Document:

Exhibit 10.5

                             FARMERS GROUP, INC.

                         EXECUTIVE INCENTIVE PROGRAM

                                                                December 1999

<PAGE>

                           TABLE OF CONTENTS

Purpose...................................................................  1

Administration............................................................  1

Eligibility and Participation.............................................  1

Determination and Allocation of Awards....................................  1

Rights of Participants and Beneficiaries..................................  3

Termination of Employment.................................................  4

Effective Date, Amendment and Termination of Program......................  5

Special Rule..............................................................  5

Governing Law.............................................................  5

<PAGE>   1

Purpose

     The Farmers Group, Inc. Executive Incentive Program (the "Program") is
designed to award and compensate key executives who contribute substantially
to the financial success of Farmers Group, Inc., its subsidiaries and its
affiliates (the "Corporation"), and to focus the efforts of such key executives
on the continued success of the Corporation.

Administration

     (a) The Program shall be administered by the Board of Directors of the
Corporation (the "Board") and by the Compensation Committee of the Board (the
"Compensation Committee"), as hereinbelow described.  The Board shall have
discretion to select key executives who are to be eligible to receive awards
under the Program with respect to each fiscal year, and to determine the amount
of such awards, subject to the terms and conditions set forth in the Program
and such other terms and conditions as are not inconsistent with the purposes
and provisions of the Program.

     (b) The Board may establish such rules and regulations as deemed
appropriate for proper administration of the Program and may modify or revoke
such rules and regulations from time to time.  In addition, the Board may
make such determinations and take such action in connection with the Program
as are necessary.

     (c) All determinations and interpretations of the Board shall be final
and binding, except that all awards are subject to final approval by the Zurich
Financial Services Chairman.

Eligibility and Participation

     Eligibility and participation in the Program are restricted to the Chief
Executive Officer of the Corporation and such Home Office Officers and Field
Executives of the Corporation whom the Board, in its discretion, selects to
receive awards under the Program.

Determination and Allocation of Awards

     (a) Awards under the Program shall be made from a pool (the "Pool"), which
Pool for a given year shall consist of twenty percent (20%) of Growth in
Earnings (as hereinbelow defined) for that year, less a factor for a decrease
in Exchange Surplus as also defined below.

     (b) Growth in Earnings for a particular year shall mean the increase in
the U.S. PGAAP net income of the Corporation over the U.S. PGAAP net income
of the Corporation for the immediately preceding year.  For purposes of
determining the amount of the Pool, U.S. PGAAP net income shall be adjusted
as follows:

          (1) Awards paid or accrued under this Program shall be excluded;

          (2) Capital gains or losses attributable to sales of real estate or
              equipment used solely in the Corporation's insurance business
              shall be excluded to the extent that they individually or
              collectively exceed two percent (2%) of U.S. PGAAP net income
              in any one calendar quarter;

          (3) In the event that the statutory rates used in determining Federal
              Income Tax and/or California Franchise Tax are increased or
              decreased in a particular year from the rates applicable during
              the immediately preceding year, or if the method of determining
              and reporting said taxes changes due to a change in accounting
              method required by a recognized rule-making body, said taxes
              applicable to the preceding year shall be recalculated on an
              equivalent basis in determining U.S. PGAAP net income for such
              preceding year;

<PAGE>   2

          (4) Capital gains or losses arising from the sale or other
              disposition of any joint venture investment of FIG Holding
              Company entered into before January 1, 1974 shall be excluded;

          (5) Any expense or income attributable to merger or acquisition
              activities shall be excluded; and

          (6) Other extraordinary items as approved by the Compensation
              Committee.

     (c) Growth in Earnings for each year shall be determined by the Chief
Financial Officer for the Corporation and verified by the independent certified
public accountants of the Corporation.  The Pool shall be an accrued liability
in the consolidated financial statements of the Corporation and the amount
accrued in the Pool shall not be placed in a separate account or in trust or
otherwise be segregated from the general funds of the Corporation.

     (d) A three-year weighted average Surplus Ratio shall be calculated and
compared to the Target Surplus Ratio of 33 1/3% (premium written to surplus of
3 to 1).  If the three-year weighted average Surplus Ratio is at or greater
than 33 1/3%, no reduction in the Bonus Pool will be made.  If the three-year
weighted average Surplus Ratio is less than 33 1/3%, the Bonus Pool will be
reduced in the following manner.  A Maximum Reduction of 20% of the Bonus Pool
will be made when the Exchange Surplus Ratio is 28.57% (premium written to
surplus of 3.5 to 1) or lower.  The Maximum Reduction will be reduced
proportionately based on where the three-year weighted average Surplus Ratio
falls between 33 1/3% and 28.57%.

     (e) The Award to the Chief Executive Officer of the Corporation under the
Program for each year shall not exceed seventy-five percent (75%) of the base
salary paid to the Chief Executive Officer during the year to which the award
relates, except as outlined in section 4(h) below.  The Award amount for the
Chief Executive Officer shall be determined by the Zurich Financial Services
Chairman.

