies have limited exposure during this period, the actual
                premium as determined by processing the Company's exposure data
                shall then be divided in half, the provisional premium shall be
                credited, and the resulting amount shall be the total premium
                due for the Company for the remainder of the Contract Year.
                However, if that amount is less than $1,000.00, then the Company
                shall pay $1,000.00. The premium payment is due no later than
                May 1 of the Contract Year. The Company's Retention and Coverage
                will be determined based on the total premium due as calculated
                above.
        (c)     If the Company first begins writing Covered Policies on or after
                December 1 but through and including May 31 of the Contract
                Year, the Company shall pay the FHCF a Reimbursement Premium of
                $1,000 upon execution of this Contract. The Company shall pay no
                other Reimbursement Premium for the Contract Year.
        (d)     The requirement that the Reimbursement Premium is due on a
                certain date means that the Premium shall be in the physical
                possession of the FHCF no later than 5 p.m., Eastern Time, on
                the due date applicable to the particular installment. If
                remitted by check to the FHCF's Post Office Box, the check shall
                be physically in the Post Office Box 550261, Tampa, FL

                                       10
<PAGE>

                33655-0261, as set out on the invoice sent to the Company. If
                remitted by check by hand delivery, the check shall be
                physically on the premises of the FHCF's bank in Tampa, Florida,
                as set out on the invoice sent to the Company. If remitted
                electronically, the wire transfer shall have been completed to
                the FHCF's account at its bank in Tampa, Florida. If the
                applicable due date is a Saturday, Sunday or legal holiday, and
                if the due date's being a Saturday, Sunday or legal holiday
                means that neither the United States Postal Service nor private
                delivery services are operating that day and if the due date's
                being a Saturday, Sunday or legal holiday means that electronic
                wire transfers cannot be completed, then the applicable due date
                will be the day immediately following the applicable due date
                which is not a Saturday, Sunday or legal holiday. For purposes
                of the timeliness of the remittance, neither the United States
                Postal Service postmark nor a postage meter date is in any way
                determinative. Premium checks sent to the SBA in Tallahassee,
                Florida, or to the FHCF's Administrator in Minneapolis,
                Minnesota, will be returned to the sender. Reimbursement
                Premiums not in the physical possession of the FHCF by 5 p.m.,
                Easter Time, on the applicable due date are late.
(3)     Claims and Losses
        (a)    In General
               1.     Claims and losses resulting from Loss Occurrences
                      commencing during the Contract Year shall be reported by
                      the Company and reimbursed by the FHCF as provided herein
                      and in accordance with the Statute, with this Contract,
                      and any rules adopted pursuant to the Statute.
               2.     Pursuant to Section 215.555(4)(c), Florida Statutes, the
                      SBA is obligated to pay losses not to exceed the Actual
                      Claims-paying Capacity of the FHCF, up to a limit of $11
                      billion for any one Contract Year.
        (b)    Claims Reports
               1.     At the direction of the SBA, the Company shall report its
                      ground-up losses for Covered Policies from each Covered
                      Event to provide information to the SBA in determining any
                      potential liability for possible reimbursable losses under
                      the Contract on the Interim Loss Report, Form FHCF-L1A, as
                      adopted in Rule 19-8.029, F.A.C.
               2.     No later than December 31 of the Contract Year, the
                      Company shall report to the FHCF its Ultimate Net Loss
                      with respect to each Loss Occurrence from the beginning of
                      the Contract Year on the Proof of Loss Report, Form
                      FHCF-L1B, as adopted in Rule 19-8.029, F.A.C.
               3.     Quarterly thereafter until all claims and losses resulting
                      from Loss Occurrences commencing during the Contract Year
                      are fully discharged, the Company shall render to the FHCF
                      revised reports of the actual amount of Ultimate Net Loss
                      incurred and paid to date by the Company with respect to
                      each Loss Occurrence commencing during the contract Year.
                      If the Company's retention must be recalculated as the
                      result of an exposure resubmission and if the
                      newly-recalculated retention changes the FHCF's
                      reimbursement obligations, then the Company shall submit
                      add itional reports of claims and losses for recalculation
                      of the FHCF's obligations.
               4.     Such reports shall include the actual or anticipated
                      reinsurance recoveries from non-affiliated insurers and/or
                      reinsurers on the Company's Ultimate Net Loss, and a
                      certification that such recoveries, together with the
                      actual or anticipated reimbursement from the FHCF shall
                      not exceed 100% of the Company's losses under Covered
                      Policies from Covered Events.

