S-1

As filed with the Securities and Exchange Commission on August 3, 2005

Registration No. 333-               

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

AMERISAFE, Inc.

(Exact name of registrant as specified in its charter)

Texas
(State or other jurisdiction of
incorporation or organization) 6331
(Primary Standard Industrial
Classification Code Number) 75-2069407
(I.R.S. Employer
Identification No.)

2301 Highway 190 West

DeRidder, Louisiana 70634

(337) 463-9052

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Arthur L. Hunt

Executive Vice President and General Counsel

2301 Highway 190 West

DeRidder, Louisiana 70634

(337) 463-9052

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

James E. O’Bannon
Lisa K. Durham
Jones Day
2727 North Harwood Street
Dallas, Texas 75201
(214) 220-3939 J. Brett Pritchard
Lord, Bissell & Brook LLP
115 South LaSalle Street
Chicago, Illinois 60603
(312) 443-0700

      Approximate date of commencement of proposed sale to the public: As soon as practicable after the Registration Statement becomes effective.

      If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.     o

      If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

      If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

      If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

      If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.     o

CALCULATION OF REGISTRATION FEE

Title of Each Class of	Proposed Maximum Aggregate
Securities to be Registered	Offering Price(1)(2)	Amount of Registration Fee
Common Stock, par value $0.01 per share	$92,000,000	$10,829

(1)	Includes amount attributable to shares of common stock that may be purchased by the underwriters under an option granted by the selling shareholders to purchase additional shares at the public offering price, less the underwriting discount.
(2)	Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended.

      The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on the date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not a solicitation of an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED                     , 2005

Shares

AMERISAFE, Inc.

Common Stock

        This is the initial public offering of our common stock. We are offering                      shares of common stock.

      Prior to this offering, there has been no public market for our common stock. We currently estimate that the initial public offering price will be between $          and $           per share. See “Underwriting” for a discussion of the factors to be considered in determining the initial public offering price.

      We intend to apply to have our shares of common stock approved for listing on the Nasdaq National Market under the symbol “AMSF.”

       Investing in our common stock involves risks. See “Risk Factors” beginning on page 11 to read about factors you should consider before buying our common stock.

	Per Share	Total
Initial public offering price	$	$
Underwriting discount*	$	$
Proceeds, before expenses, to us	$	$

*  See “Underwriting” on page 100 for a description of the underwriters’ compensation.

      To the extent that the underwriters sell more than                      shares of common stock, the selling shareholders have granted the underwriters a 30-day option to purchase up to                     additional shares of common stock at the initial public offering price, less the underwriting discount, to cover over-allotments, if any. We will not receive any of the proceeds from the sale of shares by the selling shareholders.

      Neither the Securities and Exchange Commission nor any state securities commission or other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

      The underwriters expect to deliver the shares of our common stock to purchasers on or about                     , 2005.

Friedman Billings Ramsey

Keefe, Bruyette & Woods

William Blair & Company

The date of this prospectus is                     , 2005.

TABLE OF CONTENTS

	Page
Prospectus Summary		1
Risk Factors		11
Certain Important Information		25
Forward-Looking Statements		26
Use of Proceeds		27
Dividend Policy		27
Capitalization		28
Dilution		29
Selected Financial Information		30
Management’s Discussion and Analysis of Financial Condition and Results of Operations		32
Business		49
Management		78
Principal and Selling Shareholders		88
Certain Relationships and Related Transactions		92
Description of Capital Stock		93
Shares Eligible for Future Sale		98
Underwriting		100
Legal Matters		102
Experts		102
Where You Can Find More Information		102
Index to Financial Statements		F-1
Form of Restated Bylaws
Amended/Restated Registration Rights
Form of Opinion/Consent of Jones Day
Executive Agreement
Employment Agreement - C. Allen Bradley, Jr.
Employment Agreement - C. Geoffrey R. Banta
Employment Agreement - Arthur L. Hunt
Employment Agreement - Craig P. Leach
Form of 2005 Equity Incentive Plan
Form of Incentive Stock Option Award Agreement
Form of Non-Qualified Stock Option Award Agreement
Form of 2005 Non-Employee Director Restricted Stock Plan
Form of Restricted Stock Award Agreement
Form of Director and Officer Indemnification Agreement
First Casualty Excess of Loss Reinsurance Contract
Second Casualty Excess of Loss Reinsurance Contract
Workers' Compensation Catastrophe Excess of Loss Reinsurance Constract
Commutation and Release Agreement
Subsidiaries
Consent of Ernst & Young LLP
Power of Attorney
Consent of Jared A. Morris

PROSPECTUS SUMMARY

      This summary highlights information contained elsewhere in this prospectus. Before making a decision to purchase our common stock, you should read the entire prospectus carefully, including the “Risk Factors” and “Forward-Looking Statements” sections and our consolidated financial statements and the notes to those financial statements.

Who We Are

      We are a specialty provider of workers’ compensation insurance focused on small to mid-sized employers engaged in hazardous industries, principally construction, trucking, logging, agriculture, oil and gas, maritime and sawmills. Since commencing operations in 1986, we have gained significant experience underwriting the complex workers’ compensation exposures inherent in these industries. We provide coverage to employers under state and federal workers’ compensation laws. These laws prescribe wage replacement and medical care benefits that employers are obligated to provide to their employees who are injured in the course and scope of their employment.

      Employers engaged in hazardous industries pay substantially higher than average rates for workers’ compensation insurance compared to employers in other industries, as measured per payroll dollar. The higher premium rates are due to the nature of the work performed and the inherent workplace danger of our target employers. Our policyholders paid an average rate of $7.76 per $100 of payroll for workers’ compensation insurance in 2004, which was approximately three times the average for all reported occupational class codes, according to the most recent market analyses provided by the National Council on Compensation Insurance, Inc., or NCCI.

      Hazardous industry employers tend to have less frequent but more severe claims as compared to employers in other industries due to the nature of their businesses. We employ a proactive, disciplined approach in underwriting employers and providing comprehensive services intended to lessen the overall incidence and cost of workplace injuries. We provide safety services at employers’ workplaces as a vital component of our underwriting process and to promote safer workplaces. We utilize intensive claims management practices that we believe permit us to reduce the overall cost of our claims. In addition, our audit services ensure that our policyholders pay the appropriate premiums required under the terms of their policies and enable us to monitor payroll patterns or aberrations that cause underwriting, safety or fraud concerns.

      We believe the workers’ compensation market in the hazardous industries we target is underserved and competition is fragmented. We compete on the basis of coverage availability, claims management, safety services, payment terms and premium rates. We believe that the higher premiums typically paid by our policyholders, together with our disciplined underwriting and safety, claims and audit services, provide us with the opportunity to earn attractive returns on equity.

      As of March 31, 2005, we had total assets of $778.6 million and shareholders’ deficit plus redeemable preferred stock of $91.9 million. As of December 31, 2004, we had total assets of $754.2 million and shareholders’ deficit plus redeemable preferred stock of $89.1 million. For the year ended December 31, 2004, we produced total revenues of $249.0 million and net income of $10.6 million. For the three months ended March 31, 2005, we produced total revenues of $66.0 million and net income of $3.2 million.

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      We are rated “A-” (Excellent) by A.M. Best Company, which rating is the fourth highest of 15 rating levels. In June 2005, A.M. Best placed our rating under review with negative implications, citing concerns about our risk adjusted capital, credit risk associated with amounts recoverable from our reinsurers and the somewhat limited financial flexibility of our holding company, AMERISAFE. As a result of our commutation with Converium Reinsurance (North America), one of our reinsurers, discussed elsewhere in this document, and the application of the proceeds from this offering, we expect that our under review status will be returned to stable and that A.M. Best will affirm our “A-” (Excellent) rating in late 2005. A.M. Best ratings are directed toward the concerns of policyholders and insurance agencies and are not intended for the protection of investors or as a recommendation to buy, hold or sell our securities.

Our Focus

      We provide workers’ compensation insurance primarily to employers in the following targeted hazardous industries:

• Construction. Includes a broad range of operations such as highway and bridge construction, building and maintenance of pipeline and powerline networks, excavation, commercial construction, roofing, iron and steel erection, tower erection and numerous other specialized construction operations.

• Trucking. Includes a large spectrum of diverse operations including contract haulers, regional and local freight carriers, special equipment transporters and other trucking companies that conduct a variety of short- and long-haul operations.

• Logging. Includes tree harvesting operations ranging from labor intensive chainsaw felling and trimming to sophisticated mechanized operations using heavy equipment.

      We also provide workers’ compensation insurance to employers in the agriculture, oil and gas, maritime, sawmill and other hazardous industries. In addition, we offer general liability insurance coverage to our workers’ compensation policyholders in the logging industry on a select basis. As of March 31, 2005, only 1.1% of our voluntary in-force premiums were derived from general liability policies.

      Our gross premiums are derived from:

• Direct Premiums. Includes premiums from workers’ compensation and general liability insurance policies that we issue to:

• employers who seek to purchase insurance directly from us and who we voluntarily agree to insure, which we refer to as our voluntary business; and

• employers assigned to us under residual market programs implemented by some of the states in which we operate, which we refer to as our assigned risk business.

• Assumed Premiums. Includes assumed reinsurance premiums from our participation in mandatory pooling arrangements under residual market programs implemented by some of the states in which we operate.

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      Gross premiums written during the years ended December 31, 2002, 2003 and 2004 and the allocation of those premiums among the hazardous industries we target are presented in the table below.

									Percentage of
			Gross Premiums Written						Gross Premiums Written
			2002		2003		2004		2002		2003		2004
			(In thousands)
Voluntary business:
	Construction		$	61,558	$	80,693	$	101,300		33.2%		36.1%		38.3%
	Trucking			36,392		47,104		57,822		19.7%		21.1%		21.8%
	Logging			32,156		32,008		30,340		17.4%		14.3%		11.5%
	Agriculture			6,574		8,502		11,203		3.6%		3.8%		4.2%
	Oil and Gas			7,157		7,221		7,226		3.9%		3.2%		2.7%
	Maritime			5,326		6,076		5,909		2.9%		2.7%		2.2%
	Sawmills			3,760		4,009		5,566		2.0%		1.8%		2.1%
	Other			21,164		24,239		28,117		11.4%		10.8%		10.6%
		Total voluntary business		174,087		209,852		247,481		94.1%		93.9%		93.4%
Assigned risk business				7,415		9,216		9,431		4.0%		4.1%		3.6%
Assumed premiums				3,592		4,522		8,050		1.9%		2.0%		3.0%
		Total	$	185,093	$	223,590	$	264,962		100.0%		100.0%		100.0%

      Our operations are geographically diverse, with no more than 11.0% of our gross premiums written in 2004 derived from any one state. In 2004, our largest states in terms of gross premiums written were Louisiana (10.6%), Georgia (9.5%), Texas (6.5%), Illinois (6.4%), North Carolina (6.3%) and Virginia (5.2%). No other state had gross premiums written in excess of 5.0% of our total gross premiums written in 2004. As of March 31, 2005, we had approximately 6,100 voluntary business policyholders with an average annual premium per workers’ compensation policy of approximately $38,000.

Competitive Strengths

      We believe we enjoy the following competitive strengths:

• Focus on Hazardous Industries. We focus on providing workers’ compensation insurance to employers engaged in hazardous industries. We have extensive experience insuring these types of employers and have a history of profitable underwriting in these industries. As a result, we believe we are able to take advantage of opportunities for continued premium and market share growth. Our specialized knowledge of these hazardous industries helps us better serve our policyholders, which leads to greater employer loyalty and policy retention. Our policy renewal rate on voluntary business that we elected to quote for renewal was 87.9% in 2002, 91.4% in 2003 and 93.0% in 2004.

• Focus on Small to Mid-Sized Employers. We believe large insurance companies generally do not target small to mid-sized employers in hazardous industries due to their smaller premium size, type of operations, mobile workforce and extensive service needs. We provide enhanced customer services to our policyholders. For example, unlike many of our competitors, our premium payment plans enable our policyholders to better match their premium payments with their payroll costs.

• Specialized Underwriting Expertise. Our focus on employers engaged in hazardous industries has provided us with an in-depth understanding of our policyholders’ business operations and the risks of accidents inherent in those operations. We have developed industry specific risk analysis and rating tools to assist our underwriters in risk selection and pricing. Our 15

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underwriting professionals average over 11 years of experience underwriting workers’ compensation insurance, most of which has focused on hazardous industries. We are highly disciplined when quoting and binding new business, and we do not delegate underwriting authority to agencies that sell our insurance. In 2004, we offered quotes on approximately one out of every five applications submitted.

• Comprehensive Safety Services. Most of our policyholders utilize mobile workforces, often in rural areas, due to the nature of their business operations. We provide proactive safety reviews of employers’ workplaces, regardless of the location. These safety reviews are a vital component of our underwriting process and also assist our policyholders in loss prevention and encourage the safest workplaces possible by deploying experienced field safety professionals, or FSPs, to our policyholders’ worksites. Our 48 FSPs have an average of approximately 15 years of workplace safety or related industry experience. From January 1, 2004 through March 31, 2005, approximately 84% of our new voluntary business policyholders were subject to pre-quotation safety inspections where our FSPs visited the employer worksites to evaluate working conditions and existing safety procedures. On an ongoing basis, we perform periodic on-site safety surveys on all of our voluntary business policyholders.

• Proactive Claims Management. As of March 31, 2005, our employees managed more than 97% of our open claims in-house utilizing our intensive claims management practices that emphasize a personal approach and quality, cost-effective medical treatment. Our claims management staff includes 92 field case managers, or FCMs, who average approximately 17 years of experience in the workers’ compensation insurance industry, and five medical-only case managers. We currently average approximately 60 open indemnity claims per FCM, which we believe is significantly less than the industry average. We believe our claims management practices allow us to achieve a more favorable claim outcome, accelerate an employee’s return to work and more rapidly close claims, all of which ultimately lead to lower overall costs. In addition, we believe our practices lessen the likelihood of litigation. Only 10.7% of all claims reported for accident year 2003 were open as of March 31, 2005.

Strategy

      We believe the net proceeds from this offering will provide us with the additional capital necessary to increase the amount of insurance we are able to write. We will scrutinize the potential for achieving underwriting profits and adequate returns on capital as we expand our business. We plan to pursue profitable growth and favorable returns on equity using the following strategies:

• Expand in our Existing Markets. Our market share in our six largest states in terms of premiums written did not exceed 3.0% of the workers’ compensation market in any one state, according to NCCI’s most recent market analyses. Competition in our target markets is fragmented by state and employer industry focus. We believe that our specialized underwriting expertise and safety, claims and audit services position us to profitably increase our market share in our existing principal markets, with minimal increase in field service employees.