     (f) The Chief Executive Officer shall evaluate the performance and
contribution to the successful operation of the Corporation of each Officer
and Field Executive of the Corporation and shall recommend to the Compensation
Committee each year, prior to the February meeting of the Board, the percentage
of the Pool for the preceding year which he believes should be awarded to each
such individual.  Such recommendations shall be in an amount not to exceed one
hundred percent (100%) of the Pool, except as outlined in section 4(h) below,
less the percentage of the Pool awarded to the Chief Executive Officer.  Awards
for Level I executives shall not exceed 75% of salary, awards to Level II
executives shall not exceed 60% of salary, awards for Level III executives
shall not exceed 40% of salary, except as outlined in section 4(h) below.
Membership in each level shall be determined by the Chief Executive Officer at
the outset of the performance year.  Generally, Level I executives are direct
reports to the CEO, Level II executives are Home Office Officers and Level III
executives are Field Executives, or more junior executives.

     (g) Each year, prior to the February meeting of the Board, the
Compensation Committee shall receive the recommendations of the Chief
Executive Officer and shall confer with him concerning such recommendations.
Such recommendations will be based on estimated prior year end and financial
results. The Compensation Committee shall then recommend to the Board at the
February meeting of the Board the individuals to receive awards under the
Program and the percentage of the Pool which should be awarded to each such
individual.  The Board shall, in its absolute discretion, select the
individuals to whom awards shall be made under the Program and determine the
percentage of the Pool which shall be awarded to such individuals.  No award
made under the Program shall exceed the maximum award applicable to the level
of the incumbent either 75%, 60% or 40% of the base salary paid to an
individual during the year to which the award relates, except as outlined in
section 4(h) below.  Final confirmation by the Board based on actual prior
year end results will occur at the May meeting of the Board.

     (h) Payment of EIP awards is contingent upon performance of the
Corporation as it relates to the performance of a peer group of companies.
Depending upon which quartile performance falls, individual awards may be
increased/decreased based on individual performance as shown below:

<PAGE>   3

<TABLE>
<CAPTION>

          Peer Group Standing     Award Adjustment
          -------------------     ----------------
          <S>                     <C>
          4th Quartile            +33 1/3%
          3rd Quartile            No Adjustment
          2nd Quartile            -33 1/3%
          1st Quartile            -66 2/3%

</TABLE>

     Should the results in the Peer Group Comparison differ between the
Property & Casualty operations and the Life Company, the proportion of
each business' net income to total net income will be used to modify the above
award adjustments.

     Should the Award Pool be insufficient to fund the approved awards in the
4th quartile, additional funds will be added and expensed.  In no event will
the amount of the additional funds be greater than one-third of the original
Pool for the year.  A comparative analysis is to be provided to the
Compensation Committee each year to substantiate the current year's awards.

     (i) Payments of awards under the Program shall be within the absolute
discretion of the Board subject to the final approval of the Zurich Financial
Services Chairman.  The Board shall be under no obligation to award all of the
Pool or any portion thereof.

     (j) The Pool shall not accumulate from year to year, and any amount in
the Pool not distributed pursuant to the Program shall revert to net income
of this Corporation.

     (k) Payment of awards under the Program shall be made no later than
April 15 after the close of the calendar year to which the award relates.

     (l) The Corporation shall have the right to deduct any sums required to
be withheld by federal, state or other applicable laws from payments of awards
under the Program.

Rights of Participants and Beneficiaries

     (a) No individual shall have any vested or protectable interest in, legal
right to, or shall otherwise be entitled to, any amount under the Program until
such time as the Board by resolution approves an award to such individual.

     Nothing in the Program shall be deemed to give any individual, or his or
her legal representative or assigns, or any other person or entity claiming
under or through him, any contract or right to participate in the benefits of
the Program.

     (b) The Corporation shall pay all amounts payable hereunder only to the
individual or beneficiaries entitled thereto pursuant to this Program. The
Corporation shall not be liable for the debts, contracts, or engagements of
any individual or his or her beneficiaries, and rights to payments under this
Program may not be taken in execution by attachment or garnishment, or by any
other legal or equitable proceeding while in the hands of the Corporation; nor
shall any individual or his or her beneficiaries have any right to assign,
pledge, or hypothecate any benefits or payments hereunder.

     (c) Participation in the Program shall not be construed as constituting a
commitment, guarantee, agreement or understanding of any kind that the
Corporation shall continue to employ any individual.

<PAGE>   4

     (d) Any individual eligible to participate in the Program may designate a
beneficiary to receive payments of awards under the Program in the case of
such individual's death.