                                       11
<PAGE>

              5.     The SBA will determine and pay, as soon as practicable
                     after receiving Proof of Loss Reports described and adopted
                     in Rule 19-8.029, F.A.C. the reimbursement amount due based
                     on losses paid by the Company to date and adjustments to
                     this amount based on subsequent quarterly information. The
                     adjustments to reimbursement amounts shall require the SBA
                     to pay, or the Company to return, amounts reflecting the
                     most recent determination of losses.
              6.     Initial or quarterly reports received on or before the due
                     date for that report will be reimbursed within 30 days
                     following the due date or as soon as practicable after the
                     receipt of the report and verification of the reported
                     losses. Those received after the initial or quarterly
                     reporting due date will be reimbursed within 30 days
                     following the due date or as soon as practicable after the
                     receipt of the report and verification of the reported
                     losses.
              7.     If a Covered Event occurs during the Contract Year, but
                     after 12/31, Companies shall report their losses as soon as
                     practicable thereafter and the FHCF shall begin to
                     reimburse Companies for paid losses as soon as the losses
                     are reported and the FHCF has established the availability
                     of the moneys to pay the reimbursements. The FHCF shall
                     determine the schedule for reporting losses for Covered
                     Events after 12/31 by taking into consideration the date or
                     dates of the Covered Event's occurrence; its size;
                     severity; windspeeds; forward track; occurrence of
                     tornadoes or flooding as a result of the Covered Event;
                     geographical area impacted; and ability of adjusters to
                     assess the damage.
              8.     All loss reports received will be compared with the FHCF's
                     exposure data to establish the facial reasonableness of the
                     reports. Preliminarily, the FHCF will examine the reported
                     losses to determine whether reported losses exceed reported
                     exposure in the affected counties; whether the Company has
                     reported a low concentration of exposure in the affected
                     counties; and whether the ground-up loss as a percentage of
                     exposure in affected counties is significantly higher than
                     the average. Companies meeting these tests for
                     reasonableness will be scheduled for reimbursement.
                     Companies not meeting these tests for reasonableness will
                     be handled on a case-by-case basis and will be contacted to
                     provide specific information regarding their individual
                     book of business.
       (c)    Claims Reimbursement Calculations
              1.     In General. An insurer's covered paid losses must exceed
                     its FHCF retention as determined in accordance with Section
                     215.555(2)(e), Florida Statutes, before any reimbursement
                     is payable from the FHCF. If more than one Covered Event
                     occurs in any one Contract Year, any reimbursements due
                     from the FHCF shall take into account the separate
                     retention requirement for each insurer for each Covered
                     Event, as that term is defined in subsection (2)(b) of
                     Section 215.555, Florida Statutes.
              2.     Exhaustion of claims-paying capacity. This section of
                     Article X provides procedures for reimbursing insurers for
                     losses from Covered Events in those situation in which the
                     SBA determines, pursuant to Section 215.555(6)(a), Florida
                     Statutes, and Rule 19-8.013, F.A.C., that reimbursable
                     losses from a Covered Event are likely to exhaust the
                     available claims-paying capacity of the FHCF. The
                     "claims-paying capacity" is the total of the balance of the
                     FHCF as of 12/31 of the Contract Year in which the Covered
                     Event occurs plus the amount the SBA is able to raise, to

                                       12
<PAGE>

                     the extent allowed by law, through the issuance of bonds,
                     by purchasing reinsurance or through the incurrence of
                     other indebtedness, up to the statutory limit of $11
                     billion for any one Contract Year. In that situation, each
                     insurer sustaining reimbursable losses will receive the
                     amount of reimbursement due under the reimbursement
                     contract up to the amount of the insurer's payout, based on
                     the payout multiple, as calculated in accordance with
                     subsections (4)(c) and (4)(d)2.b. of Section 215.555,
                     Florida Statutes, and as defined in Article V(21) of this
                     Contract. For purposes of the projected payout calculation,
                     the "actual premium paid for that contract year," as
                     referenced in subsection (4)(d)2.b. of Section 215.555,
                     Florida Statutes, shall be the premium billed by the FHCF
                     as of December 31 of the Contract Year. Thereafter,
                     payments for additional reimbursable losses will be
                     available only to entities created under Section 627.351,
                     Florida Statutes, and will be based on a pro rata share of
                     the outstanding losses to the extent of any funds available
                     up to the $11 billion limitation. In order to determine the
                     amount available for payment of reimbursable losses on a
                     pro rata basis for entities created under Section 627.351,
                     Florida Statutes, the SBA will review reported loss
                     information from all insurers and determine that all
                     insurers which received payments for reimbursable losses
                     but which did not exceed their projected payout have
                     settled all, or substantially all, of their claims eligible
                     for reimbursement. The SBA will then determine the
                     remaining amount of claims-paying capacity and will pay
                     entities created under Section 627.351, Florida Statutes,
                     on a pro rata basis, up to the $11 billion limitation.
                     Reimbursements for all covered events occurring during the
                     same Contract Year will be made in accordance with this
                     section (3)(c)2. of Article X.
              3.     Exhaustion of cash, but not of claims-paying capacity. This
                     section of Article X provides procedures for reimbursing
                     insurers for losses from Covered Events in those situations
                     in which the SBA determines, pursuant to Section
                     215.555(6)(a), Florida Statutes, and Rule 19-8.013, F.A.C.,
                     that reimbursable losses for Covered Events will exhaust
                     the balance of the FHCF as of 12/31 of the Contract Year in
                     which the Covered Event has occurred but will not exceed
                     the amount the SBA is able to raise through the issuance of
                     bonds, reinsurance purchased, or the incurrence of other
                     indebtedness. In that situation, each insurer sustaining
                     reimbursable losses will receive the among of reimbursement
                     due under the Reimbursement Contract up to the amount of
                     the insurer's projected payout, as calculated in accordance
                     with subsections (4)(c) and (4)(d)2.b. of Section 215.555,
                     Florida Statutes, and as defined in Article V(21) of this
                     Contract. Thereafter, payments for additional reimbursable
                     losses will continue to be made based on the loss reports
                     required pursuant to this Contract from entities created
                     under Section 627.351, Florida Statutes.
              4.     Losses payable from cash. This section of Article X
                     provides procedures for reimbursing insurers for losses
                     from Covered Events in those situations in which the SBA
                     determines that the reimbursable losses will not exhaust
                     the balance of the FHCF as of 12/31 of the contract year in
                     which the Covered Event has occurred. In that situation,
                     each insurer sustaining reimbursable losses will receive
                     the amount of reimbursement due under the Reimbursement
                     Contract. Thereafter, payments for additional reimbursable
                     losses will continue to be made based on the loss reports
                     required pursuant to this Contract from entities created
                     under Section 627.351, Florida Statutes.