• Prudent and Opportunistic Geographic Expansion. While we actively market our insurance in 29 states and the District of Columbia, approximately 42.9% of our voluntary in-force premiums were generated in six states as of March 31, 2005. We are licensed in an additional 16 states and the U.S. Virgin Islands. Our existing licenses and rate filings will expedite our ability to write policies in these markets when we decide it is prudent to do so.

• Focus on Underwriting Profitability. We intend to maintain our underwriting discipline and profitability throughout market cycles. Our strategy is to focus on underwriting workers’ compensation insurance in hazardous industries and to maintain adequate rate levels commensurate with the risks we underwrite. We will also continue to strive for improved risk selection and pricing, as well as reduced frequency and severity of claims through

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comprehensive workplace safety reviews, rapid closing of claims through personal, direct contact with our policyholders and their employees, and effective medical cost containment measures.

• Leverage Investments in Information Technology. In October 2000, we launched our customized information system, ICAMS, that we believe significantly enhances our ability to select risk, write profitable business and cost-effectively administer our billing, claims and audit functions. Since the launch, we have introduced automated analytical tools and have continued to improve and enhance our ICAMS system and tools. We believe our technology is scalable and can be modified at minimal cost to accommodate our growth. In addition, we believe this scalability has lowered, and will continue to lower, our expense ratio as we continue to achieve premium growth over time.

• Maintain Capital Strength. We plan to manage our capital to achieve our growth and profitability goals while maintaining the current operating leverage of our insurance company subsidiaries. To accomplish this objective, we intend to maintain underwriting profitability throughout market cycles, deploy a portion of the proceeds of this offering toward the judicious growth of our business, optimize our use of reinsurance, reduce our current financial leverage, and maximize an appropriate risk adjusted return on our growing investment portfolio.

Operating History

      We commenced operations in 1986 to underwrite workers’ compensation insurance for employers engaged in the logging industry. Beginning in 1994, we expanded our customer base by insuring employers in other hazardous occupation industries.

      Beginning in 1997 and into 2000, we employed a strategy to increase revenue through rapid geographic expansion and underwriting workers’ compensation insurance for employers engaged in non-hazardous industries, such as service and retail businesses. This strategy did not produce the results anticipated, and as a result our weighted average gross accident year loss ratio for the period 1997 through 1999 was 119.3%, as compared to 82.9% for the period 1994 through 1996.

      In September 2000, we undertook several strategic initiatives to improve the profitability of our existing in-force book of business and new business. These initiatives included the following:

•  Renewed focus on core hazardous classes of business. We undertook action to non-renew policies with higher frequency, non-hazardous industries and refocused our efforts on employers engaged in the hazardous industries that we underwrite today.

•  Commenced re-underwriting our book of business. We commenced re-underwriting our core hazardous industry book of business to improve our risk selection and establish rates commensurate with the risks we were underwriting.

•  Reduced or ceased underwriting in certain states. We reduced or ceased underwriting in states where we lacked a sufficient level of premium production to effectively deploy our field resources or where we believed the rate environment did not adequately compensate us for the risks we were underwriting.

•  Increased pre-quotation inspection of employers on new business. In conjunction with our refocus on core hazardous industries, we began mandating, with limited exceptions, a pre-quotation safety inspection of employers for new business that we utilize today.

•  Took action to manage substantially all claims in-house. We made the strategic decision to take substantially all of our claims in-house and limit reliance on third-party administrators. We believe this action has reduced the number of open claims and improved our ability to close claims promptly and therefore reduce costs.

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•  Implemented incentive program. Effective January 1, 2001, we implemented an incentive program under which our underwriters and field safety professionals are compensated in part based on the achievement of certain loss ratio targets.

      We believe these actions have contributed to improved underwriting profitability, as measured on an accident year basis. An accident year loss ratio measures loss and loss adjustment expenses for insured events occurring during a particular year, regardless of when they are reported, as a percentage of the premium earned during that year. Our accident year gross loss ratio improved to 68.1% for 2004 from 121.5% for 2000, as developed through December 31, 2004.

Our Challenges

      As part of your evaluation of our business, you should consider the following challenges we face in implementing our business strategies:

• the cyclical nature of the workers’ compensation insurance industry may affect our financial performance;

• an inability to obtain reinsurance on favorable terms could negatively affect our ability to write new policies;

• an inability to recover amounts due from our reinsurers would adversely affect our financial condition;

• our premiums and loss reserves may be inadequate to cover our actual losses;

• a downgrade in our A.M. Best rating would negatively affect our business;

• changes in the economic conditions affecting the states in which we operate could negatively affect our business;

• our business is subject to extensive regulation; and

• we operate in a highly competitive industry and may lack the financial resources to compete effectively.

      For further discussion of these and other challenges we face, see “Risk Factors.”

Industry Perspective

      Workers’ compensation was the fourth-largest property and casualty insurance line in the United States in 2004, according to A.M. Best. Direct premiums written in 2004 for the workers’ compensation insurance industry were approximately $54 billion, and direct premiums written for the property and casualty industry as a whole were approximately $466 billion. According to A.M. Best, direct premiums written in the workers’ compensation insurance industry have increased 37% from 2001 to 2004, while the entire property and casualty industry experienced a 30% increase in direct premiums written over the same period. We believe that current trends in the labor market, in particular the transfer of service jobs overseas, better position us for future growth as compared to some other workers’ compensation insurance carriers. The employers we target engage in activities that are largely non-exportable. As a result, we believe that the labor force in the industries we target will continue to grow at a rate that exceeds that of the overall labor market. For example, according to the Bureau of Labor Statistics, the number of employees in the construction sector increased 2.6% from 2000 to 2004. By contrast, over the same period, the number of employees in the professional and business services sector declined by nearly 1.5%. As a result of our focus on largely non-exportable industries, we believe that we are well-positioned for future growth.

      According to the most recent market data reported by the NCCI, which is the official ratings bureau in the majority of states in which we are licensed, total premiums reported for the specific

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occupational class codes for which we underwrite business was $17 billion. Total premiums reported for all occupational class codes reported by the NCCI for these same jurisdictions was $37 billion.

Recent Development

      Effective June 30, 2005, we entered into a commutation agreement with Converium Reinsurance (North America), one of our reinsurers. Under this agreement, Converium will pay us $61.3 million in exchange for a termination and release of three of our five reinsurance agreements with Converium. Under the commutation agreement, all liabilities reinsured with Converium under these three reinsurance agreements reverted back to us. These three reinsurance agreements have been terminated, and we and Converium have fully released each other from all liabilities under or relating to these three reinsurance agreements. Converium remains obligated to us under the remaining two reinsurance agreements. As of June 30, 2005, the amount recoverable from Converium under the remaining two agreements was $6.9 million.

      AMERISAFE is an insurance holding company and was incorporated in Texas in 1985. Our principal subsidiary is American Interstate Insurance Company. Our executive offices are located at 2301 Highway 190 West, DeRidder, Louisiana 70634, and our telephone number at that location is (337) 463-9052. Our website is www.amerisafe.com. The information on our website is not part of this prospectus.

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The Offering

Shares of common stock offered by us	shares
Over-allotment shares of common stock offered by selling shareholders	shares
Shares of common stock to be issued upon exchange of outstanding Series A preferred stock	shares
Shares of common stock to be outstanding after the offering	shares
Use of proceeds	We estimate that our net proceeds from this offering will be approximately $           million, based on an assumed initial public offering price of $           per share, which is the mid-point of the price range set forth on the cover page of this prospectus, and after deducting the underwriting discounts and commissions and our estimated offering expenses. We will use 50% of our net proceeds from this offering, or approximately $           million, to redeem approximately              shares of our outstanding Series A preferred stock and approximately $           million to redeem all of our outstanding Series E preferred stock. We intend to use approximately $           million of the remaining net proceeds to contribute capital to our insurance company subsidiaries and approximately $           million for general corporate purposes.
Dividend policy	We currently intend to retain any additional future earnings to finance our operations and growth. As a result, we do not expect to pay any cash dividends on our common stock for the foreseeable future.
	Our ability to pay dividends is subject to restrictions in our articles of incorporation that prohibit us from paying dividends on our common stock (other than in additional shares of common stock) without the consent of the holders of two-thirds of the outstanding shares of our convertible preferred stock. In addition, because AMERISAFE is a holding company and has no direct operations, our ability to pay dividends in the future may be limited by regulatory restrictions on the payment of dividends to AMERISAFE by our insurance company subsidiaries.
Proposed Nasdaq National Market symbol	“AMSF”

      The number of shares of common stock shown to be outstanding upon completion of the offering excludes:

•                     shares issuable upon conversion of our outstanding Series C and Series D convertible preferred stock, subject to adjustment in certain circumstances;

•                     shares that may be issued pursuant to stock options we intend to grant to our executive officers and other employees upon completion of this offering, at an exercise price equal to the initial public offering price; and

•                     additional shares available for future issuance under our equity incentive plans.

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Summary Financial Information

      The following income statement data for the years ended December 31, 2002, 2003 and 2004 and the balance sheet data as of December 31, 2003 and 2004 were derived from our consolidated financial statements included elsewhere in this prospectus. The income statement data for the years ended December 31, 2000 and 2001 and the balance sheet data as of December 31, 2000, 2001 and 2002 were derived from our audited consolidated financial statements, which are not included in this prospectus. The income statement data for the three-month periods ended March 31, 2004 and 2005 and the balance sheet data as of March 31, 2004 and 2005 were derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus, which include all adjustments, consisting of normal recurring adjustments, that management considers necessary for a fair presentation of our financial position and results of operations for the periods presented. These historical results are not necessarily indicative of results to be expected from any future period. You should read the following summary financial information together with the other information contained in this prospectus, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and related notes included elsewhere in this prospectus.

		Year Ended															Three Months Ended
		December 31,															March 31,
		2000			2001			2002			2003			2004			2004			2005
		(In thousands, except share and per share data)
Income Statement Data
Gross premiums written		$	345,027		$	204,752		$	185,093		$	223,590		$	264,962		$	68,992		$	71,575
Ceded premiums written			(80,076	)		(49,342	)		(26,563	)		(27,600	)		(21,951	)		(4,893	)		(4,835	)
	Net premiums written	$	264,951		$	155,410		$	158,530		$	195,990		$	243,011		$	64,099		$	66,740
Net premiums earned		$	187,106		$	170,782		$	163,257		$	179,847		$	234,733		$	52,312		$	61,917
Net investment income			9,372			9,935			9,419			10,106			12,217			2,641			3,718
Net realized gains (losses) on investments			(773	)		491			(895	)		316			1,421			310			227
Fee and other income			2,520			1,367			2,082			462			589			143			162
	Total revenues		198,225			182,575			173,863			190,731			248,960			55,406			66,024
Loss and loss adjustment expenses incurred			109,536			123,386			121,062			129,250			174,186			37,475			45,918
Underwriting and certain other operating costs(1)			23,334			23,364			22,674			23,062			28,987			6,585			8,344
Commissions			16,121			14,351			9,189			11,003			14,160			3,168			3,806
Salaries and benefits			20,253			17,148			16,541			15,037			15,034			3,810			2,800
Policyholder dividends			7,156			2,717			156			736			1,108			338			171
Interest expense			797			735			498			203			1,799			142			640
	Total expenses		177,197			181,701			170,120			179,291			235,274			51,518			61,679
Income before taxes			21,028			874			3,743			11,440			13,686			3,888			4,345
Income tax expense (benefit)			7,001			(395	)		(1,438	)		2,846			3,129			997			1,108
	Net income	$	14,027		$	1,269		$	5,181		$	8,594		$	10,557		$	2,891		$	3,237
Payment-in-kind preferred dividends			(8,229	)		(8,820	)		(9,453	)		(10,133	)		(9,781	)		(2,645	)		(2,340	)
Net income (loss) available to common shareholders		$	5,798		$	(7,551	)	$	(4,272	)	$	(1,539	)	$	776		$	246		$	897
Portion allocable to common shareholders(2)			65.3%			100.0%			100.0%			100.0%			70.2%			65.3%			75.8%
Net income (loss) allocable to common shareholders		$	3,784		$	(7,551	)	$	(4,272	)	$	(1,539	)	$	545		$	161		$	680
Diluted earnings per common share equivalent		$	0.18		$	(0.58	)	$	(0.33	)	$	(0.12	)	$	0.03		$	0.01		$	0.03
Diluted weighted average of common share equivalents outstanding			21,581,864			12,967,104			12,967,104			12,967,104			18,380,132			21,581,864			21,581,864

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	Year Ended										Three Months Ended
	December 31,										March 31,
	2000		2001		2002		2003		2004		2004		2005
Selected Insurance Ratios
Current accident year loss ratio(3)		57.1%		66.9%		71.8%		70.6%		68.5%		67.0%		69.8%
Prior accident year loss ratio(4)		1.4%		5.3%		2.4%		1.3%		5.7%		4.6%		4.4%
Net loss ratio		58.5%		72.2%		74.2%		71.9%		74.2%		71.6%		74.2%
Net underwriting expense ratio(5)		31.9%		32.1%		29.7%		27.3%		24.8%		25.9%		24.2%
Net dividend ratio(6)		3.8%		1.6%		0.1%		0.4%		0.5%		0.6%		0.3%
Net combined ratio(7)		94.2%		105.9%		104.0%		99.6%		99.5%		98.1%		98.7%

	As of December 31,															As of March 31,
	2000			2001			2002			2003			2004			2004			2005
	(In thousands)
Balance Sheet Data
Cash and cash equivalents	$	44,914		$	44,270		$	44,677		$	49,815		$	25,421		$	54,909		$	26,356
Investments		145,439			148,305			205,315			257,729			364,868			272,311			381,312
Amounts recoverable from reinsurers		327,172			298,451			214,342			211,774			198,977			197,057			189,698
Premiums receivable, net		122,450			104,907			95,291			108,380			114,141			122,389			124,115
Deferred income taxes		11,807			14,716			11,372			12,713			15,624			14,435			16,634
Deferred policy acquisition costs		14,038			11,077			9,505			11,820			12,044			12,933			16,533
Deferred charges		3,681			2,588			1,997			2,987			3,054			3,365			3,182
Total assets		685,308			645,474			603,801			678,608			754,187			694,196			778,553
Reserves for loss and loss adjustment expenses		379,824			383,032			346,542			377,559			432,880			378,447			442,554
Unearned premiums		107,418			92,047			87,319			103,462			111,741			115,249			116,564
Insurance-related assessments		25,522			25,964			23,743			26,133			29,876			27,825			32,544
Debt		9,500			9,000			8,000			16,310			36,090			16,310			36,090
Redeemable preferred stock(8)		112,061			116,520			121,300			126,424			131,916			127,761			133,350
Shareholders’ deficit(9)		(26,913	)		(10,980	)		(25,100	)		(20,652	)		(42,862	)		(19,326	)		(41,404	)

(1)	Includes policy acquisition expenses, such as assessments, premium taxes and other general and administrative expenses, excluding commissions and salaries and benefits, related to insurance operations and corporate operating expenses.
(2)	Reflects the participation rights of the Series C and Series D convertible preferred stock. See Note 15 to our audited financial statements.
(3)	The current accident year loss ratio is calculated by dividing loss and loss adjustment expenses incurred for the current accident year by the current year’s net premiums earned.
(4)	The prior accident year loss ratio is calculated by dividing the change in loss and loss adjustment expenses incurred for prior accident years by the current year’s net premiums earned.
(5)	The net underwriting expense ratio is calculated by dividing underwriting and certain other operating costs, commissions and salaries and benefits by the current year’s net premiums earned.
(6)	The net dividend ratio is calculated by dividing policyholder dividends by the current year’s net premiums earned.
(7)	The net combined ratio is the sum of the net loss ratio, the net underwriting expense ratio and the net dividend ratio.
(8)	Includes our Series A preferred stock and Series C and Series D convertible preferred stock, each of which is mandatorily redeemable upon the occurrence of certain events that are deemed to be outside the control of our company.
(9)	In 1997, we entered into a recapitalization transaction with Welsh Carson that resulted in a $164.2 million charge to retained earnings. See Note 1 to our audited financial statements.