     (e) Commencing with awards to be made for services rendered, on or after
January 1, 1984 and for which awards are to be paid after January 1, 1985, any
individual eligible to participate in the Program may request that payment of
all or a portion of any award be deferred until the occurrence of retirement,
death or permanent disability. Such request must be made to the Compensation
Committee in writing on or before December 31 of the performance year which is
the year prior to the date the awards are determined and paid (i.e., a request
must be made on or before December 31, 1988, relating to any award under the
Program which might be determined and paid in 1989).  Such request shall
specify that either 25%, 50%, 75% or 100% of awards which might be made are to
be deferred and shall specify whether such request relates only to awards
relating to services to be performed during the next calendar year or to all
awards which might be made under the Program in the second succeeding and all
future years.  Once such a request for deferral is made, it may not be
withdrawn by the participant except with respect to any awards for service to
be performed in calendar years following the year in which the date such
request for withdrawal is made.  Any such request for withdrawal must be made
in writing to the Compensation Committee.  If the Board selects the individual
for an award and in its sole discretion consents to the request for deferred
payment, to any amount so deferred there will be interest added to the deferred
amount for each year or partial year the payment of the award is deferred.
The participant in this Deferred Payment Plan may elect at the time of
initially requesting deferral to commence payment of benefits within thirty
(30) days of retirement, death or the date it is established to the
satisfaction of the Compensation Committee that the participant has a permanent
disability, either in a single payment or in five (5) or ten (10) equal annual
payments to which will be added an interest equivalent from the first payment
date computed as provided above.

     On single payments made within 30 days of retirement, death or disability,
the interest rate earned between the date of retirement, death or disability
until the date of disbursement will be based on the average yield of the
institutional money market fund in which the Corporation invests.

     In the event of extreme hardship, any participant may make a written
request to the Compensation Committee for immediate payment.  For this purpose,
an extreme hardship is an unanticipated emergency caused by an event beyond
the control of the participant that would result in severe financial hardship
if early withdrawal were not permitted.  The amount to be withdrawn must be
limited to the amount necessary to meet the emergency.  Amounts deferred under
this Section 5 (e) will be held as part of the general assets of the
Corporation and shall not be set aside or funded in any manner; provided that
deferred amounts and any earnings thereon may be set aside in one or more
non-qualified grantor trusts so long as such arrangements do not result in
benefits hereunder being considered funded for federal tax purposes.

     Notwithstanding any other provision hereof, to the extent deferred amounts
are funded through one or more grantor trusts, then earnings or appreciation
thereon shall be determined solely by reference to the experience of assets in
such trust or trusts.  This Corporation shall direct the trustee or trustees of
such trust or trusts, as the case may be, as to the investment of assets in
such trust or trusts and the Corporation may, in advising the trustee, offer,
in any manner and to any extent it deems appropriate, Participants the
opportunity to advise the Corporation as to how assets allocated to their
respective accounts are to be invested.  In no event may Participants
communicate directly with any trustee in regard to asset investment.
Participants shall in no event have rights greater than those of general
creditors of the Corporation with respect to any amounts held in trust.  Any
amounts deferred hereunder as well as any earnings are not subject to
anticipation, alienation or hypothecation by any Participant.

Termination of Employment

     (a) In the event of death, disability or retirement during the year to
which the award relates, a pro rata award shall be paid to any individual who
would have otherwise received an award under the Program.  In the event of
disability or retirement, such award shall be paid to the individual.  In the
event of death, such award shall be paid to the individual's estate or legal
representative, as determined by the Compensation Committee or, in the event
the individual has designated a beneficiary to receive payments of awards
under the Program in the case of such individual's death, to such beneficiary.

<PAGE>   5

     (b) In the event of termination of employment for any other reason during
the year to which the award relates, such individual's eligibility to receive
any award for such year shall be terminated, although the Chief Executive
Officer may, at his discretion, recommend to the Compensation Committee that
a pro rata award be made.

     (c) In the event of termination of a participant's employment in the
Deferred Payment Plan for any reason other than retirement, permanent
disability or death, payment of all deferred amounts in the Deferred Payment
Plan together with the appropriate interest equivalent will be made in a single
payment within 30 days after the employment termination date.  From the date of
termination until distribution, Deferred amounts will earn an interest rate
based on the average yield of the institutional money market fund in which the
Corporation invests.

Effective Date, Amendment and Termination of Program

     The amendments to the Program adopted by the Board of Directors on August
5, 1983 shall be effective for the year ending December 31, 1983.  The
amendments to the Program adopted by the Board of Directors in November 1987
and in February 1988 shall be effective for the year ending December 31, 1987
and subsequent years. The amendments to the Program adopted in November 1988
shall be effective for the year ending in December 1988 and subsequent years.
The amendments to the Program adopted in February 1990 shall be effective for
the year ending in December 1990 and subsequent years.  The amendments to the
Program adopted in May and November 1993 shall be effective for the year ending
in December 1993 and subsequent years.  The amendments to the Program adopted
in May and August 1997 shall be effective for the year ending in December 1997
and subsequent years.  The amendments to the Program adopted in February 1999
shall be effective for the year ending December 31, 1998 and subsequent years.
The Program may be amended or terminated at any time by the Board.  Such
amendment or termination shall not adversely affect or alter any right or
obligation with respect to any award previously made hereunder.