                                       13
<PAGE>

              5.     Reserve established. When a Covered Event occurs in a
                     subsequent Contract Year when reimbursable losses are still
                     being paid for a Covered Event in a previous Contract Year,
                     the SBA will establish a reserve for the outstanding
                     reimbursable losses for the previous Contract Year, based
                     on the length of time the losses have been outstanding, the
                     amount of losses already paid, the percentage of incurred
                     losses still unpaid, and any other factors specific to the
                     loss of development of the Covered Events involved.
(4)    Advances
       (a)    The SBA may make advances to the Company prior to December 31 of
              the Contract Year in accordance with Section 215.555(4)(e),
              Florida Statutes. All interest assessed will commence on the date
              the SBA issues a check for an advance and will cease at midnight
              on the date upon which the FHCF has received the Company's loss
              reimbursement report for the storm for which the advance was
              issued qualifying the Company for reimbursement equal to or
              exceeding the amount(s) of the advance(s). If, upon audit, it is
              determined that the Company received funds in excess of those to
              which it was entitled, the interest as to those sums will not
              cease on the date of the receipt of the loss reimbursement report
              but will continue until the Company reimburses the FHCF for the
              overpayment. The following procedures in Article X(4) apply to the
              specific type of advances enumerated in the Statute.
       (b)    Advances to insurers to prevent insolvency.
              1.     Pursuant to subsection (4)(e) of Section 215.555, Florida
                     Statutes, the SBA may advance certain Companies certain
                     percentages of the SBA's estimate of reimbursement due the
                     Company. Section 215.555(4)(e)1., Florida Statutes,
                     provides that if Companies demonstrate to the SBA that the
                     immediate receipt of moneys from the SBA is likely to
                     prevent the Company from becoming insolvent due to the
                     occurrence of one or more Covered Events, the SBA shall
                     advance, at market interest rates, up to 50 percent of the
                     SBA's estimate of the reimbursement due to the Company from
                     FHCF. A Company is insolvent if it is unable to pay its
                     policyholders for justifiable claims. The "market interest
                     rate" shall be the then current interest rate being earned
                     on the FHCF's investments.
              2.     Companies shall request a specific amount for the advance
                     and shall demonstrate that the immediate receipt of moneys
                     from the SBA is likely to prevent the Company from becoming
                     insolvent by providing the SBA with the following
                     information, determined in accordance with statutory
                     accounting principles, which are the rules and procedures
                     governing insurer financial reporting for regulatory
                     purposes:
                     a.     Current assets;
                     b.     Current liabilities other than liabilities due to
                            the Covered Event;
                     c.     Current liabilities due to the Covered Event, paid
                            and unpaid, submitted on the Proof of Loss Report,
                            Form FHCF-L1B, as adopted in Rule 19-8.029, F.A.C.;
                     d.     Evidence of estimated-retention breached by payment
                            of paid losses from the Covered Event;
                     e.     Current surplus as to policyholders;
                     f.     Estimate of expected liabilities due to the Covered
                            Event;
                     g.     Estimate of other expected liabilities not due to
                            the Covered Event;
                     h.     Estimate of reinsurance immediately available to pay
                            claims for the Covered Event under other reinsurance
                            treaties;
                     i.     Estimated amount of payout from the FHCF, determined
                            in accordance with Section 215.555(4)(b), Florida
                            Statutes. This estimate is necessarily predicated on
                            the Company's premium which in turn is predicated on
                            its exposure. Therefore, if the Covered Event occurs
                            in June, July, or August, the Company shall provide
                            its exposure data prior to September 1 in order that
                            the appropriate calculations may be made.

                                       14
<PAGE>

              3.     Companies seeking advances pursuant to Section
                     215.555(4)(e)1., Florida Statutes, shall also describe any
                     steps they have taken to pay claims, including liquidation
                     of assets, and may also supply such other information as
                     they deem necessary and appropriate to aid the SBA in
                     reaching a determination regarding whether or not to grant
                     an advance.
              4.     The information outlined above shall be supplied in the
                     form of a letter, signed by two executive officers of the
                     insurer, with the supporting information attached.
              5.     In determining whether or not to grant an advance pursuant
                     to subsection (4)(e) of Section 215.555, Florida Statutes,
                     the SBA shall take the following steps:
                     a.     The SBA shall carefully review and consider all the
                            information submitted by such Companies;
                     b.     The SBA shall consult with all relevant regulatory
                            agencies seeking all relevant information about the
                            Company's financial and solvency condition;
                     c.     The SBA shall carefully review its currently
                            available liquid assets; and
                     d.     The SBA shall review the damage caused by the
                            Covered Event and when that Covered Event occurred.
              6.     The SBA's final decision regarding an application for an
                     advance under Section 215.555(4)(e)1., Florida Statutes,
                     shall be based on whether or not, considering the totality
                     of the circumstances, including the SBA's obligations to
                     provide reimbursement for all Covered Events occurring
                     during the Contract Year, granting an advance will prevent
                     the insolvency of the applicant Company so that the Company
                     is able, not only to pay its policyholders' claims arising
                     from the Covered Event, but also to maintain its existence
                     as a viable source of residential property insurance
                     coverage to the people of this state. A majority vote of
                     the Trustees in favor is required before an advance can be
                     granted.
              7.     If an advance is granted, the "market interest rate" shall
                     be determined with reference to the then current interest
                     rate earned on the FHCF's investments on the date the
                     Trustees' vote is taken. Pursuant to Section
                     215.555(4)(e)1., Florida Statutes, the amount of the
                     advance shall not exceed 50 percent of the SBA's estimate
                     of the reimbursement due the Company. The Company's final
                     reimbursement shall be reduced by an amount equal to the
                     amount of the advance and the interest thereon.
              8.     Any amount advanced by the SBA shall be used by the Company
                     only to pay claims of its policyholders for the Covered
                     Event or Covered Events which have precipitated the
                     immediate need to continue to pay additional claims as they
                     become due. The advance is a reimbursement which allows the
                     Company to continue to pay claims in a timely manner.
       (c)    Advances to entities created pursuant to Section 627.351, Florida
              Statutes.
              1.     Section 215.555(4)(e)2., Florida Statutes, provides that
                     entities created under Section 627.351, Florida Statutes,
                     may receive an advance at market interest rates of up to
                     90% of the lesser of the SBA's estimate of reimbursement
                     for losses due to such entity or the entity's share of
                     Reimbursement Premium for that Contract Year multiplied by
                     the currently available liquid assets of the FHCF. The
                     purpose of the advance under that subsection is to allow
                     the entity to continue to pay additional claims from a
                     Covered Event in a timely manner. The "market interest
                     rate" shall be the then current interest rate earned on the
                     FHCF's investments.