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RISK FACTORS

      An investment in our common stock involves a number of risks. Before making a decision to purchase our common stock, you should carefully consider the following information about these risks, together with the other information contained in this prospectus. Any of the risks described below could result in a significant or material adverse effect on our business, financial condition or results of operations, and a decline in the market price of our common stock. You could lose all or part of your investment.

Risks Related to Our Business

The workers’ compensation insurance industry is cyclical in nature, which may affect our overall financial performance.

      The financial performance of the workers’ compensation insurance industry has historically fluctuated with periods of low premium rates and excess underwriting capacity resulting from increased competition followed by periods of high premium rates and shortages of underwriting capacity resulting from decreased competition. Although the financial performance of an individual insurance company is dependent on its own specific business characteristics, the profitability of most workers’ compensation insurance companies generally tends to follow this cyclical market pattern. Beginning in 2000 and accelerating in 2001, the workers’ compensation insurance industry experienced a market reflecting increasing premium rates, more restrictive policy coverage terms and more conservative risk selection. We believe these trends slowed beginning in 2004 and the current workers’ compensation insurance market is becoming more competitive in terms of premium rates and policy coverage terms. Because this cyclicality is due in large part to the actions of our competitors and general economic factors, we cannot predict the timing or duration of changes in the market cycle. These cyclical patterns cause our revenues and net income to fluctuate, which may cause the price of our common stock to be volatile.

If we are unable to obtain reinsurance on favorable terms, our ability to write new policies could be adversely affected.

      We purchase reinsurance to protect us from the impact of large losses. Reinsurance is an arrangement in which an insurance company, called the ceding company, transfers insurance risk by sharing premiums with another insurance company, called the reinsurer. Conversely, the reinsurer receives or assumes reinsurance from the ceding company. We currently participate in a reinsurance treaty program covering all of our voluntary and assigned risk business. Our current reinsurance program provides us with reinsurance coverage for each loss occurrence up to $30.0 million, subject to applicable deductibles and retentions. However, for any loss occurrence involving only one person, our reinsurance coverage is limited to a maximum of $10.0 million, subject to applicable deductibles and retentions. We retain the first $1.0 million of each loss and are subject to an annual aggregate deductible of approximately $5.6 million for losses between $1.0 million and $5.0 million before our reinsurers are obligated to reimburse us. After the deductible is satisfied, we retain 10.0% of each loss between $1.0 million and $5.0 million. See “Business—Reinsurance.” The availability, amount and cost of reinsurance are subject to market conditions and our experience with insured losses.

      The agreements for our current reinsurance treaty program may be terminated by us or our reinsurers upon 90 days prior notice on any December 31. If our reinsurance treaty program is terminated and we enter into a new program, any decrease in the amount of reinsurance at the time we enter into a new program, whether caused by the existence of more restrictive terms and conditions or decreased availability, will also increase our risk of loss and, as a result, could adversely affect our business, financial condition and results of operations. We currently have ten reinsurers participating in our reinsurance treaty program, and we believe that this is a sufficient number of reinsurers to provide us with the reinsurance coverage we require. However, because our reinsurance treaty program may be terminated on any December 31, it is possible that one or more of our current reinsurers could

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terminate participation in our program. In addition, we may terminate the participation of one or more of our reinsurers under certain circumstances as permitted by the terms of our reinsurance agreements. In either of those events, if our reinsurance broker is unable to spread the terminated reinsurance among the remaining reinsurers in the program, it could take a significant amount of time to identify and negotiate agreements with a replacement reinsurer. During this time, we would be exposed to an increased risk of loss, the extent of which would depend on the volume of terminated reinsurance.

      Due to the increased cost of reinsurance, we increased our levels of retention on a per occurrence basis in 2003, 2004 and 2005. As a result, we are exposed to increased risk of loss resulting from volatility in the frequency and severity of claims.

We may not be able to recover amounts due from our reinsurers, which would adversely affect our financial condition.

      Reinsurance does not discharge our obligations under the insurance policies we write. We remain liable to our policyholders even if we are unable to make recoveries that we are entitled to receive under our reinsurance contracts. As a result, we are subject to credit risk with respect to our reinsurers. Losses are recovered from our reinsurers as claims are paid. In long-term workers’ compensation claims, the creditworthiness of our reinsurers may change before we recover amounts to which we are entitled. Therefore, if a reinsurer is unable to meet any of its obligations to us, we would be responsible for all claims and claim settlement expenses for which we would have otherwise received payment from the reinsurer.

      In the past, we have been unable to recover amounts from our reinsurers. In 2001, Reliance Insurance Company, one of our former reinsurers, was placed under regulatory supervision by the Pennsylvania Insurance Department and was subsequently placed into liquidation. As a result, between 2001 and 2003, we recognized losses related to uncollectible amounts due from Reliance aggregating $20.3 million.

      As of March 31, 2005, we had $189.7 million of recoverables from reinsurers. Of this amount, $187.8 million was unsecured. As of March 31, 2005, our largest recoverables from reinsurers included $80.0 million from Converium Reinsurance (North America), $28.0 million from American Reinsurance Company and $21.4 million from Odyssey America Reinsurance Company. If we are unable to collect amounts recoverable from our reinsurers, our financial condition would be adversely affected.

      During 2004, Converium reported a significant loss, resulting in a downgrade in its A.M. Best rating. Although Converium continued to indemnify us under the terms of our reinsurance agreements, we initiated discussions with Converium to seek to reduce the credit risk associated with the amounts due to us. Effective as of June 30, 2005, we entered into a commutation agreement with Converium. Under this agreement, Converium will pay us $61.3 million in exchange for a termination and release of three of our five reinsurance agreements with Converium. Under the commutation agreement, all liabilities reinsured with Converium under these three reinsurance agreements reverted back to us. The reinsurance agreements have been terminated, and we and Converium have fully released each other from all liabilities under or relating to these three reinsurance agreements. Converium remains obligated to us under the remaining two reinsurance agreements. As of June 30, 2005, the amount recoverable from Converium under the remaining two agreements was $6.9 million. We cannot assure you that the cash payment we received from Converium, and any investment income we may earn on that amount, will be sufficient to cover all claims for which we would otherwise have been contractually entitled to recover from Converium under the three reinsurance agreements subject to the commutation agreement.

Our loss reserves are based on estimates and may be inadequate to cover our actual losses.

      We must establish and maintain reserves for our estimated liability for loss and loss adjustment expenses. We establish loss reserves that represent an estimate of amounts needed to pay and

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administer claims with respect to insured events that have occurred, including events that have occurred but have not yet been reported to us. Reserves are based on estimates of the ultimate cost of individual claims. These estimates are inherently uncertain. Judgment is required to determine the relevance of historical payment and claim settlement patterns under current facts and circumstances. The interpretation of this historical data can be impacted by external forces, principally legislative changes, economic fluctuations and legal trends. Key assumptions that we utilize to estimate our reserves are frequency and severity trends, including the increasing costs and utilization of health care. If there are unfavorable changes in our assumptions, our reserves may need to be increased.

      Workers’ compensation claims often are paid over a long period of time. In addition, there are no policy limits on our liability for workers’ compensation claims as there are for other forms of insurance. Therefore, estimating reserves for workers’ compensation claims may be more uncertain than estimating reserves for other types of insurance claims with shorter or more definite periods between occurrence of the claim and final determination of the loss and with policy limits on liability for claim amounts. Accordingly, our reserves may prove to be inadequate to cover our actual losses. If we change our estimates, these changes would result in adjustments to our reserves and our loss and loss adjustment expenses incurred in the period in which the estimates are changed. If the estimate is increased, our pre-tax income for the period in which we make the change will decrease by a corresponding amount. In addition, increasing reserves results in a reduction in our surplus and could result in a downgrade in our A.M. Best rating. Such a downgrade could, in turn, adversely affect our ability to sell insurance policies.

A downgrade in our A.M. Best rating would likely reduce the amount of business we are able to write.

      Rating agencies evaluate insurance companies based on their ability to pay claims. We are currently assigned a group letter rating of “A-” (Excellent) from A.M. Best, which is the rating agency that we believe has the most influence on our business. This rating is assigned to companies that, in the opinion of A.M. Best, have demonstrated an excellent overall performance when compared to industry standards. A.M. Best considers “A-” rated companies to have an excellent ability to meet their ongoing obligations to policyholders. The ratings of A.M. Best are subject to periodic review using, among other things, proprietary capital adequacy models, and are subject to revision or withdrawal at any time. A.M. Best ratings are directed toward the concerns of policyholders and insurance agencies and are not intended for the protection of investors or as a recommendation to buy, hold or sell securities. Our competitive position relative to other companies is determined in part by our A.M. Best rating.

      In June 2005, A.M. Best placed our rating under review with negative implications, citing concerns about our risk adjusted capital, credit risk associated with amounts recoverable from our reinsurers and the somewhat limited financial flexibility of our holding company, AMERISAFE. As a result of our commutation with Converium Reinsurance (North America), one of our reinsurers, discussed elsewhere in this document and the application of the proceeds from this offering, we expect that our under review status will be returned to stable and that A.M. Best will affirm our “A-” (Excellent) rating in late 2005. However, there can be no assurance that we will be able to maintain our current rating. Any downgrade in our rating would likely adversely affect our business through the loss of certain existing and potential policyholders and the loss of relationships with independent agencies. For example, some of our construction contractor policyholders are required to maintain workers’ compensation coverage with an insurance company with an A.M. Best rating of “A-” (Excellent) or better in order to bid on certain contracts. As a result, if our rating were downgraded, we would not be able to write this business.

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If we do not accurately establish our premium rates, our results of operations will be adversely affected.

      In general, the premium rates for our insurance policies are established when coverage is initiated and, therefore, before all of the underlying costs are known. Like other workers’ compensation insurance companies, we rely on estimates and assumptions in setting our premium rates. Establishing adequate rates is necessary, together with investment income, to generate sufficient revenue to offset losses, loss adjustment expenses and other underwriting expenses and to earn a profit. If we fail to accurately assess the risks that we assume, we may fail to charge adequate premium rates to cover our losses and expenses, which could reduce our net income and cause us to become unprofitable. For example, when initiating coverage on a policyholder, we estimate future claims expense based, in part, on prior claims information provided by the policyholder’s previous insurance carriers. If this prior claims information is not accurate, we may underprice our policy by using claims estimates that are too low. As a result, our actual costs for providing insurance coverage to our policyholders may be significantly higher than our premiums. In order to set premium rates accurately, we must:

• collect and properly analyze a substantial volume of data;

• develop, test and apply appropriate rating formulae;

• closely monitor and timely recognize changes in trends; and

• project both frequency and severity of losses with reasonable accuracy.

      We must also implement our pricing accurately in accordance with our assumptions. Our ability to undertake these efforts successfully, and as a result set premium rates accurately, is subject to a number of risks and uncertainties, principally:

• insufficient reliable data;

• incorrect or incomplete analysis of available data;

• uncertainties generally inherent in estimates and assumptions;

• our inability to implement appropriate rating formulae or other pricing methodologies;

• costs of ongoing medical treatment;

• our inability to accurately estimate retention, investment yields and the duration of our liability for loss and loss adjustment expenses; and

• unanticipated court decisions, legislation or regulatory action.

      Consequently, we could set our premium rates too low, which would negatively affect our results of operations and our profitability, or we could set our premium rates too high, which could reduce our competitiveness and lead to lower revenues.

Negative developments in the workers’ compensation insurance industry would adversely affect our financial condition and results of operations.

      We principally offer workers’ compensation insurance. We have no current plans to focus our efforts on offering other types of insurance. As a result, negative developments in the economic, competitive or regulatory conditions affecting the workers’ compensation insurance industry could have an adverse effect on our financial condition and results of operations. Negative developments in the workers’ compensation insurance industry could have a greater effect on us than on more diversified insurance companies that also sell other types of insurance.

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A decline in the level of business activity of our policyholders, particularly those engaged in the construction, trucking and logging industries, could negatively affect our earnings and profitability.

      In 2004, approximately 71.5% of our gross premiums written were derived from policyholders in the construction, trucking and logging industries. Because premium rates are calculated, in general, as a percentage of a policyholder’s payroll expense, premiums fluctuate depending upon the level of business activity and number of employees of our policyholders. As a result, our gross premiums written are primarily dependent upon the economic conditions in the construction, trucking and logging industries and upon economic conditions generally.

Unfavorable changes in economic conditions affecting the states in which we operate could adversely affect our financial condition or results of operations.

      As of March 31, 2005, we provided insurance in 29 states and the District of Columbia. Although we have expanded our operations into new geographic areas and expect to continue to do so in the future, approximately 44.5% of our gross premiums written for the year ended December 31, 2004 were derived from policyholders in Louisiana, Georgia, Texas, Illinois, North Carolina and Virginia. No other state accounted for more than 5.0% of gross premiums written in 2004. In the future, we may be exposed to economic and regulatory risks or risks from natural perils that are greater than the risks faced by insurance companies that have a larger percentage of their gross premiums written diversified over a broader geographic area. Unfavorable changes in economic conditions affecting the states in which we write business could adversely affect our financial condition or results of operations. See “Business—Policyholders.”

Our revenues and results of operations may fluctuate as a result of factors beyond our control, which fluctuation may cause the price of our common stock to be volatile.

      The revenues and results of operations of insurance companies historically have been subject to significant fluctuations and uncertainties. Our profitability can be affected significantly by:

• rising levels of claims costs, including medical and prescription drug costs, that we cannot anticipate at the time we establish our premium rates;

• fluctuations in interest rates, inflationary pressures and other changes in the investment environment that affect returns on invested assets;

• changes in the frequency or severity of claims;

• the financial stability of our reinsurers and changes in the level of reinsurance capacity and our capital capacity;

• new types of claims and new or changing judicial interpretations relating to the scope of liabilities of insurance companies;

• volatile and unpredictable developments, including man-made, weather-related and other natural catastrophes or terrorist attacks; and

• price competition.