Special Rule

     Benefits under the Program, whether paid currently or deferred under
Section 5, constitute no more than an unsecured promise by the Corporation to
provide said benefits and no participant or beneficiary shall have rights
greater than those of a general creditor of the Corporation in either the
general assets of the Corporation or the assets of any trust established under
Section 7 hereof in connection with such benefits.

Governing Law

     This Program shall be governed by the laws of the State of California.Exhibit 10.9

               THE ZURICH FINANCIAL SERVICES GROUP
                LONG TERM PERFORMANCE SHARE PLAN
                     FOR SELECTED EXECUTIVES

   As adopted by resolution of the Board of Directors of Zurich Financial
                   Services on September 2, 1998.

<PAGE>

                           CONTENTS

Clause                                                                    Page

1.  PURPOSE...............................................................  1

2.  ESTABLISHMENT OF SUB-PLANS............................................  1

3.  ELIGIBILITY...........................................................  1

4.  PERFORMANCE TERMS.....................................................  1

5.  TERMINATION OF EMPLOYMENT.............................................  2

6.  TRANSFERS AND PROMOTIONS..............................................  3

7.  GRANT OF AWARDS.......................................................  3

8.  CHANGE OF CONTROL AND LIQUIDATION.....................................  4

9.  ADJUSTMENT OF AWARD...................................................  4

10. OVERALL LIMITS........................................................  4

11. ADMINISTRATION........................................................  4

12. AMENDMENT.............................................................  4

13. GENERAL...............................................................  5

APPENDIX 1................................................................  6

APPENDIX 2................................................................  8

APPENDIX 3................................................................  9

DEFINITIONS............................................................... 11

<PAGE>   1

                 RULES OF THE ZURICH FINANCIAL SERVICES GROUP
                      LONG TERM PERFORMANCE SHARE PLAN
                          FOR SELECTED EXECUTIVES

PURPOSE

1. The Zurich Financial Services ("Zurich") Group Long Term Performance
Share Plan for Selected Executives is a plan for encouraging organizational
     performance with the purpose of:

(a) strengthening the focus of key executives of Zurich Group on
          planning, developing, leading and controlling the Group's
          long-term business strategies;
     (b)  focusing management's attention on shareholders, analysts and
          potential investor's interests;
     (c)  sharing entrepreneurial reward and risk;
     (d)  strengthening the alignment between executive rewards and the
          creation of shareholder value; and
     (e)  attracting, motivating and retaining world-class executive talent.

     The overall objective of the plan is intended to focus the attention of
     the key executive group on the main financial issues essential to
     achieving long-term business success and the creation of shareholder
     value.

     The Plan is the framework for long term performance awards at the Group
     and Business Unit levels and focuses on the underlying drivers of long
     term shareholder value.

     The Shares over which Awards are granted under the Plan and any Sub-Plans
     will be provided through the Central Share Vehicle which may subscribe
     Shares from Allied Zurich and Zurich Allied or purchase such Shares on
     any relevant stock exchange where the Shares are traded.

ESTABLISHMENT OF SUB-PLANS

2.   The Committee of a Business Unit may establish with the prior approval of
     the Group Chief Executive Officer a Sub-Plan to the Plan for selected
     executives of that Business Unit provided that:

     (a)  the terms of any such Sub-Plan are substantially based on the basic
          principles of the Plan modified as appropriate to take account of
          tax, securities and trust laws and exchange control requirements and
          local practices in the countries in which Executives are resident;
          and

     (b)  the number of new Shares that may be issued (including to the
          Central Share Vehicle) pursuant to the Sub-Plan shall count against
          the limits in Appendix 1.

ELIGIBILITY

3.   Positions eligible for participation in the Plan will be agreed annually
     by the Committee. Participants for each Performance Period will be newly
     defined each year and accordingly an individual has no contractual
     entitlement to ongoing participation in the Plan or to be granted an
     Award.

PERFORMANCE TERMS

4.1  The Committee will determine for each Performance Period, and a
     Participant shall be notified of, the terms and conditions on which an
     Award will be made. The setting of appropriate performance

<PAGE>   2

     objectives is critical to the success of the Plan. The Group Chief
     Executive Officer will therefore establish guidelines to assure
     consistency in the application of performance criteria and goals in the
     Group.

4.2 The Committee will also set for each Participant a target number of
     Shares to be awarded if target performance is achieved.  In setting the
     target number, consideration shall be given to the Participant's position
     and level of responsibility, to local market conditions and the extent
     of the Participant's participation in other long term incentive programs
     of the Group.

4.3  The actual number of Shares over which Awards are granted to the
     Participants after the completion of the Performance Period will depend
     on the extent to which the performance conditions are met over the
     Performance Period. At the end of a performance period, the Committee
     will assess the performance achieved during that period and will
     calculate the number of Shares which are awarded. No Award shall be made
     unless the minimum performance level is satisfied.

4.4  The maximum number of Shares over which an Award may be granted is 200%
     of the target Shares.

4.5  The Award may be increased or reduced by 25% if the Committee considers
     that special or unusual circumstances have occurred which have affected
     the performance achievement.  If the Award is in respect of Share Baskets
     the number of Allied Zurich Shares and Zurich Allied Shares shall be
     adjusted proportionately.