                                       15
<PAGE>

              2.     The entity shall request a specific amount for the advance
                     and shall demonstrate that an advance is essential to allow
                     the entity to continue to pay claims for a Covered Event in
                     a timely manner once currently available liquid assets have
                     been exhausted by providing the SBA with the following
                     information, determined in accordance with the statutory
                     accounting principles, which are the rules and procedures
                     governing insurer financial reporting for regulatory
                     purposes:
                     a.     Current assets;
                     b.     Current liabilities other than liabilities due to
                            the Covered Event;
                     c.     Current liabilities due to the Covered Event, paid
                            and unpaid, submitted on the Proof of Loss Report,
                            Form FHCF-L1B, as adopted in Rule 19-8.029, F.A.C.;
                     d.     Evidence that the estimated retention will be
                            breached by payment of covered losses from the
                            Covered Event;
                     e.     Current surplus as to policyholders;
                     f.     Estimate of expected liabilities due to the Covered
                            Event;
                     g.     Estimate of other expected liabilities not due to
                            the Covered Event;
                     h.     Estimate of reinsurance available to pay claims for
                            the Covered Event;

                     i.     Estimated amount of payout from the FHCF, determined
                            in accordance with subsection (4)(b) of Section
                            215.555, Florida Statutes. This estimate is
                            necessarily predicated on the entity's Premium which
                            in turn is predicated on its exposure. Therefore, if
                            the Covered Event occurs in June, July, or August,
                            the entity shall provide its exposure data prior to
                            September 1 in order that the appropriate
                            calculations may be made.
              3.     Entities seeking advances pursuant to subsection (4)(e)2.
                     of Section 215.555, Florida Statutes, shall describe any
                     steps they have taken to pay claims, including liquidation
                     of assets, and may also supply such other information as
                     they deem necessary and appropriate to aid the SBA in
                     reaching a determination regarding whether or not to grant
                     an advance.
              4.     The information outlined above shall be supplied in the
                     form of a letter, signed by two executive officers of the
                     entity, with the supporting information attached.
              5.     In determining whether or not to grant an advance pursuant
                     to subsection (4)(e) of Section 215.555, Florida Statutes,
                     the SBA shall take the following steps:
                     a.     The SBA shall carefully review and consider all the
                            information submitted by such entities;
                     b.     The SBA shall consult with all relevant regulatory
                            agencies seeking all relevant information about the
                            entity's financial and solvency condition;
                     c.     The SBA shall carefully review its currently
                            available liquid assets; and
                     d.     The SBA shall review the damage caused by the
                            Covered Event and when that Covered Event occurred
                            during the Contract Year.
              6.     The SBA's final decision regarding an application for an
                     advance shall be based on whether or not, considering the
                     totality of the circumstances, including the SBA's
                     obligations to provide reimbursement for all Covered Events
                     occurring during the Contract Year, granting an advance is
                     essential to allowing the entity to continue to pay
                     additional claims for a Covered Event in a timely manner
                     once currently available liquid assets have been exhausted.
                     A majority vote of the Trustees in favor is required before
                     an advance can be granted.

                                       16
<PAGE>

              7.     If an advance is granted, the "market interest rate" shall
                     be determined with reference to the then current interest
                     rate earned on the FHCF's investments on the date the
                     Trustees' vote is taken. Pursuant to Section
                     215.555(4)(e)2., Florida Statutes, the amount of the
                     advance shall not exceed the lesser of 90% of the SBA's
                     estimate of the reimbursement for reimbursable losses due
                     to such entity or the entity's share of the actual
                     Reimbursement Premium paid for that Contract Year
                     multiplied by the currently available liquid assets of the
                     FHCF. The Company's final reimbursement shall be reduced by
                     an amount equal to the amount of the advance and the
                     interest thereon.
              8.     Any amount advanced by the SBA shall be used by the entity
                     only to pay claims of its policyholders for the Covered
                     Event or Covered Events which have precipitated the need to
                     continue to pay additional claims as they become due. The
                     advance is a reimbursement which allows the entity to
                     continue to pay claims in a timely manner.
       (d)    Advances to limited apportionment companies.
              1.     Subsection (4)(e)3. of Section 215.555, Florida Statutes,
                     provides that any limited apportionment company qualified
                     under Section 627.351(2)(b)3., Florida Statutes, may
                     receive an advance of the amount of the estimated
                     reimbursement payable to such Company as calculated
                     pursuant to subsection (4)(d) of Section 215.555, Florida
                     Statutes, at market rates, if the SBA determines that the
                     FHCF's assets are sufficient and are sufficiently liquid to
                     permit the SBA to make an advance to such Company and at
                     the same time fulfill its reimbursement obligations to the
                     FHCF's other participating insurers.
              2.     Limited apportionment companies seeking an advance pursuant
                     to subsection (4)(e)3. of Section 215.555, Florida
                     Statutes, shall request a specific amount for the advance
                     and provide the SBA with the following information,
                     determined in accordance with statutory accounting
                     principles, which are the rules and procedures governing
                     insurer financial reporting for regulatory purposes:
                     a.     Current assets;
                     b.     Current liabilities other than liabilities due to
                            the Covered Event;
                     c.     Current liabilities due to the Covered Event, paid
                            and unpaid, submitted on the Proof of Loss Report,
                            Form FHCF-L1B, adopted in Rule 19-8.029, F.A.C.;
                     d.     Evidence of estimated retention breached by payment
                            of paid losses from the Covered Event;
                     e.     Current surplus as to policyholders;
                     f.     Estimate of expected liabilities due to the Covered
                            Event;
                     g.     Estimate of other expected liabilities not due to
                            the Covered Event;
                     h.     Amount of reinsurance available to pay claims for
                            the Covered Event;