      If our revenues and results of operations fluctuate as a result of one or more of these factors, the price of our common stock may be volatile.

15

We operate in a highly competitive industry and may lack the financial resources to compete effectively.

      There is significant competition in the workers’ compensation insurance industry. We believe that our competition in the hazardous industries we target is fragmented and not dominated by one or more competitors. We compete with other insurance companies, individual self-insured companies, state insurance pools and self-insurance funds. Many of our existing and potential competitors are significantly larger and possess greater financial, marketing and management resources than we do. Moreover, a number of these competitors offer other types of insurance in addition to workers’ compensation and can provide insurance nationwide. We compete on the basis of many factors, including coverage availability, claims management, safety services, payment terms, premium rates, policy terms, types of insurance offered, overall financial strength, financial ratings and reputation. If any of our competitors offer premium rates, policy terms or types of insurance that are more competitive than ours, we could lose market share. No assurance can be given that we will maintain our current competitive position in the markets in which we currently operate or that we will establish a competitive position in new markets into which we may expand.

If we cannot sustain our relationships with independent agencies, we may be unable to operate profitably.

      We market a substantial portion of our workers’ compensation insurance through independent agencies. As of March 31, 2005, independent agencies produced approximately 79.7% of our voluntary in-force premiums, and no independent agency accounted for more than 1.5% of our voluntary in-force premiums at that date. Independent agencies are not obligated to promote our insurance and may sell insurance offered by our competitors. As a result, our continued profitability depends, in part, on the marketing efforts of our independent agencies and on our ability to offer workers’ compensation insurance and maintain financial strength ratings that meet the requirements of our independent agencies and their policyholders.

An inability to effectively manage the growth of our operations could make it difficult for us to compete and affect our ability to operate profitably.

      Our continuing growth strategy includes expanding in our existing markets, entering new geographic markets and further developing our agency relationships. Our growth strategy is subject to various risks, including risks associated with our ability to:

• identify profitable new geographic markets for entry;

• attract and retain qualified personnel for expanded operations;

• identify, recruit and integrate new independent agencies; and

• augment our internal monitoring and control systems as we expand our business.

Because we are subject to extensive state and federal regulation, legislative changes may negatively impact our business.

      We are subject to extensive regulation by the Louisiana Department of Insurance and the insurance regulatory agencies of other states in which we are licensed and, to a lesser extent, federal regulation. State agencies have broad regulatory powers designed primarily to protect policyholders and their employees, and not our shareholders. Regulations vary from state to state, but typically address:

• standards of solvency, including risk-based capital measurements;

16

• restrictions on the nature, quality and concentration of our investments;

• restrictions on the terms of the insurance policies we offer;

• restrictions on the way our premium rates are established and the premium rates we may charge;

• required reserves for unearned premiums and loss and loss adjustment expenses;

• standards for appointing general agencies;

• limitations on transactions with affiliates;

• restrictions on mergers and acquisitions;

• restrictions on the ability of our insurance company subsidiaries to pay dividends to AMERISAFE;

• certain required methods of accounting; and

• potential assessments for state guaranty funds, second injury funds and other mandatory pooling arrangements.

      We may be unable to comply fully with the wide variety of applicable laws and regulations that are continually undergoing revision. In addition, we follow practices based on our interpretations of laws and regulations that we believe are generally followed by our industry. These practices may be different from interpretations of insurance regulatory agencies. As a result, insurance regulatory agencies could preclude us from conducting some or all of our activities or otherwise penalize us. For example, in order to enforce applicable laws and regulations or to protect policyholders, insurance regulatory agencies have relatively broad discretion to impose a variety of sanctions, including examinations, corrective orders, suspension, revocation or denial of licenses and the takeover of one or more of our insurance subsidiaries. The extensive regulation of our business may increase the cost of our insurance and may limit our ability to obtain premium rate increases or to take other actions to increase our profitability.

The effects of emerging claim and coverage issues on our business are uncertain.

      As industry practices and legal, judicial, social and other environmental conditions change, unexpected and unintended issues related to claims and coverage may emerge. These issues may adversely affect our business by either extending coverage beyond our underwriting intent or by increasing the number or size of claims. In some instances, these changes may not become apparent until after we have issued insurance policies that are affected by the changes. As a result, the full extent of our liability under an insurance policy may not be known until many years after the policy is issued. For example, medical costs associated with permanent and partial disabilities may increase more rapidly or be higher than we currently expect. Changes of this nature may expose us to higher claims than we anticipated when we wrote the underlying policy. As of March 31, 2005, approximately 1.5% of the 28,377 claims reported for accident year 2000 were open, 2.8% of the 13,813 claims reported for accident year 2001 were open, 5.1% of the 8,005 claims reported for accident year 2002 were open, 10.7% of the 6,272 claims reported for accident year 2003 were open and 29.8% of the 6,869 claims reported for accident year 2004 were open.

Additional capital that we may require in the future may not be available to us or may be available to us only on unfavorable terms.

      Our future capital requirements will depend on many factors, including state regulatory requirements, the financial stability of our reinsurers and our ability to write new business and establish

17

premium rates sufficient to cover our estimated claims. We may need to raise additional capital or curtail our growth if the portion of our net proceeds of this offering to be contributed to the capital of our insurance subsidiaries is insufficient to support future operating requirements and/or cover claims. If we had to raise additional capital, equity or debt financing may not be available to us or may be available only on terms that are not favorable. In the case of equity financings, dilution to our shareholders could result and the securities sold may have rights, preferences and privileges senior to the common stock sold in this offering. In addition, under certain circumstances, the sale of our common stock, or securities convertible or exchangeable into shares of our common stock, at a price per share less than the fair value of our common stock may result in an adjustment to the conversion price at which shares of our existing convertible preferred stock may be converted into shares of our common stock. If we cannot obtain adequate capital on favorable terms or at all, we may be unable to support future growth or operating requirements and, as a result, our business, financial condition or results of operations could be adversely affected.

If we are unable to realize our investment objectives, our financial condition and results of operations may be adversely affected.

      Investment income is an important component of our net income. As of March 31, 2005, our investment portfolio, including cash and cash equivalents, had a carrying value of $407.7 million. For the year ended December 31, 2004, we had $12.2 million of net investment income. Our investment portfolio is managed by an independent asset manager that operates under investment guidelines approved by our board of directors. Although these guidelines stress diversification and capital preservation, our investments are subject to a variety of risks, including risks related to general economic conditions, interest rate fluctuations and market volatility. General economic conditions may be adversely affected by U.S. involvement in hostilities with other countries and large-scale acts of terrorism, or the threat of hostilities or terrorist acts.

      Interest rates are highly sensitive to many factors, including governmental monetary policies and domestic and international economic and political conditions. Changes in interest rates could have an adverse effect on the value of our investment portfolio and future investment income. For example, changes in interest rates can expose us to prepayment risks on mortgage-backed securities included in our investment portfolio. When interest rates fall, mortgage-backed securities are prepaid more quickly than expected and the holder must reinvest the proceeds at lower interest rates. In periods of increasing interest rates, mortgage-backed securities are prepaid more slowly, which may require us to receive interest payments that are below the interest rates then prevailing for longer than expected.

      These and other factors affect the capital markets and, consequently, the value of our investment portfolio and our investment income. Any significant decline in our investment income would adversely affect our revenues and net income and, as a result, increase our shareholders’ deficit and decrease our surplus.

Our business is dependent on the efforts of our senior management and other key employees because of their industry expertise, knowledge of our markets and relationships with the independent agencies that sell our insurance.

      Our success is dependent on the efforts of our senior management and other key employees because of their industry expertise, knowledge of our markets and relationships with our independent agencies. Two of our five executive officers have been with our company for more than 25 years and two others have been with us for more than ten years. Should any members of our senior management or other key employees cease working for us, we may be unable to find acceptable replacements with comparable skills and experience in the workers’ compensation insurance industry and the hazardous

18

industries that we target. As a result, our operations may be disrupted and our business may be adversely affected.

AMERISAFE is an insurance holding company and does not have any direct operations.

      AMERISAFE is a holding company that transacts business through its operating subsidiaries, including American Interstate. AMERISAFE’s primary assets are the capital stock of these operating subsidiaries. The ability of AMERISAFE to pay dividends to our shareholders depends upon the surplus and earnings of our subsidiaries and their ability to pay dividends to AMERISAFE. Payment of dividends by our insurance subsidiaries is restricted by state insurance laws, including laws establishing minimum solvency and liquidity thresholds, and could be subject to contractual restrictions in the future, including those imposed by indebtedness we may incur in the future. See “Business—Regulation—Dividend Limitations.” As a result, at times, AMERISAFE may not be able to receive dividends from its insurance subsidiaries and may not receive dividends in amounts necessary to pay dividends on our capital stock. Based on reported capital and surplus at December 31, 2004, American Interstate would have been permitted under Louisiana insurance law to pay dividends to AMERISAFE in 2005 in an amount up to $11.2 million without approval by the Louisiana Department of Insurance.

      In addition, our ability to pay dividends is subject to restrictions in the articles of incorporation of AMERISAFE that prohibit us from paying dividends on our common stock (other than in additional shares of common stock) without the consent of the holders of two-thirds of the outstanding shares of our convertible preferred stock. If holders of our convertible preferred stock consent to the payment of a dividend, we must pay a dividend to the holders of our convertible preferred stock on an as-converted to common stock basis equal to the dividend we pay to holders of our common stock. Currently, we do not intend to pay dividends on our common stock.

Assessments and premium surcharges for state guaranty funds, second injury funds and other mandatory pooling arrangements may reduce our profitability.

      Most states require insurance companies licensed to do business in their state to participate in guaranty funds, which require the insurance companies to bear a portion of the unfunded obligations of impaired, insolvent or failed insurance companies. These obligations are funded by assessments, which are expected to continue in the future. State guaranty associations levy assessments, up to prescribed limits, on all member insurance companies in the state based on their proportionate share of premiums written in the lines of business in which the impaired, insolvent or failed insurance companies are engaged. See “Business—Regulation.” Accordingly, the assessments levied on us may increase as we increase our written premium. Some states also have laws that establish second injury funds to reimburse insurers and employers for claims paid to injured employees for aggravation of prior conditions or injuries. These funds are supported by either assessments or premium surcharges based on paid losses.

      In addition, as a condition to conducting business in some states, insurance companies are required to participate in residual market programs to provide insurance to those employers who cannot procure coverage from an insurance carrier on a negotiated basis. Insurance companies generally can fulfill their residual market obligations by, among other things, participating in a reinsurance pool where the results of all policies provided through the pool are shared by the participating insurance companies. Although we price our insurance to account for obligations we may have under these pooling arrangements, we may not be successful in estimating our liability for these obligations. Accordingly, mandatory pooling arrangements may cause a decrease in our profits. We currently participate in mandatory pooling arrangements in 11 states. Our average annual premiums from mandatory pooling arrangements were approximately $5.2 million from 2001 through 2004. Our loss and loss adjustment expenses and assessments for expenses and losses related to these mandatory pooling arrangements caused our

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combined ratio in these years to increase an average of 0.1%. As we write policies in new states that have mandatory pooling arrangements, we will be required to participate in additional pooling arrangements. Further, the impairment, insolvency or failure of other insurance companies in these pooling arrangements would likely increase the liability for other members in the pool. The effect of assessments and premium surcharges or changes in them could reduce our profitability in any given period or limit our ability to grow our business.

The outcome of recent insurance industry investigations and regulatory proposals could adversely affect our financial condition and results of operations and cause the price of our common stock to be volatile.

      The insurance industry has recently become the focus of increased scrutiny by regulatory and law enforcement authorities, as well as class action attorneys and the general public, relating to allegations of improper special payments, price-fixing, bid-rigging, improper accounting practices and other alleged misconduct, including payments made by insurers to brokers and the practices surrounding the placement of insurance business. Formal and informal inquiries have been made of a large segment of the industry, and a number of companies in the insurance industry have received or may receive subpoenas, requests for information from regulatory agencies or other inquiries relating to these and similar matters. These efforts are expected to result in both enforcement actions and proposals for new state and federal regulation. It is difficult to predict the outcome of these investigations, whether they will expand into other areas not yet contemplated, whether activities and practices currently thought to be lawful will be characterized as unlawful, what form new regulations will have when finally adopted and the impact, if any, of increased regulatory and law enforcement action and litigation on our business and financial condition. We have received and responded to requests for information and other inquiries from the Department of Insurance in each of Arkansas, Delaware and North Carolina and have received no further requests for information.

We may have exposure to losses from terrorism for which we are required by law to provide coverage.

      When writing workers’ compensation insurance policies, we are required by law to provide workers’ compensation benefits for losses arising from acts of terrorism. The impact of any terrorist act is unpredictable, and the ultimate impact on us would depend upon the nature, extent, location and timing of such an act. Notwithstanding the protection provided by reinsurance and the Terrorism Risk Insurance Act of 2002, the risk of severe losses to us from acts of terrorism has not been eliminated because our reinsurance treaty program includes various sub-limits and exclusions limiting our reinsurers’ obligation to cover losses caused by acts of terrorism. Accordingly, events constituting acts of terrorism may not be covered by, or may exceed the capacity of, our reinsurance and could adversely affect our business and financial condition. In addition, the Terrorism Risk Insurance Act is set to expire on December 31, 2005, and the U.S. Department of the Treasury has recommended that Congress not extend the law in its current form. If this law is not extended or is extended in a scaled-back form, which is the current proposal by the U.S. Department of the Treasury, reinsurance for losses arising from terrorism may be unavailable or prohibitively expensive, and we may be further exposed to losses arising from acts of terrorism.

Risks Related to Our Common Stock and This Offering

There has been no prior public market for our common stock and, therefore, you cannot be certain that an active trading market or a specific share price will be established.

      Currently, there is no public trading market for our common stock, and it is possible that an active trading market will not develop upon completion of this offering or that the market price of our common stock will decline below the initial public offering price. We intend to apply to have our shares

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of common stock approved for listing on the Nasdaq National Market under the symbol “AMSF.” The initial public offering price per share will be determined by negotiation among us and the underwriters and may not be indicative of the market price of our common stock after completion of this offering.

The trading price of our common stock may decline after this offering.

      The trading price of our common stock may decline after this offering for many reasons, some of which are beyond our control, including, among others:

• our results of operations;

• changes in expectations as to our future results of operations, including financial estimates and projections by securities analysts and investors;

• results of operations that vary from those expected by securities analysts and investors;

• developments in the healthcare or insurance industries;

• changes in laws and regulations;

• announcements of claims against us by third parties; and

• future sales of our common stock.