4.6  Unless the Committee decides otherwise, the average of the Market Values
     over the first month of the Performance Period of the maximum number of
     Shares over which a Participant may be granted an Award shall not exceed
     an amount equal to 100% of his annual salary at the start of the
     Performance Period.

4.7  Until the Award Date, the Participant shall have no dividend, voting or
     other rights commonly enjoyed by a beneficial owner of shares.

TERMINATION OF EMPLOYMENT

5.1  If the Participant ceases to be an employee of a member of the Group at
     any time before the end of the Performance Period for any reason other
     than one stated in 5.2 and 5.3 below, his participation in the Plan shall
     cease and he shall not receive an Award for that Performance Period.

5.2  In the event that the Participant ceases to be an employee of the Group
     before the end of the Performance Period by reason of:

     (a)  retirement at or after his normal retirement age;

     (b)  injury, disability or ill-health (as agreed by the Committee);

     (c)  early retirement (as agreed by the Committee); or

     (d)  any other reason than one stated in this rule 5.2 and rule 5.3,
          which the Committee so decides in its absolute discretion,
     the Participant shall be granted an Award for that Performance Period
     after the end of the Performance Period subject to rule 7 and the number
     of Shares in the Award shall be calculated according to the performance
     achieved up to the end of the Performance Period but pro rated
     according to the length of the Participant's service during the relevant
     Performance Period.

5.3  In the event that the Participant ceases to be an employee of the Group
     before the end of the Performance Period by reason of death he shall be
     granted an Award and the Shares in the Award shall be based on an
     assessment by the Committee of the performance achieved up to the date of
     death and

<PAGE>   3

     the Shares shall be transferred to his personal representatives
     or designated beneficiary or any other person who has power over his
     estate within the period of six months from such date.

TRANSFERS AND PROMOTIONS

6.1  If the Participant is transferred to a position in the Group which is
     ineligible for participation in the Plan or Sub-Plan at a time when he
     has more than 24 months of participation in any long term incentive
     arrangement in the Group, he shall be granted an Award for each
     Performance Period in which he was participating at the time of the
     transfer. The Award will be pro rated.

6.2  If a Participant is promoted and/or transferred during the Performance
     Period from a position in a Business Unit which is eligible for
     participation in the Plan or Sub-Plan to another position which is also
     eligible to participate in the Plan or Sub-Plan, he may at the discretion
     of the Committees of the relevant Business Units participate in both
     plans and be granted Awards under the plans for numbers of Shares which
     are pro rated according to that proportion of the relevant Performance
     Periods during which he was employed in the eligible positions.

6.3  If an employee is hired, promoted or transferred into a position in which
     he becomes eligible to participate in the Plan or Sub-Plan and this
     occurs during the first seven months of a Performance Period he may
     participate in the plan and be eligible for an Award of Shares which is
     pro rated according to the length of his anticipated service during the
     Performance Period and if this occurs during the last five months of a
     Performance Period he may participate and be granted an Award on a like
     basis but only if the Committee so decides.

GRANT OF AWARDS

7.1  Save as otherwise permitted in these rules an Award shall be made to a
     Participant who has remained an employee of the Group throughout the
     relevant Performance Period within the period of:

     (a)  six weeks commencing on the day immediately following the day on
          which the Company or, in the case of a Sub-Plan, the Business Unit
          announces its results for the last preceding financial year, half
          year or other period immediately following the Performance Period
          for which an Award is due to the Participant; or,

     (b)  any day on which the Committee resolves that exceptional
          circumstances exist which justify the grant of Awards,

     provided that the granting of Awards shall comply with the London Stock
     Exchange's Model Code for Securities Transactions by Directors of Listed
     Companies, any equivalent regulations or rules imposed under Swiss law or
     by the Swiss Exchange, which are applicable to the Company and which
     govern dealings in Shares.

7.2  On the grant of an Award the Participant shall as soon as reasonably
     practicable be transferred such proportion of Restricted Shares and
     Unrestricted Shares as shall have been determined by the Committee at the
     beginning of the Performance Period.

7.3  The Committee shall have the discretion to determine that Awards may be
     deferred and or satisfied in the form of a cash payment or a pension
     contribution or in some other manner as is considered appropriate to take
     account of local tax, legal, exchange control or other regulatory
     matters.

7.4  The Committee shall make such arrangements, as it considers necessary to
     ensure that the Restricted Shares remain restricted from dealings for
     the period ending on the third anniversary of the Award Date.

7.5  Any liability of a Participant to taxation and/or social security
     contributions in respect of an Award shall be for the account of the
     relevant Participant.  In a case where any member of the Group is

<PAGE>   4

     required to withhold or account for any tax and/or social security
     contributions for which the Participant is liable by virtue of the
     receipt of Shares under an Award, any transfer of Shares to the
     Participant shall be conditional on the Participant entering into
     arrangements acceptable to the Committee to secure that such payment
     is made (whether by authorizing the sale of some of the Unrestricted
     Shares or the payment to the relevant Group member) of an amount
     required to discharge the tax or social security liability.