                                       17
<PAGE>

                     i.     Estimated amount of payout from the FHCF, determined
                            in accordance with Section 215.555(4)(b), Florida
                            Statutes. This estimate is necessarily predicated on
                            the Company's Premium which in turn is predicated on
                            its exposure. Therefore, if the Covered Event occurs
                            in June, July, or August, the Company shall provide
                            its exposure data prior to September 1 in order that
                            the appropriate calculations may be made.
              3.     Limited apportionment companies may also supply such other
                     information as they deem necessary and appropriate to aid
                     the SBA in reaching a determination regarding whether or
                     not to grant an advance pursuant to Section 215.555(4)(e),
                     Florida Statutes.
              4.     The information outlined above shall be supplied in the
                     form of a letter, signed by two executive officers of the
                     Company, with the supporting information attached.
              5.     In determining whether or not to grant an advance pursuant
                     to subsection (4)(e) of Section 215.555, Florida Statutes,
                     the SBA shall take the following steps:
                     a.     The SBA shall carefully review and consider all the
                            information submitted by such companies;
                     b.     The SBA shall consult with all relevant regulatory
                            agencies seeking all relevant information about the
                            Company's financial and solvency condition;
                     c.     The SBA shall carefully review its currently
                            available liquid assets; and
                     d.     The SBA shall review the damage caused by the
                            Covered Event and when that Covered Event occurred
                            during the Contract Year.
              6.     The SBA's final decision regarding an application for an
                     advance under Section 215.555(4)(e)3., Florida Statutes,
                     shall be based on whether or not, considering the totality
                     of the circumstances, the FHCF's assets are sufficient and
                     sufficiently liquid to permit the SBA to make an advance to
                     the limited apportionment company and at the same time
                     fulfill its reimbursement obligations to the FHCF's other
                     participating insurers. A majority vote of the Trustees in
                     favor is required before an advance can be granted.
              7.     If an advance is granted, the "market interest rate" shall
                     be determined with reference to the then current interest
                     rate earned on the FHCF's investments on the date the
                     Trustees' vote is taken. Pursuant to Section
                     215.555(4)(e)3., Florida Statutes, the amount of the
                     advance shall not exceed the SBA's estimate of the
                     reimbursement due the Company calculated in accordance with
                     subsection (4)(d) of Section 215.555, Florida Statutes. The
                     Company's final reimbursement shall be reduced by an amount
                     equal to the amount of the advance and the interest
                     thereon.
              8.     Any amount advanced by the SBA shall be used by the Company
                     only to pay claims of its policyholders for the Covered
                     Event or Covered Events which have precipitated either the
                     need to continue to pay additional claims as they become
                     due. The advance is a reimbursement which allows the
                     Company to continue to pay claims in a timely manner.
(5)    Delinquent Payments
       Failure to submit a Reimbursement Premium or Reimbursement Premium
       installment when due is a violation of the terms of this Contract and
       Section 215.555, Florida Statutes. Interest on late payment shall be due
       as set forth in Article IX(2) of this Contract. In addition, the SBA will
       refer any Company failing to submit such payments to the DOI for
       administrative action or will take other action as appropriate pursuant
       to Sections 215.555(10) and (11), Florida Statutes.
(6)    Inadequate Data Submissions
       If exposure data or other information required to be reported by the
       Company under the terms of this Contract is not received by the FHCF in
       the format specified by the FHCF and is inadequate to the extent that the
       FHCF requires resubmission of data, the Company will be required to pay
       the FHCF a resubmission fee of $1,000. The $1,000 fee is also applicable
       to exposure resubmissions made as a result of audits of the Company's
       exposure and of audits of the Company's claims data.

                                       18
<PAGE>

(7)    Delinquent Submissions
       Failure to submit an exposure submission or an exposure resubmission when
       due is a violation of the terms of this Contract and of the Statute. The
       SBA will refer any Company failing to submit such submissions or
       resubmissions to the DOI for administrative action or will take other
       action as appropriate pursuant to subsections (10) and (11) of Section
       215.555, Florida Statutes.

ARTICLE XI - TAXES

In consideration of the terms under which this Contract is issued, the Company
agrees to make no deduction in respect of the Premium herein when making premium
tax returns to the appropriate authorities. Should any taxes be levied on the
Company in respect of the Premium herein, the Company agrees to make no claim
upon the SBA for reimbursement in respect of such taxes.

ARTICLE XII - ERRORS AND OMISSIONS

An inadvertent delay, omission or error on the part of the SBA shall not be held
to relieve the Company from any liability which would attach to it hereunder if
such delay, omission or error had not been made.