      In addition, the stock market in general has experienced significant volatility that often has been unrelated to the operating performance of companies whose shares are traded. These market fluctuations could adversely affect the trading price of our common stock, regardless of our actual operating performance. As a result, the trading price of our common stock may be less than the initial public offering price, and you may not be able to sell your shares at or above the price you pay to purchase them.

Public investors will suffer immediate and substantial dilution as a result of this offering.

      The initial public offering price per share is significantly higher than our pro forma net tangible book value per share of common stock. Accordingly, if you purchase shares in this offering, you will suffer immediate and substantial dilution of your investment. Based upon the issuance and sale of            shares of our common stock at an assumed initial offering price of $           per share, which is the midpoint of the price range set forth on the cover page of this prospectus, you will incur immediate dilution of approximately $          in the net tangible book value per share if you purchase common stock in this offering. See “Dilution.” In addition, if you purchase shares in this offering, you will:

•  pay a price per share that substantially exceeds the book value of our assets after subtracting liabilities; and

•  contribute      % of the total amount invested to date to fund our company based on an assumed initial offering price to the public of $           per share, which is the midpoint of the price range set forth on the cover page of this prospectus, but will own only      % of the shares of common stock outstanding after completion of this offering.

Securities analysts may not initiate coverage of our common stock or may issue negative reports, which may adversely affect the trading price of our common stock.

      There is no assurance that securities analysts will cover our company after completion of this offering. If securities analysts do not cover our company, this lack of coverage may adversely affect the trading price of our common stock. The trading market for our common stock will rely in part on the

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research and reports that securities analysts publish about us or our business. If one or more of the analysts who cover our company downgrades our common stock, the trading price of our common stock may decline rapidly. If one or more of these analysts ceases to cover our company, we could lose visibility in the market, which, in turn, could also cause the trading price of our common stock to decline. Because of our small market capitalization, it may be difficult for us to attract securities analysts to cover our company, which could adversely affect the trading price of our common stock.

Upon completion of this offering, our principal shareholders will still have the ability to significantly influence our business, which may be disadvantageous to other shareholders and adversely affect the trading price of our common stock.

      Upon completion of this offering and based on the number of shares outstanding as of March 31, 2005, entities affiliated with Welsh Carson Anderson & Stowe, or Welsh Carson, collectively, will beneficially own approximately      % of our outstanding common stock and will possess approximately      % of the total voting power. As a result, these shareholders, acting together, will have the ability to exert substantial influence over all matters requiring approval by our shareholders, including the election and removal of directors, any proposed merger, consolidation or sale of all or substantially all of our assets and other corporate transactions. In addition, these shareholders may have interests that are different from ours. For example, entities affiliated with Welsh Carson own a substantial interest in AmCOMP Incorporated, which is a workers’ compensation insurance company.

      Our officers, directors and principal shareholders could delay or prevent an acquisition or merger of our company even if the transaction would benefit other shareholders. Moreover, this concentration of share ownership may make it difficult for shareholders to replace management. In addition, this significant concentration of share ownership may adversely affect the trading price for our common stock because investors often perceive disadvantages in owning stock in companies with significant or controlling shareholders. This concentration could be disadvantageous to other shareholders with interests different from those of our officers, directors and principal shareholders and the trading price of our common stock could be adversely affected. See “Principal and Selling Shareholders” for a more detailed description of our share ownership.

Future sales of our common stock may affect the trading price of our common stock and the future exercise of options or the exercise of the conversion rights of our convertible preferred stock may lower our stock price.

      We cannot predict what effect, if any, future sales of our common stock, or the availability of shares for future sale, will have on the trading price of our common stock. Sales of a substantial number of shares of our common stock in the public market after completion of this offering, or the perception that such sales could occur, may adversely affect the trading price of our common stock and may make it more difficult for you to sell your shares at a time and price that you determine appropriate. See “Shares Eligible for Future Sale” for further information regarding circumstances under which additional shares of our common stock may be sold. Upon completion of this offering, there will be            shares of our common stock outstanding. Moreover,            additional shares of our common stock are issuable upon the full exercise of options granted in connection with this offering and the conversion of shares of our convertible preferred stock. See “Description of Capital Stock.” We and our current directors, our officers and the selling shareholders have entered into 180-day lock-up agreements as described in “Shares Eligible for Future Sale—Lock-Up Agreements.” An aggregate of                      shares of our common stock are subject to these lock-up agreements.

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Being a public company will increase our expenses and administrative workload.

      As a public company, we will need to comply with additional laws and regulations, including the Sarbanes-Oxley Act of 2002 and related rules of the Securities and Exchange Commission, or the SEC, and requirements of the Nasdaq National Market. We were not required to comply with these laws and requirements as a private company. Complying with these laws and regulations will require the time and attention of our board of directors and management and will increase our expenses. Among other things, we will need to:

• design, establish, evaluate and maintain a system of internal controls over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act and the related rules and regulations of the SEC and the Public Company Accounting Oversight Board;

• prepare and distribute periodic reports in compliance with our obligations under the federal securities laws;

• establish new internal policies, principally those relating to disclosure controls and procedures and corporate governance;

• institute a more comprehensive compliance function; and

• involve to a greater degree our outside legal counsel and accountants in the above activities.

      In addition, we also expect that being a public company will make it more expensive for us to obtain director and officer liability insurance. We may be required to accept reduced coverage or incur substantially higher costs to obtain this coverage. These factors could also make it more difficult for us to attract and retain qualified executives and members of our board of directors, particularly directors willing to serve on our audit committee.

We will be exposed to risks relating to evaluations of our internal controls over financial reporting required by Section 404 of the Sarbanes-Oxley Act of 2002.

      We are in the process of evaluating our internal control systems to allow management to report on, and our independent auditors to assess, our internal controls over financial reporting. We will be performing the system and process evaluation and testing (and any necessary remediation) required to comply with the management certification and auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. We are required to comply with Section 404 by no later than December 31, 2006. However, we cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or the impact of the same on our operations. Furthermore, upon completion of this process, we may identify control deficiencies of varying degrees of severity under applicable SEC and Public Company Accounting Oversight Board rules and regulations that remain unremediated. As a public company, we will be required to report, among other things, control deficiencies that constitute a “material weakness” or changes in internal controls that materially affect, or are reasonably likely to materially affect, internal controls over financial reporting. A “material weakness” is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. If we fail to implement the requirements of Section 404 in a timely manner, we might be subject to sanctions or investigation by regulatory agencies such as the SEC. In addition, failure to comply with Section 404 or the report by us of a material weakness may cause investors to lose confidence in our financial statements and the trading price of our common stock may decline. If we fail to remedy any material weakness, our financial statements may be inaccurate, our access to the capital markets may be restricted and the trading price of our common stock may decline.

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Anti-takeover provisions in our articles of incorporation and bylaws and under the laws of the states of Louisiana and Texas could impede an attempt to replace or remove our directors or otherwise effect a change of control of our company, which could diminish the value of our common stock.

      Our articles of incorporation and bylaws contain provisions that may make it more difficult for shareholders to replace or remove directors even if the shareholders consider it beneficial to do so. In addition, these provisions could delay or prevent a change of control of our company that shareholders might consider favorable. Our articles of incorporation and bylaws contain the following provisions that could have an anti-takeover effect:

• election of our directors is classified, meaning that the members of only one of three classes of our directors are elected each year;

• shareholders have limited ability to call shareholder meetings and to bring business before a meeting of shareholders;

• shareholders may not act by written consent, unless the consent is unanimous; and

• our board of directors may authorize the issuance of preferred stock with such rights, preferences and privileges as the board deems appropriate.

      These provisions may make it difficult for shareholders to replace management and could have the effect of discouraging a future takeover attempt that is not approved by our board of directors, but which individual shareholders might consider favorable.

      We are incorporated in Texas and will be subject to Part 13 of the Texas Business Corporation Act. Under this statute, our ability to enter into a business combination with any affiliated shareholder will be limited. See “Description of Capital Stock—Anti-Takeover Provisions.”

      In addition, two of our three insurance company subsidiaries, American Interstate and Silver Oak Casualty, are incorporated in Louisiana and the other, American Interstate of Texas, is incorporated in Texas. Under Louisiana and Texas insurance law, advance approval by the state insurance department is required for any change of control of an insurer. “Control” is presumed to exist through the direct or indirect ownership of 10% or more of the voting securities of a domestic insurance company or any entity that controls a domestic insurance company. Obtaining these approvals may result in the material delay of, or deter, any such transaction.

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CERTAIN IMPORTANT INFORMATION

      You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with information that is different from that contained in this prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. We and the underwriters are offering to sell and seeking offers to buy these securities only in jurisdictions where offers and sales are permitted. You should assume that the information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of common stock. Our business, financial condition, results of operations and prospects may have changed since that date.

      In this prospectus:

• references to the “company,” “we,” “us” or “our” refer to AMERISAFE, Inc. and its subsidiaries, unless the context suggests otherwise; and

• references to “AMERISAFE” refer solely to AMERISAFE, Inc., unless the context suggests otherwise.

Statistical and Other Data

      This prospectus includes certain statistical and other data with respect to our company, the insurance we provide and our industry derived from publicly available reports and other publications of:

• A.M. Best Company;

• Bureau of Labor Statistics; and

• National Council on Compensation Insurance, Inc.

      These organizations generally use methodologies and conventions that they deem appropriate to measure companies within the relevant industry segment. These organizations generally indicate that they have obtained information from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information.

Assumptions

      Unless otherwise stated, all amounts in this prospectus assume no exercise of the underwriters’ over-allotment option and all share amounts for periods following completion of, or giving effect to, this offering assume:

• an initial public offering price of $           per share, which is the mid-point of the price range set forth on the cover page of this prospectus;

• a           -for-          reverse stock split prior to completion of this offering;

• the use of 50% of our net proceeds from this offering, or approximately $           million, to redeem                      shares of our outstanding Series A preferred stock and approximately $           million to redeem all of our outstanding Series E preferred stock upon completion of this offering; and

• the exchange of the remaining                      shares of our outstanding Series A preferred stock for                      shares of common stock upon completion of this offering.

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FORWARD-LOOKING STATEMENTS

      Some of the statements under the captions “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” and elsewhere in this prospectus may include forward-looking statements. These statements reflect the current views of our senior management with respect to future events and our financial performance. These statements include forward-looking statements with respect to our business and the insurance industry in general. Statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “estimate,” “may,” “should,” “anticipate” and similar statements of a future or forward-looking nature identify forward-looking statements for purposes of the federal securities laws or otherwise.

      Forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to, the following:

• the cyclical nature of the workers’ compensation insurance industry;

• changes in the availability, cost or quality of reinsurance and the failure of our reinsurers to pay claims in a timely manner or at all;

• greater frequency or severity of claims and loss activity, including as a result of natural or man-made catastrophic events, than our underwriting, reserving or investment practices anticipate based on historical experience or industry data;

• changes in rating agency policies or practices;

• negative developments in the workers’ compensation insurance industry;

• decreased level of business activity of our policyholders;

• decreased demand for our insurance;

• increased competition on the basis of coverage availability, claims management, safety services, payment terms, premium rates, policy terms, types of insurance offered, overall financial strength, financial ratings and reputation;

• changes in regulations or laws applicable to us, our policyholders or the agencies that sell our insurance;

• changes in legal theories of liability under our insurance policies;

• developments in capital markets that adversely affect the performance of our investments;

• loss of the services of any of our senior management or other key employees;

• the effects of U.S. involvement in hostilities with other countries and large-scale acts of terrorism, or the threat of hostilities or terrorist acts; and

• changes in general economic conditions, including inflation and other factors.

      The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this prospectus. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Any forward-looking statements you read in this prospectus reflect our views as of the date of this prospectus with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. Before making a decision to purchase our common stock, you should carefully consider all of the factors identified in this prospectus that could cause actual results to differ.

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USE OF PROCEEDS

      We estimate that our net proceeds from this offering will be approximately $           million, based on an assumed initial public offering price of $           per share, which is the mid-point of the price range set forth on the cover page of this prospectus, and after deducting the underwriting discounts and commissions and our estimated offering expenses. We will use 50% of our net proceeds from this offering, or about $           million, to redeem approximately                      shares of our outstanding Series A preferred stock and approximately $           million to redeem all of our outstanding Series E preferred stock. We intend to use approximately $           million of the remaining net proceeds to contribute capital to our insurance company subsidiaries and approximately $           million for general corporate purposes.

DIVIDEND POLICY

      We currently intend to retain any future earnings to finance our operations and growth. As a result, we do not expect to pay any cash dividends on our common stock for the foreseeable future. Any future determination to pay cash dividends on our common stock will be at the discretion of our board of directors and will be dependent on our earnings, financial condition, operating results, capital requirements, any contractual, regulatory or other restrictions on the payment of dividends by our subsidiaries to AMERISAFE, and other factors that our board of directors deems relevant.

      AMERISAFE is a holding company and has no direct operations. Our ability to pay dividends in the future depends on the ability of our operating subsidiaries to pay dividends to us. Our insurance company subsidiaries are regulated insurance companies and therefore are subject to significant regulatory restrictions limiting their ability to declare and pay dividends.

      Our ability to pay dividends is also subject to restrictions set forth in our articles of incorporation, which prohibit us from paying dividends on our common stock (other than in additional shares of common stock) without the consent of the holders of two-thirds of the outstanding shares of our convertible preferred stock. If holders of our convertible preferred stock consent to the payment of a dividend by us, we must pay a dividend to the holders of our convertible preferred stock on an as-converted to common stock basis equal to the dividend we pay to holders of our common stock.

      For additional information regarding restrictions on the payment of dividends by us and our insurance company subsidiaries, see “Business—Regulation—Dividend Limitations.”

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CAPITALIZATION

      The table below sets forth our consolidated capitalization as of March 31, 2005 on an actual basis and on an as adjusted basis giving effect to:

• the sale of                      shares of common stock in this offering at an assumed initial public offering price of $           per share, which is the mid-point of the price range set forth on the cover page of this prospectus, and after deducting underwriting discounts and commissions and our estimated offering expenses;

• a           -for-          reverse stock split prior to completion of this offering;

• the use of $           million, or 50% of our net proceeds from this offering, to redeem                      shares of our outstanding Series A preferred stock and approximately $           million to redeem all of our outstanding Series E preferred stock upon completion of this offering;

• the exchange of the remaining                      shares of our outstanding Series A preferred stock for                      shares of common stock upon completion of this offering; and

•                     shares of restricted stock that we intend to grant to our non-employee directors upon completion of this offering.