CHANGE OF CONTROL AND LIQUIDATION

8.   Appendix 1 shall apply in the event of a change of control and
     liquidation or other similar event affecting Allied Zurich or
     Zurich Allied.

ADJUSTMENT OF AWARD

9.   Appendix 2 shall apply in the event of any variation of the share capital
     of Zurich Allied or Allied Zurich.

OVERALL LIMITS

10.  Appendix 3 shall apply to limit the number of new Shares that may be
     issued for the purposes of the Plan

ADMINISTRATION

11.1 The decision of the Committee shall be final and binding in all matters
     relating to the Plan and it may at any time discontinue participation in
     the Plan and the grant of further Awards.

11.2 Benefits under the Plan shall not be considered pensionable income nor be
     taken into account in determining any benefits.

     The rights and obligations of any individual under the terms of his
     office or employment shall not be affected by his participation in the
     Plan, and each Participant shall by his participation waive all and any
     rights to compensation or damages in consequence of the termination of
     his office or employment for any reason whatsoever insofar as those
     rights arise or may arise from his ceasing to have rights under the Plan
     as a result of such termination or from the loss or diminution in value
     of such rights or entitlements.  Participation in this Plan shall not
     impose or be deemed to impose any obligations on the Company or any
     member of the Group to continue to employ him.

11.3 All Share certificates and other documents of title relating to the
     Shares including communications relating to the Plan shall be sent at
     the Participant's risk.

11.4 Any member of the Group or relevant Business Unit which employs
     Participants who participate in the Plan shall provide such monies as
     the Central Share Vehicle determines to provide Shares to satisfy all
     Awards granted to such Executives.

AMENDMENT

12.  The Board may amend any of the provisions of the Plan in any way it
     thinks fit PROVIDED THAT:

     (a)  no amendment to the advantage of Executives or Participants may be
          made without the prior approval of an ordinary resolution of Allied
          Zurich in general meeting except in the case of minor amendments to
          benefit the administration of the Plan, to take account of a change
          in legislation or developments in the law affecting the Plan or to
          obtain or maintain favorable tax, exchange control or regulatory
          treatment for Executives or Participants or any member of the Group;
          and

<PAGE>   5

     (b)  no amendment shall have effect until any approvals which are
          necessary in accordance with clause 10 of the Governing Agreement
          have been obtained.

      AND FURTHER PROVIDED THAT the Board shall be entitled to alter the
     performance targets applying to Awards from one Performance Period to
     another.

GENERAL

13.1 The Board reserves the right to terminate this Plan at any time.

13.2 No Performance Period may commence after August 31, 2008.

13.4 These rules shall be governed by and construed in accordance with the
     laws of Switzerland.

<PAGE>   6

                               APPENDIX 1

                                (Rule 8)

CHANGE OF CONTROL AND LIQUIDATION

Award

Awards granted following any of the events mentioned in this Appendix 1 shall
be determined for each Performance Period where the Awards have not been
awarded to the Participants at such a date on the following basis:

     (a)  using actual performance for completed Financial Years, assuming
          the performance is known at the date the Award is made and

     (b)  using target performance for those Financial Years where the
          performance is not known at the date the Award is made.

The Awards will be pro rated according to the time completed during the
performance period and delivered in the form of Unrestricted Shares.

For each Performance Period where the Shares are already awarded, the sales
restriction shall be removed (subject to such removal being permissible under
any applicable law).

Offers for Allied Zurich and Zurich Allied

1.   If during a Performance Period, or before an Award is made, any person
     (either alone or together with any person acting in concert with him)
     obtains Control of a Qualifying Company as a result of making;

     (a)  Joint Offers; or

     (b)  a general offer to acquire the whole of the issued share capital of
          one of the Qualifying Companies (other than those shares which are
          already owned by him and/or any person acting in concert with him)

     Awards shall be granted in respect of Shares in the relevant Qualifying
     Company (subject to such grant being permissible under any applicable
     law) as soon as reasonably practicable thereafter and in any event not
     later than 3 months from the date such Control is obtained.

Compulsory Acquisition

2.   If during a Performance Period, or before an Award is made, whether in
     connection with Joint Offers or a general offer within paragraph 1 any
     person becomes bound or entitled to acquire Allied Zurich Shares under
     sections 428 to 430F of the Companies Act 1985, (or there occurs in
     relation to Zurich Allied an event entitling an offer or to acquire
     compulsorily Zurich Allied Shares held by minority shareholders pursuant
     to Art. 33 of the Swiss Stock Exchange Act). Awards in respect of Shares
     in the relevant Qualifying Company to which such acquisition provisions
     relate shall be granted (subject to such grant being permissible under
     any applicable law) as soon as reasonably practicable after, and not
     later than the period of 30 days from, the date on which such person
     becomes so bound or entitled.