ARTICLE XIII - INSPECTION OF RECORDS

The Company shall allow the SBA to inspect, examine, and audit, at reasonable
times, all records of the Company relating to the Covered Policies under this
Contract, including Company files concerning claims, losses, or legal
proceedings regarding subrogation or claims recoveries which involve this
Contract, including premium, loss records and reports involving exposure data on
Covered Policies and applicable ceded reinsurance contracts. All discovered
errors, inadvertent omissions, and typographical errors associated with the data
reporting of insured values shall be corrected to reflect the proper values.
This right shall survive the termination of this Contract. The Company shall
retain its records in accordance with the requirements for records retention
regarding exposure reports and claims reports in Article X of this Contract, and
in any administrative rules adopted pursuant to Section 215.555, Florida
Statutes.
(1)     Auditing Requirements for Exposure Audits
        The Company shall retain complete and accurate records, in policy level
        detail, of all exposure data submitted to the SBA in any Contract Year
        until the SBA has completed its audit of the Company's exposure
        submissions. The Company shall also retain complete and accurate records
        of any Contract Year in which the Company incurred losses until the
        completion of the loss reimbursement audit for that year. The records to
        be retained shall include computer runs of the files used to support the
        exposure reported to the SBA. The files shall include sufficient detail
        to support the exposure reported to the SBA. All computer runs must
        contain the policy number, policy effective date, policy expiration
        date, type of business, line of business, construction type, deductible
        group, zip code, county code, total number of insured risks, total
        insured value - building, total insured value - appurtenant structures,
        total insured value - contents, composite windstorm mitigation credit
        code, BCEG code, and any other information which would allow for a
        complete audit of the Company's reported exposure data or information
        which is specifically requested in the data call for that Contract Year.
        The Company must also have available, at the time of the audit, a copy
        of its underwriting manual, a copy of its rating manual, a copy of its
        most recent Certificate of Authority as issued by the Florida DOI, and a

                                       19
<PAGE>

       copy of its Renewal Notice, indicating the lines of business the Company
       is authorized to write in Florida. The Company is also required to retain
       declarations pages and policy applications to support reported exposure.
       To meet the requirement that the application must be retained, an insurer
       may retain either the actual application or may retain, in electronic
       format, all the information from the actual application.
(2)    Auditing Requirements for Claims Reports
       All insurers reporting losses and/or receiving reimbursements or advances
       from the SBA for paid losses from Covered Events are subject to audit by
       the SBA or its agents pursuant to this Article XIII for the Contract Year
       during which the Covered Event occurs for which losses are reported
       and/or reimbursements are made by the SBA. Therefore, the Company shall
       retain complete and accurate records of all losses paid by the SBA until
       the SBA has completed its audit of the Company's reimbursable losses,
       whichever is later. The records to be retained are set forth as part of
       the Proof of Loss Report, Form L1B and as part of the Reinsurance
       Recovery Worksheet, Form FHCF-L1C, adopted in Rule 19-8.029, F.A.C., and
       are also set out immediately below.
       (a)    All records, including the Proof of Loss Report, Form FHCF-L1B,
              correspondence, and supporting documentation, must be available
              with computer runs produced containing the following information:
              1.     Detail claims listing which supports the losses reported on
                     the Proof of Loss Report, Form FHCF-L1B, including: claim
                     number; date of loss; policy number; policy effective date;
                     paid loss - habitational building, appurtenant structure,
                     and contents; outstanding loss reserve - habitational
                     building, appurtenant structure, and contents; and salvage
                     received, if any.
              2.     Hard copy claim files which include documentation of the
                     following: claim number; claim description; policy number
                     and location of property; evidence of salvage received;
                     amount of loss adjustment expense; and copies of checks for
                     payment of losses.
              3.     Detail exposure listing which was retained at the time the
                     exposure data was submitted to the FHCF for the Contract
                     Year the loss occurred.
       (b)    In addition, all records relating to the Reinsurance Recovery
              Worksheet, Form FHCF-L1C, as adopted in Rule 19-8.029, F.A.C.,
              must be available with the supporting information listed below:
              1.     For reinsurance recoveries in which FHCF recoveries inure
                     to the benefit of the private reinsurer, provide the
                     reinsurance agreement(s).
              2.     For reinsurance recoveries in which FHCF recoveries do not
                     inure to the benefit of the private reinsurer, provide the
                     following:
                     a.     Summary of reinsurance in effect at the date of
                            loss. Include subject per risk and aggregate
                            agreements.
                     b.     For proportional per risk reinsurance include
                            percentage ceded, placement percentage, and treaty
                            limits.
                     c.     For non-proportional per risk reinsurance include
                            attachment point, limit, percentage placed, and
                            treaty limits.
                     d.     For proportional aggregate reinsurance include
                            attachment point, percentage ceded, placement
                            percentage, and treaty limit.
                     e.     For non-proportional aggregate reinsurance include
                            attachment point, limit, and treaty limit.
                     f.     For facultative reinsurance, provide summary of
                            coverage placed.