		As of March 31, 2005
		Actual			As Adjusted
		(Unaudited)
		(In thousands, except
		share data)
Subordinated debt securities		$	36,090		$	36,090
Redeemable preferred stock:
Series A preferred stock, par value $0.01 per share, $100 per share redemption value, 1,500,000 shares authorized; 833,496 shares issued and outstanding, actual; no shares issued and outstanding, as adjusted			83,350			—
Series C convertible preferred stock, par value $0.01 per share, $100 per share redemption value, 300,000 shares authorized; 300,000 shares issued and outstanding, actual and as adjusted			30,000			30,000
Series D convertible preferred stock, par value $0.01 per share, $100 per share redemption value, 200,000 shares authorized; 200,000 shares issued and outstanding, actual and as adjusted			20,000			20,000
			133,350			50,000
Shareholders’ deficit:
Series E preferred stock, par value $0.01 per share, $100 per share redemption value, 500,000 shares authorized; 26,712 shares issued and outstanding, actual; no shares issued and outstanding, as adjusted			2,671			—
Common stock, par value $0.01 per share, 100,000,000 shares authorized; 21,581,864 shares issued and outstanding, actual;     shares issued and outstanding, as adjusted			216
Additional paid-in capital			—
Retained deficit			(51,001	)
Accumulated other comprehensive income			6,710
	Total shareholders’ deficit		(41,404	)
Total capitalization		$	128,036		$

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DILUTION

      Our net tangible book value as of March 31, 2005 is presented below on a pro forma basis, assuming:

• the use of $           million, or 50% of our net proceeds from this offering, based on the assumed initial public offering price of $           per share, which is the mid-point of the price range set forth on the cover page of this prospectus, to redeem                      shares of our outstanding Series A preferred stock and approximately $           million to redeem all of our outstanding Series E preferred stock;

• the exchange of the remaining                      shares of our outstanding Series A preferred stock for                      shares of our common stock; and

• the issuance of                      shares of restricted stock to our non-employee directors upon completion of this offering.

      As of March 31, 2005, our pro forma net tangible book value was $           million, or $           per share of common stock. Our pro forma net tangible book value per share represents the amount of our total tangible assets less total liabilities divided by the number of shares of our common stock outstanding. After giving effect to the issuance of                      shares of our common stock at the assumed initial public offering price of $           per share, which is the mid-point of the price range set forth on the cover page of this prospectus, and the application of the estimated net proceeds therefrom, and after deducting underwriting discounts and commissions and our estimated offering expenses, our pro forma net tangible book value as of March 31, 2005 would have been $           million, or $           per share of common stock. This amount represents an immediate increase of $           per share to our existing shareholders and an immediate dilution of $           per share from the assumed initial public offering price of $           per share issued to new investors purchasing shares offered hereby. The table below illustrates this per share dilution:

Assumed initial public offering price per share			$
	Pro forma net tangible book value per share as of March 31, 2005	$
	Increase in pro forma net tangible book value per share attributable to this offering	$
Pro forma net tangible book value per share after this offering			$
Dilution per share to new investors			$

      The table below sets forth, as of March 31, 2005, the number of shares of our common stock issued (assuming the use of $           million, or 50% of our net proceeds from this offering, to redeem                      shares of our outstanding Series A preferred stock and approximately $           million to redeem all of our outstanding Series E preferred stock, the exchange of the remaining shares of our outstanding Series A preferred stock for                      shares of our common stock, and the issuance of                      shares of restricted stock to our non-employee directors upon completion of this offering), the total consideration paid and the average price per share paid by (a) our existing shareholders, and (b) our new investors, after giving effect to the issuance of                      shares of common stock in this offering at the assumed initial public offering price, before deducting underwriting discounts and commissions and our estimated offering expenses, of $           per share.

		Shares Issued		Total Consideration
						Average Price
		Number	Percent	Amount	Percent	Per Share
Existing shareholders
New investors
	Total

      This table does not give effect to:

•                     shares that may be issued pursuant to stock options we intend to grant to our executive officers and other employees upon completion of this offering, at an exercise price equal to the initial public offering price; and

•                     additional shares available for future issuance under our equity incentive plans.

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SELECTED FINANCIAL INFORMATION

      The following income statement data for the years ended December 31, 2002, 2003 and 2004 and the balance sheet data as of December 31, 2003 and 2004 were derived from our consolidated financial statements included elsewhere in this prospectus. The income statement data for the years ended December 31, 2000 and 2001 and the balance sheet data as of December 31, 2000, 2001 and 2002 were derived from our audited consolidated financial statements, which are not included in this prospectus. The income statement data for the three-month periods ended March 31, 2004 and 2005 and the balance sheet data as of March 31, 2004 and 2005 were derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus, which include all adjustments, consisting of normal recurring adjustments, that management considers necessary for a fair presentation of our financial position and results of operations for the periods presented. These historical results are not necessarily indicative of results to be expected from any future period. You should read the following selected financial information together with the other information contained in this prospectus, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and related notes included elsewhere in this prospectus.

																	Three Months Ended
		Year Ended December 31,															March 31,
		2000			2001			2002			2003			2004			2004			2005
		(In thousands, except share and per share data)
Income Statement Data
Gross premiums written		$	345,027		$	204,752		$	185,093		$	223,590		$	264,962		$	68,992		$	71,575
Ceded premiums written			(80,076	)		(49,342	)		(26,563	)		(27,600	)		(21,951	)		(4,893	)		(4,835	)
	Net premiums written	$	264,951		$	155,410		$	158,530		$	195,990		$	243,011		$	64,099		$	66,740
Net premiums earned		$	187,106		$	170,782		$	163,257		$	179,847		$	234,733		$	52,312		$	61,917
Net investment income			9,372			9,935			9,419			10,106			12,217			2,641			3,718
Net realized gains (losses) on investments			(773	)		491			(895	)		316			1,421			310			227
Fee and other income			2,520			1,367			2,082			462			589			143			162
	Total revenues		198,225			182,575			173,863			190,731			248,960			55,406			66,024
Loss and loss adjustment expenses incurred			109,536			123,386			121,062			129,250			174,186			37,475			45,918
Underwriting and certain other operating costs(1)			23,334			23,364			22,674			23,062			28,987			6,585			8,344
Commissions			16,121			14,351			9,189			11,003			14,160			3,168			3,806
Salaries and benefits			20,253			17,148			16,541			15,037			15,034			3,810			2,800
Policyholder dividends			7,156			2,717			156			736			1,108			338			171
Interest expense			797			735			498			203			1,799			142			640
	Total expenses		177,197			181,701			170,120			179,291			235,274			51,518			61,679
Income before taxes			21,028			874			3,743			11,440			13,686			3,888			4,345
Income tax expense (benefit)			7,001			(395	)		(1,438	)		2,846			3,129			997			1,108
	Net income	$	14,027		$	1,269		$	5,181		$	8,594		$	10,557		$	2,891		$	3,237
Payment-in-kind preferred dividends			(8,229	)		(8,820	)		(9,453	)		(10,133	)		(9,781	)		(2,645	)		(2,340	)
Net income (loss) available to common shareholders		$	5,798		$	(7,551	)	$	(4,272	)	$	(1,539	)	$	776		$	246		$	897
Portion allocable to common shareholders(2)			65.3%			100.0%			100.0%			100.0%			70.2%			65.3%			75.8%
Net income (loss) allocable to common shareholders		$	3,784		$	(7,551	)	$	(4,272	)	$	(1,539	)	$	545		$	161		$	680
Diluted earnings per common share equivalent		$	0.18		$	(0.58	)	$	(0.33	)	$	(0.12	)	$	0.03		$	0.01		$	0.03
Diluted weighted average of common share equivalents outstanding			21,581,864			12,967,104			12,967,104			12,967,104			18,380,132			21,581,864			21,581,864

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											Three Months Ended
	Year Ended December 31,										March 31,
	2000		2001		2002		2003		2004		2004		2005
Selected Insurance Ratios
Current accident year loss ratio(3)		57.1%		66.9%		71.8%		70.6%		68.5%		67.0%		69.8%
Prior accident year loss ratio(4)		1.4%		5.3%		2.4%		1.3%		5.7%		4.6%		4.4%
Net loss ratio		58.5%		72.2%		74.2%		71.9%		74.2%		71.6%		74.2%
Net underwriting expense ratio(5)		31.9%		32.1%		29.7%		27.3%		24.8%		25.9%		24.2%
Net dividend ratio(6)		3.8%		1.6%		0.1%		0.4%		0.5%		0.6%		0.3%
Net combined ratio(7)		94.2%		105.9%		104.0%		99.6%		99.5%		98.1%		98.7%

	As of December 31,															As of March 31,
	2000			2001			2002			2003			2004			2004			2005
	(In thousands)
Balance Sheet Data
Cash and cash equivalents	$	44,914		$	44,270		$	44,677		$	49,815		$	25,421		$	54,909		$	26,356
Investments		145,439			148,305			205,315			257,729			364,868			272,311			381,312
Amounts recoverable from reinsurers		327,172			298,451			214,342			211,774			198,977			197,057			189,698
Premiums receivable, net		122,450			104,907			95,291			108,380			114,141			122,389			124,115
Deferred income taxes		11,807			14,716			11,372			12,713			15,624			14,435			16,634
Deferred policy acquisition costs		14,038			11,077			9,505			11,820			12,044			12,933			16,533
Deferred charges		3,681			2,588			1,997			2,987			3,054			3,365			3,182
Total assets		685,308			645,474			603,801			678,608			754,187			694,196			778,553
Reserves for loss and loss adjustment expenses		379,824			383,032			346,542			377,559			432,880			378,447			442,554
Unearned premiums		107,418			92,047			87,319			103,462			111,741			115,249			116,564
Insurance-related assessments		25,522			25,964			23,743			26,133			29,876			27,825			32,544
Debt		9,500			9,000			8,000			16,310			36,090			16,310			36,090
Redeemable preferred stock(8)		112,061			116,520			121,300			126,424			131,916			127,761			133,350
Shareholders’ deficit(9)		(26,913	)		(10,980	)		(25,100	)		(20,652	)		(42,862	)		(19,326	)		(41,404	)

(1)	Includes policy acquisition expenses, such as assessments, premium taxes and other general and administrative expenses, excluding commissions and salaries and benefits, related to insurance operations and corporate operating expenses.
(2)	Reflects the participation rights of the Series C and Series D convertible preferred stock. See Note 15 to our audited financial statements.
(3)	The current accident year loss ratio is calculated by dividing loss and loss adjustment expenses incurred for the current accident year by the current year’s net premiums earned.
(4)	The prior accident year loss ratio is calculated by dividing the change in loss and loss adjustment expenses incurred for prior accident years by the current year’s net premiums earned.
(5)	The net underwriting expense ratio is calculated by dividing underwriting and certain other operating costs, commissions and salaries and benefits by the current year’s net premiums earned.
(6)	The net dividend ratio is calculated by dividing policyholder dividends by the current year’s net premiums earned.
(7)	The net combined ratio is the sum of the net loss ratio, the net underwriting expense ratio and the net dividend ratio.
(8)	Includes our Series A preferred stock and Series C and Series D convertible preferred stock, each of which is mandatorily redeemable upon the occurrence of certain events that are deemed to be outside the control of our company.
(9)	In 1997, we entered into a recapitalization transaction with Welsh Carson that resulted in a $164.2 million charge to retained earnings. See Note 1 to our audited financial statements.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

      The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this prospectus. This discussion includes forward-looking statements that are subject to risks, uncertainties and other factors described under the caption “Risk Factors.” These factors could cause our actual results in 2005 and beyond to differ materially from those expressed in, or implied by, those forward-looking statements. See “Forward-Looking Statements.”

Overview

      AMERISAFE is a holding company that markets and underwrites workers’ compensation insurance through its subsidiaries. Workers’ compensation insurance covers statutorily prescribed benefits that employers are obligated to provide to their employees who are injured in the course and scope of their employment. Our business strategy is focused on providing this coverage to small to mid-sized employers engaged in hazardous industries, principally construction, trucking and logging. Employers engaged in hazardous industries pay substantially higher than average rates for workers’ compensation insurance compared to employers in other industries, as measured per payroll dollar. The higher premium rates are due to the nature of the work performed and the inherent workplace danger of our target employers. Hazardous industry employers also tend to have less frequent but more severe claims as compared to employers in other industries due to the nature of their businesses. We provide proactive safety reviews of employers’ workplaces. These safety reviews are a vital component of our underwriting process and also promote safer workplaces. We utilize intensive claims management practices that we believe permit us to reduce the overall cost of our claims. In addition, our audit services ensure that our policyholders pay the appropriate premiums required under the terms of their policies and enable us to monitor payroll patterns or aberrations that cause underwriting, safety or fraud concerns. We believe that the higher premiums typically paid by our policyholders, together with our disciplined underwriting and safety, claims and audit services, provide us with the opportunity to earn attractive returns on equity.

      We actively market our insurance in 29 states and the District of Columbia through independent agencies, as well as through our wholly owned insurance agency subsidiary and are licensed in an additional 16 states and the U.S. Virgin Islands.

      We review our results of operations using various measures of growth, profitability, leverage and capital adequacy. Growth is measured in terms of changes in gross and net premiums written. Profitability is measured using net income (loss), underwriting and certain other operating costs, commissions, salaries and benefits and combined ratios. We evaluate leverage using both a debt-to-capital ratio that measures the financial leverage of our company on a consolidated basis, and a net premiums written-to-surplus ratio that measures the operating leverage of our insurance company subsidiaries. We evaluate capital adequacy using rating agency methodologies, which measure our insurance subsidiaries’ capital and surplus based on various factors, principally credit quality and loss reserve adequacy.

      Investment income is an important part of our business. Because the period of time between our receipt of premiums and the ultimate settlement of claims is often over several years, we are able to invest cash from premiums for significant periods of time. As a result, we are able to generate more investment income from our premiums as compared to insurance companies that operate in many other lines of business. From January 1, 2002 to December 31, 2004, our investment portfolio, including cash and cash equivalents, increased from $192.6 million to $390.3 million and produced net investment income of $9.4 million, $10.1 million and $12.2 million in 2002, 2003 and 2004, respectively.

      The use of reinsurance is an important component of our business strategy. We purchase reinsurance to protect us from the impact of large losses. Our reinsurance program for 2005 includes ten

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reinsurers that provide coverage to us in excess of a certain specified loss amount, or retention level. Under our reinsurance program, we pay our reinsurers a percentage of our gross premiums earned and, in turn, the reinsurers assume an allocated portion of losses for the year. Under our current reinsurance program, we retain the first $1.0 million of each loss occurrence. For losses between $1.0 million and $5.0 million, we have an annual aggregate deductible of approximately $5.6 million. After the deductible is satisfied, we retain 10.0% of each loss occurrence between $1.0 million and $5.0 million. As losses are incurred and recorded, we record amounts recoverable from reinsurers for the portion of the losses ceded to our reinsurers.

      With limited exceptions, we historically have retained a significant amount of losses under our reinsurance programs. From 1998 through 2000, we substantially lowered our retention to approximately $18,000 per year, which means that we ceded a greater portion of our premiums to our reinsurers. The effect of these lower retention levels was a significant increase in the amount of estimated losses assumed by our reinsurers. In addition, our amounts recoverable from reinsurers increased, reaching a high of $360.9 million at March 31, 2001. In 2001, we increased our retention level to $500,000, and maintained that retention level in 2002 and 2003. In 2004, we further increased our retention level to $1.0 million. As a result of these increases, our amounts recoverable from reinsurers have decreased to $189.7 million as of March 31, 2005.