Scheme of Arrangement

3.   If during a Performance Period, or before an Award is made, a court
     shall direct that a meeting of the holders of Allied Zurich Shares be
     convened pursuant to section 425 of the Companies Act 1985 for the
     purposes of considering a scheme of arrangement involving the
     reconstruction of Allied Zurich or its amalgamation with any other
     company or companies Awards in respect of Allied Zurich Shares shall

<PAGE>   7

     be granted (subject to such grant being permissible under any applicable
     law), conditionally on the scheme of arrangement being approved or
     sanctioned by the court (the relevant condition), between the date of
     the court's direction and twelve noon on the day immediately preceding
     the date for which the shareholders' meeting is convened.  If the
     relevant condition is not satisfied, the Award shall not be granted and
     participation in the relevant Performance Period shall continue.

      PROVIDED THAT Awards shall not unless the Committee (in the meaning of
     the definition (a)) so decides be granted under this rule if the purpose
     and effect of the scheme of arrangement is to create a new holding
     company for Allied Zurich, such company having substantially the same
     shareholders and proportionate shareholdings as those of Allied Zurich
     immediately prior to the scheme of arrangement.

Winding up

4.   If during a Performance Period, or before an Award is made, notice is
     duly given of a resolution for the voluntary winding up of a Qualifying
     Company, Awards may be granted in respect of Shares in the relevant
     Qualifying Company (subject to such grant being permissible under any
     applicable law) within the period of two months from the date of the
     resolution.

<PAGE>   8

                                  APPENDIX 2

                                   (Rule 9)

ADJUSTMENT OF AWARD

In the event of any of the following:

     (a)  the issue of any shares of whatever class or any other securities
          of Allied Zurich or Zurich Allied (as the case may be) to the
          Central Share Vehicle by way of capitalization of reserves or
          profits (but not by way of rights);

     (b)  the sub-division or consolidation of the ordinary share capital of
          Allied Zurich or Zurich Allied (as the case may be); or

     (c)  a demerger, dividend in specie, super dividend or other transaction
          affecting the Group which in the Committee's (in the meaning of
          definition (a)) opinion may affect the current or future value of
          Awards,

     the number of Shares over which an Award may be granted to a Participant
     shall be adjusted to such extent and in such manner as the Committee (in
     the meaning of definition (a)) thinks fit.

2.   Any adjustments to the number of Shares made pursuant to this Appendix 2
     shall be notified to the relevant Participants.

<PAGE>   9

                                APPENDIX 3

                                (Rule 10)

OVERALL LIMITS

1.   To the extent that Awards shall or may be satisfied out of a new issue
     of Shares subscribed by the Central Share Vehicle for the purpose of
     satisfying Awards under the Plan, no such Shares shall be so issued and
     no Award shall be granted if the result of that issue would be that:

     (a)  the aggregate number of Shares that could be issued in relation to
          that Award and any other Awards granted at the same time, when
          added to the number of Shares that:

          (i)   have been, or could be, issued to the Central Share Vehicle
                for the purpose of satisfying subsisting Awards granted during
                the preceding ten years under the Plan;

          (ii)  have been, or could be, issued to the Central Share Vehicle
                for the purpose of the exercise of any share option granted
                during the preceding ten years under any employee share option
                scheme adopted by the Company; and

          (iii) have been issued during the preceding ten years under any
                profit sharing or other employee share incentive scheme (not
                being a share option scheme) adopted by the Company,

     would exceed 10 percent of the ordinary share capital of each of Allied
     Zurich and Zurich Allied for the time being in issue; or

     (b)  the aggregate number of Shares that could be issued in relation to
          that Award and any other Awards granted at the same time, when added
          to the number of Shares that:

          (i)   have been, or could be, issued to the Central Share Vehicle
                for the purpose of satisfying subsisting Awards granted during
                the preceding ten years under the Plan;

          (ii)  have been, or could be, issued on the exercise of any share
                option granted during the preceding ten years under any
                Executive Scheme,

     would exceed 5 percent of the ordinary share capital of each of Allied
     Zurich and Zurich Allied for the time being in issue; or

     (c)  the aggregate number of Shares that could be issued in relation to
          that Award and any other Awards granted at the same time, when added
          to the number of Shares that:

          (i)   have been, or could be, issued to the Central Share Vehicle
                for the purpose of satisfying subsisting Awards granted during
                the preceding five years under the Plan;

          (ii)  have been or could be issued to the Central Share Vehicle for
                the purpose of satisfying the exercise of any share option
                granted during the preceding five years under or any employee
                share option scheme adopted by the Company, and

          (iii) have been issued during the preceding five years to the
                Central Share Vehicle for the purpose of any profit sharing or
                other employee share incentive scheme (not being a share option
                scheme) adopted by the Company,

     would exceed 5 percent of the ordinary share capital of each of Allied
     Zurich and Zurich Allied for the time being in issue.

<PAGE>   10

2.   The limits set out in this Appendix 3 are subject to any limits contained
     in the Articles of Incorporation of Zurich Allied from time to time on
     the issuance of new Zurich Allied Shares to employees of Zurich Allied
     and its group companies.