                                       20
<PAGE>

              3.     Provide treaties or placement slips for the subject
                     reinsurance agreements for all layers.
              4.     In no per risk, facultative, or aggregate reinsurance was
                     in place at the time of the subject event, provide written
                     confirmation.
              5.     Documentation supporting total paid loss for all lines, all
                     states which reconciles to amounts reported on the
                     Reinsurance Recovery Worksheet, FHCF-Form L1C, Section III
                     A. Include summary of direct paid loss listing for loss
                     portion only. Do not include loss adjustment expenses.
              6.     Documentation supporting total incurred loss for all lines,
                     all states that reconciles to amounts reported on the
                     Reinsurance Recovery Worksheet, FHCF-Form L1C, Section III
                     A. Include summary of direct incurred loss listing for loss
                     portion only. Do not include loss adjustment expenses.
              7.     Documentation supporting total paid reinsurance recovery
                     that reconciles to amounts reported on the Reinsurance
                     Recovery Worksheet, FHCF-form L1C, Section III E. Include
                     reinsurance statements, notice of loss statements to
                     reinsurer, or loss bordereau.
              8.     Documentation supporting total incurred reinsurance
                     recoverable that reconciles to amounts reported on the
                     Reinsurance Recovery Worksheet, FHCF-Form L1C, Section III
                     E. Include reinsurance statements, notice of loss
                     statements to reinsurer, or loss bordereau.
                     a.     The Company must retain the required exposure audit
                            file for the Contract Year in which the loss
                            occurred.
                     b.     The Company must also have available any other
                            information not set out above which is specific to
                            its claims payment procedures and without which a
                            complete and accurate audit would not be possible.
       (3)    Audit Procedures
              (a)    The FHCF will send an audit notice to the participating
                     insurer providing the commencement date of the audit, the
                     site of the audit, any accommodation requirements of the
                     auditor, and the reports and data which must be assembled
                     by the participating insurer and forwarded to the FHCF upon
                     request.
              (b)    The reports and data forwarded to the FHCF upon request are
                     reviewed internally and forwarded to the auditor. If the
                     FHCF receives accurate and complete records as requested,
                     the auditor will contact the participating insurer to
                     inform the insurer as to what policies or other
                     documentation will be required once the auditor is on site.
                     Any records not provided to the auditor in advance shall be
                     made available at the time the auditor arrives on site.
              (c)    At the conclusion of the auditor's audit and the management
                     review of the auditor's report, findings, recommendations,
                     and work papers, the FHCF will forward a preliminary draft
                     of the audit report to the participating insurer and
                     require a response from the participating insurer by a date
                     certain as to the audit's findings and recommendations.
              (d)    If the participating insurer accepts the audit's findings
                     and recommendations, and there is no recommendation for
                     resubmission of the participating insurer's exposure data,
                     the audit report will be finalized and the audit file
                     closed.
              (e)    If the Company disputes the audit's findings, the areas in
                     dispute will be resolved by a meeting or a conference call
                     between the participating insurer and FHCF management.
              (f)    1. If the recommendation of the audit is to resubmit the
                     insurer's exposure data for the Contract Year in question,
                     then the FHCF will send the participating insurer a letter
                     outlining the process for resubmission and including a
                     deadline for the resubmission to be received by the FHCF's
                     Administrator. Once the resubmission is received by the
                     FHCF's Administrator, the FHCF's Administrator calculates a

                                       21
<PAGE>

                     revised reimbursement premium for the Contract Year which
                     has been audited and the FHCF determines whether to send an
                     invoice to the participating insurer or to refund the
                     reimbursement premium, as the case may be. Once the
                     resubmission has been approved, the audit report will be
                     finalized and the audit file closed.
                     2. If the recommendation of the audit is either to resubmit
                     the insurer's exposure data for the Contract Year in
                     question or giving the option to pay the estimated premium
                     difference, then the FHCF will send the participating
                     insurer a letter outlining the process for resubmission or
                     for paying the estimated premium difference and including a
                     deadline for the resubmission or the payment to be received
                     by the FHCF's Administrator. If the Company chooses to
                     resubmit, the resubmission is received by the FHCF's
                     Administrator who calculates a revised reimbursement
                     premium for the contract year which has been audited and
                     the FHCF determines whether to send an invoice to the
                     participating insurer or to refund the reimbursement
                     premium, as the case may be. Once the resubmission has been
                     approved or the payment of the estimated premium difference
                     received, the audit report will be finalized and the audit
                     file closed.
              (g)    If the Company continues to dispute the audit's findings
                     and/or recommendations and no resolution of the disputed
                     matters is obtained through discussions between the insurer
                     and FHCF management, then the process within the SBA is at
                     an end and further administrative remedies may be obtained
                     under Chapter 120, Florida Statutes.
              (h)    The auditor's list of errors is made available to the
                     Company. Given that the audit was based on a sample of the
                     Company's policies rather than the whole universe of the
                     Company's Covered Policy exposure, the error list is not
                     intended to provide a complete list of errors but is
                     intended to indicate what Covered Policy information needs
                     to be reviewed and corrected throughout the Company's book
                     of Covered Policy business to ensure more complete and
                     accurate reporting in the resubmission if required and for
                     any future submissions.
(4)    Costs of the Audits
       The costs of the audits shall be borne by the SBA. However, in order to
       remove any incentive for a Company to delay preparations for an audit,
       the SBA shall be reimbursed by the Company for any audit expenses
       incurred in addition to the usual and customary costs of the audits,
       which additional expenses were incurred as a result of the Company's
       failure, despite proper notice, to be prepared for the audit or as a
       result of a Company's failure to provide requested information for the
       audit. All requested information must be complete and accurate. The
       Company shall be notified of any administrative remedies which may be
       obtained under Chapter 120, Florida Statutes.

ARTICLE XIV - INSOLVENCY OF THE COMPANY

In the event of the insolvency of the Company, the SBA shall pay directly to the
Florida Insurance Guaranty Association for the benefit of Florida policyholders
of the Company the net amount of all reimbursement moneys owed to the Company.
As used in this Article, the "net amount of all reimbursement moneys" means that
amount which remains after reimbursement for (1) preliminary or duplicate
payments owed to private reinsurers or other inuring reinsurance payments to
private reinsurers that satisfy statutory or contractual obligations of the
insolvent Company attributable to Covered Events to such reinsurers; or (2)
funds owed to a bank or other financial institution to cover obligations of the
insolvent insurer under a credit agreement that assists the insolvent insurer in

                                       22
<PAGE>

paying claims attributable to Covered Events. Such private reinsurers or banks
or other financial institutions shall be reimbursed or otherwise paid prior to
payment to the Florida Insurance Guaranty Association, notwithstanding any law
to the contrary. The Florida Insurance Guaranty Association shall pay all claims
up to the maximum amount permitted by Chapter 631, Laws of Florida; thereafter,
any remaining moneys shall be paid pro rata to claims not fully satisfied. This
Article does not apply to a joint underwriting association, a risk apportionment
plan, or any other entity created under Section 627.351, Florida Statutes.

ARTICLE XV - TERMINATION

The FHCF and the obligations of both parties under this Contract can be
terminated only as may be provided by law or applicable rules.