      Our most significant balance sheet liability is our reserve for loss and loss adjustment expenses. We record reserves for estimated losses under insurance policies that we write and for loss adjustment expenses related to the investigation and settlement of policy claims. Our reserves for loss and loss adjustment expenses represent the estimated cost of all reported and unreported loss and loss adjustment expenses incurred and unpaid at any given point in time based on known facts and circumstances. Reserves are based on estimates of the most likely ultimate cost of individual claims. These estimates are inherently uncertain. Judgment is required to determine the relevance of our historical experience and industry information under current facts and circumstances. The interpretation of this historical and industry data can be impacted by external forces, principally frequency and severity of future claims, length of time to achieve ultimate settlement of claims, inflation of medical costs and wages, insurance policy coverage interpretations, jury determinations and legislative changes. Accordingly, our reserves may prove to be inadequate to cover our actual losses. If we change our estimates, these changes would be reflected in our results of operations during the period in which they are made, with increases in our reserves resulting in decreases in our earnings. We use both internal resources and the services of an independent casualty actuarial firm to develop and monitor our loss reserve estimates. We increased our estimates for prior year loss reserves by $3.9 million, $2.3 million and $13.4 million for 2002, 2003 and 2004, respectively. These increased estimates decreased our net income in 2002, 2003 and 2004 by approximately $2.5 million, $1.5 million and $8.7 million, respectively.

      The workers’ compensation insurance industry is cyclical in nature and influenced by many factors, including price competition, medical cost increases, natural and man-made disasters, changes in interest rates, changes in state laws and regulations and general economic conditions. A hard market cycle in our industry is characterized by decreased competition that results in higher premium rates, more restrictive policy coverage terms and lower commissions paid to agencies. In contrast, a soft market cycle is characterized by increased competition that results in lower premium rates, expanded policy coverage terms and higher commissions paid to agencies. We believe that the workers’ compensation insurance industry is slowly transitioning to a more competitive market environment. Our strategy across market cycles is to maintain premium rates, deploy capital judiciously, manage our expenses and focus on underserved markets within our target industries that we believe will provide opportunities for greater returns.

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Principal Revenue and Expense Items

      Our revenues consist primarily of the following:

      Net Premiums Earned. Net premiums earned is the earned portion of our net premiums written. Net premiums written is equal to gross premiums written less premiums ceded to reinsurers. Gross premiums written includes the estimated annual premiums from each insurance policy we write in our voluntary and assigned risk businesses during a reporting period based on the policy effective date or the date the policy is bound, whichever is later, as well as assumed reinsurance premiums from mandatory pooling arrangements.

      Premiums are earned on a daily pro rata basis over the term of the policy. At the end of each reporting period, premiums written that are not earned are classified as unearned premiums and are earned in subsequent periods over the remaining term of the policy. Our insurance policies typically have a term of one year. Thus, for a one-year policy written on July 1, 2004 for an employer with constant payroll during the term of the policy, we would earn half of the premiums in 2004 and the other half in 2005.

      Net Investment Income and Net Realized Gains and Losses on Investments. We invest our statutory surplus funds and the funds supporting our insurance liabilities in fixed maturity and equity securities. In addition, a portion of these funds are held in cash and cash equivalents to pay current claims. Our net investment income includes interest and dividends earned on our invested assets. We assess the performance of our investment portfolio using a standard tax equivalent yield metric. Net realized gains and losses on our investments are reported separately from our net investment income. Net realized gains occur when our investment securities are sold for more than their costs or amortized costs, as applicable. Net realized losses occur when our investment securities are sold for less than their costs or amortized costs, as applicable, or are written down as a result of an other-than-temporary impairment. We classify all of our fixed maturity securities, other than redeemable preferred stock, as held-to-maturity, and all of our equity securities and redeemable preferred stock as available-for-sale. Net unrealized gains (losses) on our equity securities and redeemable preferred stock are reported separately within accumulated other comprehensive income on our balance sheet.

      We evaluate the return on our investment portfolio using tax-equivalent yield. Municipal bonds, which are tax-exempt, are grossed up by our marginal federal tax rate of 35% to express yield on the same basis as taxable securities.

      Fee and Other Income. We recognize commission income earned on policies issued by other carriers that are sold by our wholly owned insurance agency subsidiary as the related services are performed. We also recognize a small portion of interest income from mandatory pooling arrangements in which we participate.

      Our expenses consist primarily of the following:

      Loss and Loss Adjustment Expenses Incurred. Loss and loss adjustment expenses incurred represents our largest expense item and, for any given reporting period, includes estimates of future claim payments, changes in those estimates from prior reporting periods and costs associated with investigating, defending and servicing claims. These expenses fluctuate based on the amount and types of risks we insure. We record loss and loss adjustment expenses related to estimates of future claim payments based on case-by-case valuations and statistical analyses. We seek to establish all reserves at the most likely ultimate exposure based on our historical claims experience. It is typical for our more serious claims to take several years to settle and we continually revise our estimates as we receive additional information about the condition of injured employees. Our ability to estimate loss and loss adjustment expenses accurately at the time of pricing our insurance policies is a critical factor in our profitability.

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      Underwriting and Certain Other Operating Costs. Underwriting and certain other operating costs are those expenses that we incur to underwrite and maintain the insurance policies we issue. These expenses include state and local premium taxes and fees and other operating costs, offset by commissions we receive from reinsurers under our reinsurance treaty program. We pay state and local taxes, licenses and fees, assessments and contributions to state workers’ compensation security funds based on premiums. In addition, other operating costs include general and administrative expenses, excluding commissions and salaries and benefits, incurred at both the insurance company and corporate levels.

      Commissions. We pay commissions to the independent agencies that sell our insurance based on premiums collected from policyholders.

      Salaries and Benefits. We pay salaries and provide benefits to our employees.

      Policyholder Dividends. In limited circumstances, we pay dividends to policyholders in particular states as an underwriting incentive.

      Interest Expense. Interest expense represents amounts we incur on our outstanding indebtedness at the then-applicable interest rate.

      Income Tax Expense. We incur federal, state and local income tax expense.

Critical Accounting Policies

      It is important to understand our accounting policies in order to understand our financial statements. Management considers some of these policies to be very important to the presentation of our financial results because they require us to make estimates and assumptions. These estimates and assumptions affect the reported amounts of our assets, liabilities, revenues and expenses and the related disclosures. Some of the estimates result from judgments that can be subjective and complex and, consequently, actual results in future periods might differ from these estimates.

      Management believes that the most critical accounting policies relate to the reporting of reserves for loss and loss adjustment expenses, including losses that have occurred but have not been reported prior to the reporting date, amounts recoverable from reinsurers, assessments, deferred policy acquisition costs, deferred income taxes and the impairment of investment securities.

      The following is a description of our critical accounting policies.

      Reserves for Loss and Loss Adjustment Expenses. We record reserves for estimated losses under insurance policies that we write and for loss adjustment expenses related to the investigation and settlement of policy claims. Our reserves for loss and loss adjustment expenses represent the estimated cost of all reported and unreported loss and loss adjustment expenses incurred and unpaid at any given point in time based on known facts and circumstances. Our reserves for loss and loss adjustment expenses are estimated using case-by-case valuations and statistical analyses. In establishing these estimates, we make various assumptions regarding a number of factors, including frequency and severity of future claims, length of time to achieve ultimate settlement of claims, projected inflation of medical costs and wages, insurance policy coverage interpretations and jury determinations. We also consider estimates of our reserves prepared by our independent actuaries using various standard actuarial techniques. Due to the inherent uncertainty associated with the cost of open and unreported claims, our actual liabilities may be different from our original estimates. On a quarterly basis, we review our reserves for loss and loss adjustment expenses to determine whether further adjustments are required. Any resulting adjustments are included in the current period’s results. Additional information regarding our reserves for loss and loss adjustment expenses can be found in “Business—Loss Reserves.”

      Amounts Recoverable from Reinsurers. Amounts recoverable from reinsurers represent the portion of our paid and unpaid loss and loss adjustment expenses that are assumed by reinsurers. These amounts are separately reported on our balance sheet as assets and do not reduce our reserves for loss

35

and loss adjustment expenses because reinsurance does not relieve us of liability to our policyholders. We are required to pay claims even if a reinsurer fails to pay us under the terms of a reinsurance contract. We calculate amounts recoverable from reinsurers based on our estimates of the underlying loss and loss adjustment expenses, as well as the terms and conditions of our reinsurance contracts, which could be subject to interpretation. In addition, we bear credit risk with respect to our reinsurers, which can be significant because some of the unpaid loss and loss adjustment expenses for which we have reinsurance coverage remain outstanding for extended periods of time.

      Assessments. We are subject to various assessments and premium surcharges related to our insurance activities, including assessments and premium surcharges for state guaranty funds and second injury funds. Assessments based on premiums are generally paid one year after the calendar year in which the policies are written. Assessments based on losses are generally paid within one year of when claims are paid by us. State guaranty fund assessments are used by state insurance oversight agencies to pay claims of policyholders of impaired, insolvent or failed insurance companies and the operating expenses of those agencies. Second injury funds are used by states to reimburse insurers and employers for claims paid to injured employees for aggravation of prior conditions or injuries. In some states, these assessments and premium surcharges may be partially recovered through a reduction in future premium taxes.

      Deferred Policy Acquisition Costs. We defer commission expenses, premium taxes and certain marketing, sales, underwriting and safety costs that vary with and are primarily related to the acquisition of insurance policies. These acquisition costs are capitalized and charged to expense ratably as premiums are earned. In calculating deferred policy acquisition costs, these costs are limited to their estimated realizable value, which gives effect to the premiums to be earned, anticipated losses and settlement expenses and certain other costs we expect to incur as the premiums are earned, less related net investment income. Judgments as to the ultimate recoverability of these deferred policy acquisition costs are highly dependent upon estimated future profitability of unearned premiums. If the unearned premiums were less than our expected claims and expenses after considering investment income, we would reduce the deferred costs.

      Deferred Income Taxes. We use the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities resulting from a tax rate change impacts our net income or loss in the reporting period that includes the enactment date of the tax rate change.

      In assessing whether our deferred tax assets will be realized, management considers whether it is more likely than not that we will generate future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, tax planning strategies and projected future taxable income in making this assessment. If necessary, we establish a valuation allowance to reduce the deferred tax assets to the amounts that are more likely than not to be realized.

      Impairment of Investment Securities. Impairment of an investment security results in a reduction of the carrying value of the security and the realization of a loss when the fair value of the security declines below our cost or amortized cost, as applicable, for the security and the impairment is deemed to be other-than-temporary. We regularly review our investment portfolio to evaluate the necessity of recording impairment losses for other-than-temporary declines in the fair value of our investments. We consider various factors in determining if a decline in the fair value of an individual security is other-than-temporary. Some of the factors we consider include:

• how long and by how much the fair value of the security has been below its cost;

36

• the financial condition and near-term prospects of the issuer of the security, including any specific events that may affect its operations or earnings;

• our intent and ability to keep the security for a sufficient time period for it to recover its value;

• any downgrades of the security by a rating agency; and

• any reduction or elimination of dividends, or nonpayment of scheduled interest payments.

Results of Operations

      The table below summarizes certain operating results and key measures we use in monitoring and evaluating our operations.

											Three Months Ended
		Year Ended December 31,									March 31,
		2002			2003			2004			2004			2005
											(Unaudited)
		(In thousands)
Income Statement Data
Gross premiums written		$	185,093		$	223,590		$	264,962		$	68,992		$	71,575
Ceded premiums written			(26,563	)		(27,600	)		(21,951	)		(4,893	)		(4,835	)
	Net premiums written	$	158,530		$	195,990		$	243,011		$	64,099		$	66,740
Net premiums earned		$	163,257		$	179,847		$	234,733		$	52,312		$	61,917
Net investment income			9,419			10,106			12,217			2,641			3,718
Net realized gains (losses) on investments			(895	)		316			1,421			310			227
Fee and other income			2,082			462			589			143			162
	Total revenues		173,863			190,731			248,960			55,406			66,024
Loss and loss adjustment expenses incurred			121,062			129,250			174,186			37,475			45,918
Underwriting and certain other operating costs(1)			22,674			23,062			28,987			6,585			8,344
Commissions			9,189			11,003			14,160			3,168			3,806
Salaries and benefits			16,541			15,037			15,034			3,810			2,800
Policyholder dividends			156			736			1,108			338			171
Interest expense			498			203			1,799			142			640
	Total expenses		170,120			179,291			235,274			51,518			61,679
Income before taxes			3,743			11,440			13,686			3,888			4,345
Income tax expense (benefit)			(1,438	)		2,846			3,129			997			1,108
	Net income	$	5,181		$	8,594		$	10,557		$	2,891		$	3,237
Selected Insurance Ratios
Current accident year loss ratio(2)			71.8%			70.6%			68.5%			67.0%			69.8%
Prior accident year loss ratio(3)			2.4%			1.3%			5.7%			4.6%			4.4%
Net loss ratio			74.2%			71.9%			74.2%			71.6%			74.2%
Net underwriting expense ratio(4)			29.7%			27.3%			24.8%			25.9%			24.2%
Net dividend ratio(5)			0.1%			0.4%			0.5%			0.6%			0.3%
Net combined ratio(6)			104.0%			99.6%			99.5%			98.1%			98.7%

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	As of December 31,									As of March 31,
	2002			2003			2004			2004			2005
	(In thousands)									(Unaudited)
Balance Sheet Data
Cash and cash equivalents	$	44,677		$	49,815		$	25,421		$	54,909		$	26,356
Investments		205,315			257,729			364,868			272,311			381,312
Amounts recoverable from reinsurers		214,342			211,774			198,977			197,057			189,698
Premiums receivable, net		95,291			108,380			114,141			122,389			124,115
Deferred income taxes		11,372			12,713			15,624			14,435			16,634
Deferred policy acquisition costs		9,505			11,820			12,044			12,933			16,533
Deferred charges		1,997			2,987			3,054			3,365			3,182
Total assets		603,801			678,608			754,187			694,196			778,553
Reserves for loss and loss adjustment expenses		346,542			377,559			432,880			378,447			442,554
Unearned premiums		87,319			103,462			111,741			115,249			116,564
Insurance-related assessments		23,743			26,133			29,876			27,825			32,544
Debt		8,000			16,310			36,090			16,310			36,090
Redeemable preferred stock(7)		121,300			126,424			131,916			127,761			133,350
Shareholders’ deficit(8)		(25,100	)		(20,652	)		(42,862	)		(19,326	)		(41,404	)

(1)	Includes policy acquisition expenses, such as assessments, premium taxes and other general and administrative expenses, excluding commissions and salaries and benefits, related to insurance operations and corporate operating expenses.
(2)	The current accident year loss ratio is calculated by dividing loss and loss adjustment expenses incurred for the current accident year by the current year’s net premiums earned.
(3)	The prior accident year loss ratio is calculated by dividing the change in loss and loss adjustment expenses incurred for prior accident years by the current year’s net premiums earned.
(4)	The net underwriting expense ratio is calculated by dividing underwriting and certain other operating costs, commissions and salaries and benefits by the current year’s net premiums earned.
(5)	The net dividend ratio is calculated by dividing policyholder dividends by the current year’s net premiums earned.
(6)	The net combined ratio is the sum of the net loss ratio, the net underwriting expense ratio and the net dividend ratio.
(7)	Includes our Series A preferred stock and Series C and Series D convertible preferred stock, each of which is mandatorily redeemable upon the occurrence of certain events that are deemed to be outside the control of our company.
(8)	In 1997, we entered into a recapitalization transaction with Welsh Carson that resulted in a $164.2 million charge to retained earnings. See Note 1 to our audited financial statements.