3.   Whenever the Central Share Vehicle subscribes for Allied Zurich Shares it
     shall subscribe for shares in Zurich Allied in the proportion of 57
     (Zurich Allied) : 43 (Allied Zurich).

4.   Reference in this Appendix 3 to the issue of Shares shall, for the
     avoidance of doubt, mean the issue and allotment of Shares, and not the
     transfer of Shares (other then where the Central Share Vehicle transfers
     to a Participant Shares which have previously been issued allotted to the
     Central Share Vehicle).  In calculating the number of Shares that may be
     issued in relation to an Award, it shall be assumed that the maximum
     performance level is achieved and Awards are granted over the maximum
     number of Shares.

<PAGE>   11

DEFINITIONS

1.   In the rules of the Plan, unless the context otherwise requires, the
     following expressions shall have the following meanings respectively:

     Allied Zurich means Allied Zurich p.l.c.

     Allied Zurich Share means an ordinary share in the capital of Allied
     Zurich or any other share representing that share;

     Award means a right granted under the Plan to receive Shares;

     Award Date means the date on which Shares under an Award are transferred;

     Board means the Board of directors of the Company or a duly authorized
     committee thereof;

     Business Unit means a business unit of the Group;

     Central Share Vehicle means the entity which will acquire (by
     subscription or purchase) and hold both Allied Zurich Shares and shares
     in Zurich Allied for the purpose of employees' share schemes and which
     may without limitation take the form of a trust, a Stiftung or an
     administrative unit of or an account in the name of the Company or any
     Subsidiary;

     Committee means:

          (a)   in relation to this Plan, the Group Chief Executive Officer or,
                in the case of the participation and grant of Awards to the
                Group Chief Executive Officer and any member of the Company's
                Group Management Board, the Remuneration Committee of the
                Company; and

          (b)   in relation to a Sub-Plan, the Chief Executive Officer of the
                relevant Business Unit acting with the approval of the
                responsible member of the Group Management Board;

     Company means Zurich Financial Services, a company incorporated in
     Zurich, Switzerland;

     Control means in relation to a body corporate, the power of a person to
     secure:

          (a)   by means of the holding of shares or the possession of voting
                power in or in relation to that or any other body corporate;
                or

          (b)   by virtue of any powers conferred by the articles of
                association or other document regulating that or any other
                body corporate,

     that the affairs of the first-mentioned body corporate are conducted in
     accordance with the wishes of that person;

     Participant means a person selected from time to time for participation
     in the Plan or Sub-Plan by the Committee;

     Executive means an employee or executive director of any company within
     the Group who in the case of an executive director is required to work
     for substantially the whole of his time for the Group;

     Executive Scheme means any employees' share scheme (other than the Plan)
     adopted by the Company under which the individuals selected for
     participation at the discretion of the body administering that scheme
     are senior executive employees;

<PAGE>   12

     Financial Year means an accounting reference period;

     Governing Agreement means the Governing Agreement between Allied Zurich
     and Zurich Allied relating to the merger of the financial services
     business of Zurich Insurance Company and B.A.T Industries p.l.c.;

     Group means the Company and the Subsidiaries from time to time and member
     of the Group shall be construed accordingly;

     Market Value means on any day:

          (a)   in respect of an Allied Zurich Share, the middle market
                quotation of an Allied Zurich Share on the London Stock
                Exchange as derived from the Daily Official List for that
                day; and

          (b)   in respect of any Zurich Allied Share, the market price of
                a Zurich Allied Share on the Swiss Exchange for that day;

     Participant means a person who has been selected for participation in
     the Plan or a Sub-Plan (or where the context permits, the legal
     personal representatives or designated beneficiary of a deceased
     participant);

     Performance Period means a period of three consecutive Financial Years
     prior to an Award Date unless the Committee determines a longer period;

     the Plan means the Zurich Financial Services Group Long Term Performance
     Share Plan for Selected Executives as constituted by these Rules and
     amended from time to time;

     Restricted Shares means Shares the sale of which is prohibited for such
     period as the Committee determines;

     Share means an Allied Zurich Share or a Zurich Allied Share or any other
     share representing such Share including a collection of such number or
     value of Allied Zurich Shares and Zurich Allied Shares as the Committee
     shall from time to time determine (Share Basket);

     Sub-Plan means a sub-plan established under rule 3;

     Swiss Exchange means the Swiss Exchange owned and operated by the Swiss
     Stock Exchange Association;

     Unrestricted Shares means Shares the sale of which is not prohibited;

     Zurich Allied means Allied Zurich AG;

     Zurich Allied Share means any share in the capital of Zurich Allied or
     any other share representing such share.

2.   References to any statute or statutory instrument or to any part or parts
     thereof include any modification, amendment or re-enactment thereof for
     the time being in force.

3.   Words of the masculine gender shall include the feminine and vice versa
     and words in the singular shall include the plural and vice versa unless
     in either case the context otherwise requires or is otherwise stated.
     Headings shall be ignored in construing the Plan.

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