ARTICLE XVI - VIOLATIONS

Pursuant to the provisions of Section 215.555(10), Florida Statutes, any
violation of the terms of this Contact by the Company constitutes a violation of
the Insurance Code of the State of the Florida. Pursuant to the provisions of
Section 215.555(11), Florida Statutes, the SBA is authorized to take any action
necessary to enforce any administrative rules adopted pursuant to Section
215.555, Florida Statutes, and the provisions and requirements of this Contract.

ARTICLE XVII - APPLICABLE LAW

(1)     Applicable Law: This Contract shall be governed by and construed
        according to the laws of the State of Florida in respect of any matter
        relating to or arising out of this Contract.
(2)     Notice of Rights: Pursuant to Chapter 120, Florida Statutes, and the
        Uniform Rules of Procedure, codified as Chapters 28-101 through 28-110,
        FAC, a person whose substantial interests are affected by a decision of
        the SBA regarding the FHCF may request a hearing with the SBA by filing
        a petition within 21 days of receipt of the written notice of the
        decision. Any person who fails to file a petition within 21 days shall
        have waived his right to a hearing. The hearing may be a formal hearing
        or an informal hearing pursuant to the provisions of Sections 120.569
        and 120.57, Florida Statutes. The petition must be filed (received) in
        the office of Dr. Jack Nicholson, Chief Operating Officer, Florida
        Hurricane Catastrophe Fund, State Board of Administration, P.O. Box
        13300, Tallahassee, FL 32317-3300 within the 21 day period.

        All petitions shall contain:
        (a)    The name, address, and telephone number of the petitioner or
               petitioners.
        (b)    An explanation of how each petition's substantial interests will
               be affected by the SBA's decision;
        (c)    A statement of when and how the petitioner received notice of the
               decision;
        (d)    A statement of all disputed issues of material fact. If there are
               none, the petition must so indicate.
        (e)    A concise statement of the facts which the petitioner believes
               entitle the petitioner to the relief sought as well as the
               statutes and rules which support the petitioner's claim for
               relief;
        (f)    A statement of the relief sought, stating precisely the action
               the petitioner wants the SBA to take;
        (g)    Any other information which the petitioner contends is material.

Upon receipt of a petition, the SBA shall review the petition for compliance
with the SBA's requirements and timeliness. The petition will be denied for lack
of compliance and for failure to timely file. If the SBA elects to request that
an administrative law judge of the Division of Administrative hearings be
assigned to conduct the hearing, the SBA will forward the petition and all
materials filed with the SBA to the division and shall notify the petitioner or
petitioners of its action. Once This decision becomes final, the petitioner's
rights to appeal will be governed by Section 120.68, Florida Statutes.

                                       23
<PAGE>

        Approved by:

Florida Hurricane Catastrophe Fund
By.  State Board of Administration

By: /s/   Linda Lettera                                  10/19/01
   -----------------------------------------      ----------------------------
                      Tom Herndon                          Date

Approved as to legality:

/s/   Thomas A. Beenck   for                             10/19/01
-------------------------------------------       ----------------------------
Horace Schow II                                            Date
General Counsel
FL Bar ID#0251471

Federated National Insurance Company
                      Company

By:/s/  Richard A. Widdicombe, President                 05/24/01
   -----------------------------------------      ----------------------------
                      Name/Title                           Date

<PAGE>

                                   Schedule A

                                     to the

                             REIMBURSEMENT CONTRACT
                             Effective: June 1, 2001
                                  ("Agreement")

                                     between

                      FEDERATED NATIONAL INSURANCE COMPANY
                               Ft. Lauderdale, FL
                                 (the "Company")

                                       and

        THE STATE BOARD OF ADMINISTRATION OF THE STATE OF FLORIDA ("SBA")
            WHICH ADMINISTERS THE FLORIDA HURRICANE CATASTROPHE FUND
                                    ("FHCF")

Contract Year

This Schedule A shall be applicable for the Contract Year beginning 12:01 a.m.,
Eastern Daylight Time, June 1, 2001, to 12:01 a.m., Eastern Daylight Time, June
1, 2002.

Reimbursement Percentage

For purposes of determining reimbursement (if any) due the Company under this
Contract and in accordance with the Statute, the Company has the option to elect
a 45% or 75% or 90% Reimbursement Percentage under this Contract. The
Reimbursement Percentage elected by the Company for the Contract Year beginning
12:01 a.m., Eastern Daylight Time, June 1, 2000, to 12:01 a.m., Easter Daylight
Time, June 1, 2001, was as follows: 90%

The Company hereby elects the following Reimbursement Percentage for the
Contract Year beginning 12:01 a.m., Easter Daylight Time, June 1, 2001, to 12:01
a.m., Eastern Daylight Time, June 1, 2002, (the individual executing this
Contract on behalf of the Company shall place his or her initials in the box to
the left of the percentage elected for the Company):

      [ ] 45%     OR    [ ] 75%  OR     [X] 90%

Note that the choice indicated immediately above is for the 2001-2002 Contract
Year.

<PAGE>

If the Company is a member of a group, all members of the group must elect the
same Reimbursement Percentage. If the Company is a member of a group, the
individual executing this Contract on behalf of the Company, by placing his or
her initials in the box below, affirms that the Company has elected the same
Reimbursement Percentage as all members of the group:

                                     [ RW ]

The Company shall not be permitted to change its Reimbursement Percentage during
the Contract Year. The Company shall, however, be permitted to change its
Reimbursement Percentage election at the beginning of a new Contract Year,
except that:

            (1)   The Company shall not be permitted to reduce its Reimbursement
                  Percentage if a Covered Event required the issuance of revenue
                  bonds, until the bonds have been fully repaid;

            (2)   If the Company is a member of a group, all members of the
                  group must continue to elect the same Reimbursement
                  Percentage;

            (3)   If the Company is a joint underwriting association or an
                  assigned risk plan under Section 627.351, Florida Statutes,
                  the Company must elect the 90% Reimbursement Percentage.

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