Overview of Operating Results

Three Months Ended March 31, 2005 Compared to Three Months Ended March 31, 2004

      Gross Premiums Written. Gross premiums written for the three months ended March 31, 2005 were $71.6 million, compared to $69.0 million for the same period in 2004, an increase of 3.7%. The increase is attributable to positive premium adjustments related to payroll audits, which are written and earned in the same period, and, to a lesser extent, an increase in our assigned risk business.

      Net Premiums Written. Net premiums written for the three months ended March 31, 2005 were $66.7 million, compared to $64.1 million for the same period in 2004, an increase of 4.1%. The increase

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is attributable to growth in gross premiums written combined with a slight decrease in the percentage of premiums ceded to reinsurers from 7.1% of gross premiums written for the three months ended March 31, 2004 to 6.8% for the three months ended March 31, 2005.

      Net Premiums Earned. Net premiums earned for the three months ended March 31, 2005 were $61.9 million, compared to $52.3 million for the same period in 2004, an increase of 18.4%. This increase was the result of an increase in premiums written in 2004, which resulted in a higher relative release of earnings in the first quarter of 2005.

      Net Investment Income. Net investment income for the three months ended March 31, 2005 was $3.7 million, compared to $2.6 million for the same period in 2004, an increase of 40.8%. The change was attributable to an increase in our investment portfolio from an average of $317.9 million for the three months ended March 31, 2004 to an average of $399.0 million for the three months ended March 31, 2005. In addition, the tax-equivalent yield on our investment portfolio increased to 4.6% per annum for the three months ended March 31, 2005, as compared to 3.5% per annum for the three months ended March 31, 2004.

      Net Realized Gains on Investments. Net realized gains on investments for the three months ended March 31, 2005 totaled $227,000, compared to $310,000 for the same period in 2004, a decrease of 26.8%. The decrease was attributable to the timing of the sale of equity securities in accordance with our investment guidelines.

      Loss and Loss Adjustment Expenses Incurred. Loss and loss adjustment expenses incurred totaled $45.9 million for the three months ended March 31, 2005, as compared to $37.5 million for the three months ended March 31, 2004, which represents a 22.5% increase. This increase was driven by a growth in net premiums earned of 18.4%, and an increase in losses incurred related to the 2003 and 2004 accident years. The increase in losses incurred in the 2003 and 2004 accident years resulted primarily from claim settlements in excess of our established case reserves and increased estimates in reserves for those accident years. The increases in our case reserves resulted from new information gained by our field case managers in the normal course of adjusting claims. In the aggregate, adjustments to our reserves for the 2003 and 2004 accident years increased our net incurred losses for the three months ended March 31, 2005 by $5.0 million. However, net adjustments for accident years prior to 2003 decreased by $2.3 million. The net adjustment for all prior accident years was a $2.7 million increase to loss and loss adjustment expenses incurred for the three months ended March 31, 2005, as compared to a $2.4 million increase for the three months ended March 31, 2004.

      Underwriting and Certain Other Operating Costs. Underwriting and certain other operating costs for the three months ended March 31, 2005 were $15.0 million, compared to $13.6 million for the same period in 2004, an increase of 10.2%. The increase was attributable to increases in variable expenses such as premium taxes and loss-based assessments, as well as a decrease in our reinsurance ceding commission, which acts as an offset to underwriting expenses. Our expense ratio, however, decreased from 25.9% for the three months ended March 31, 2004 to 24.2% for the same period in 2005.

      Interest Expense. Interest expense for the three months ended March 31, 2005 was $640,000, compared to $142,000 for the same period in 2004. The increase was attributable to the issuance of $25.8 million of subordinated notes in April 2004, the proceeds of which were used to redeem outstanding shares of our Series E preferred stock. In addition, the average cost of our weighted average borrowings increased to 6.6% per annum for the three months ended March 31, 2005, as compared to 5.3% per annum for the same period in 2004.

      Income Tax Expense. Income tax expense for the three months ended March 31, 2005 was $1.1 million, compared to $1.0 million for the same period in 2004, an increase of 11.1%. The increase was attributable to an increase in pre-tax income of 11.7%. The effective tax rate was 25.5% and 25.6% for the three months ended March 31, 2005 and March 31, 2004, respectively.

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     Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

      Gross Premiums Written. Gross premiums written for the year ended December 31, 2004 were $265.0 million, compared to $223.6 million in 2003, an increase of 18.5%. The increase was attributable to increased premium rates, growth in both new and renewal business and positive premium adjustments related to payroll audits.

      Net Premiums Written. Net premiums written for the year ended December 31, 2004 were $243.0 million, compared to $196.0 million for the same period in 2003, an increase of 24.0%. The increase was attributable to growth in gross premiums written and a decrease in premiums ceded to reinsurers from $27.6 million in 2003 to $22.0 million in 2004 resulting from increased retention levels under our reinsurance treaty program in 2004 as compared to 2003.

      Net Premiums Earned. Net premiums earned for the year ended December 31, 2004 were $234.7 million, compared to $179.8 million for the same period in 2003, an increase of 30.5%. The increase was attributable to the growth in gross and net premiums written and an increase in the percentage of policies written in the first half of 2004 as compared to the first half of 2003.

      Net Investment Income. Net investment income for the year ended December 31, 2004 was $12.2 million, compared to $10.1 million for the same period in 2003, an increase of 20.9%. The increase was attributable to the growth in our investment portfolio from an average of $278.8 million in 2003 to an average of $348.9 million in 2004, an increase of 25.2%. The growth in our investment portfolio resulted primarily from our cash flows from operations, which totaled $91.9 million in 2004. In addition, the tax-equivalent yield on our investment portfolio increased from 4.0% per annum for the year ended December 31, 2003 to 4.2% per annum for 2004.

      Net Realized Gains on Investments. Net realized gains on investments for the year ended December 31, 2004 totaled $1.4 million, compared to $316,000 for the same period in 2003. The increase was due to $1.2 million in gains from the sale of equity securities in our investment portfolio.

      Loss and Loss Adjustment Expenses Incurred. Loss and loss adjustment expenses incurred increased to $174.2 million for the year ended December 31, 2004 from $129.3 million for the year ended December 31, 2003, an increase of 34.8%. The increase resulted from a growth in net premiums earned of 30.5%, and an increase in loss and loss adjustment expenses incurred for prior accident years, from $2.3 million in 2003 to $13.4 million in 2004. The increase for prior accident years related primarily to the 2002 accident year, which increased by $9.4 million. The unfavorable development in 2002 was the result of claim settlements in excess of our established case reserves and increased estimates in our reserves for that accident year.

      Underwriting and Certain Other Operating Costs. Underwriting and certain other operating costs for the year ended December 31, 2004 were $58.2 million, compared to $49.1 million for the same period in 2003, an increase of 18.4%. The increase was caused by the 30.5% increase in net premiums earned, which caused premium-related expenses, principally mandatory pooling arrangement fees, bad debt expenses, premium taxes and premium-based assessments, to increase. In addition, there was a decrease in commissions received from our reinsurers related to premiums ceded, which commissions are netted against our underwriting and certain other operating costs, from $7.3 million in 2003 to $4.8 million in 2004. Our expense ratio in 2004 was 24.8% compared to 27.3% in 2003.

      Interest Expense. Interest expense for the year ended December 31, 2004 was $1.8 million, compared to $203,000 for the same period in 2003. The increase was attributable to the issuance of $10.3 million of subordinated notes in December 2003, the issuance of $25.8 million of subordinated notes in April 2004 and an increase in interest rates. The increase in interest expense was partially offset by the repayment of $6.0 million of other long-term debt. The average cost of our weighted average borrowings increased to 4.8% per annum in 2004, as compared to 2.9% per annum in 2003.

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      Income Tax Expense. Income tax expense for the year ended December 31, 2004 was $3.1 million, compared to $2.8 million for the same period in 2003, an increase of 9.9%. As a percentage of pre-tax income, our effective income tax rate decreased from 24.9% in 2003 to 22.9% in 2004. The decrease in the effective rate resulted from a larger percentage of tax-exempt fixed maturity securities in our investment portfolio in 2004 and a positive adjustment to our prior year’s tax liability.

     Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

      Gross Premiums Written. Gross premiums written for the year ended December 31, 2003 were $223.6 million, compared to $185.1 million for the same period in 2002, an increase of 20.8%. The increase was primarily attributable to an increase in new voluntary business and, to a lesser extent, increased premium rates.

      Net Premiums Written. Net premiums written for the year ended December 31, 2003 were $196.0 million, compared to $158.5 million for the same period in 2002, an increase of 23.6%. The growth in net premiums written is attributable to the increase in gross premiums written.

      Net Premiums Earned. Net premiums earned for the year ended December 31, 2003 were $179.8 million, compared to $163.3 million for the same period in 2002, an increase of 10.2%. The increase was attributable to the growth in gross and net premiums written, offset by an increase in premiums ceded to reinsurers and a decrease in the percentage of policies written in the first half of 2003 as compared to the first half of 2002.

      Net Investment Income. Net investment income for the year ended December 31, 2003 was $10.1 million, compared to $9.4 million for the same period in 2002, an increase of 7.3%. The increase was due to an increase in our average investment portfolio from $221.3 million in 2002 to $278.8 million in 2003 resulting from increased cash flow from operations, and an increase in the yield on our investment portfolio from 3.5% per annum in 2002 to 4.0% per annum in 2003.

      Net Realized Gains (Losses) on Investments. Net realized gains on investments for the year ended December 31, 2003 were $316,000, compared to net realized losses on investments of $895,000 for the same period in 2002. This change resulted from the sale of several of our investments at a loss in 2002.

      Loss and Loss Adjustment Expenses Incurred. Loss and loss adjustment expenses incurred increased to $129.2 million for the year ended December 31, 2003 from $121.1 million for the year ended December 31, 2002, an increase of 6.8%. The increase was driven by a growth in net premiums earned of 10.2%, offset by a decrease in our net loss ratio from 74.2% in 2002 to 71.9% in 2003. This decrease in our net loss ratio was due to a decrease in our loss and loss adjustment expenses incurred in 2003 related to current and prior accident years.

      Underwriting and Certain Other Operating Costs. Underwriting and certain other operating costs for the year ended December 31, 2003 were $49.1 million, compared to $46.8 million for the same period in 2002, an increase of 4.9%. The increase was caused by the 10.2% increase in net premiums earned, which caused premium-related expenses, principally premium taxes, mandatory pooling arrangement fees and assessments to increase. Offsetting the increase was a recovery of $800,000 of legal fees through the settlement of a dispute with a building contractor. Our expense ratio in 2003 was 27.3%, compared to a ratio of 29.7% in 2002.

      Interest Expense. Interest expense for the year ended December 31, 2003 was $203,000, compared to $498,000 for the same period in 2002, a decrease of 59.2%. The decrease was the result of a decrease in the average cost of our weighted average borrowings from 3.9% per annum in 2002 to 2.9% per annum in 2003.

      Income Tax Expense. Income tax expense for the year ended December 31, 2003 was $2.8 million, compared to a $1.4 million income tax benefit for the same period in 2002. Income tax expense for 2002 was positively impacted by $1.1 million from tax method changes for prior years.

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Liquidity and Capital Resources

      Our principal sources of operating funds are premiums, investment income and proceeds from sales and maturities of investments. Our primary uses of operating funds include payments of claims and operating expenses. Currently, we pay claims using cash flow from operations and invest our excess cash in fixed maturity and equity securities.

      We seek to structure our investment portfolio so that investments mature in reasonable relation to our current expectations of future claims. We forecast claim payments based on our historical trends. The fixed maturity securities in our investment portfolio as of March 31, 2005 had an effective duration of 3.5 years, with individual maturities extending out to 30 years.

      We seek to manage the funding of claim payments by actively managing available cash and forecasting cash flows on a short- and long-term basis. We also manage our cash by purchasing reinsurance to protect us against severe claims and catastrophic events. Effective January 1, 2005, our reinsurance program provides us with reinsurance coverage for each loss occurrence in excess of $1.0 million, up to $30.0 million, subject to applicable deductibles and retentions. However, for any loss occurrence involving only one person, our reinsurance coverage is limited to a maximum of $10.0 million, subject to applicable deductibles and retentions. We have an annual aggregate deductible of approximately $5.6 million for losses between $1.0 million and $5.0 million. After the deductible is satisfied, we retain 10.0% of each loss occurrence between $1.0 million and $5.0 million. Based on our estimates of future claims, we believe we are sufficiently capitalized to retain the first $1.0 million of each loss occurrence.

      Net cash provided by operating activities was $16.0 million for the three months ended March 31, 2005, as compared to $18.8 million for the same period in 2004. For the first quarter of 2005, major components of cash provided by operating activities were net premiums collected of $60.4 million and amounts recovered from reinsurers of $9.6 million, offset by claim payments of $38.4 million and operating expenditures of $15.6 million. Major components of cash provided by operating activities in the first quarter of 2004 were net premiums collected of $56.2 million and amounts recovered from reinsurers of $16.6 million, offset by claim payments of $37.2 million and operating expenditures of $16.8 million.

      Net cash provided by operating activities was $91.9 million for the year ended December 31, 2004, $50.5 million for the year ended December 31, 2003 and $54.3 million for the year ended December 31, 2002. Major components of cash provided by operating activities in 2004 were net premiums collected of $259.0 million and amounts recovered from reinsurers of $51.7 million, offset by claim payments of $151.2 million and operating expenditures of $67.6 million. Major components of cash provided by operating activities in 2003 were net premium collected of $213.1 million and amounts recovered from reinsurers of $61.3 million, offset by claim payments of $155.5 million and operating expenditures of $68.4 million. Major components of cash provided by operating activities in 2002 were net premiums collected of $193.4 million and amounts recovered from reinsurers of $103.8 million, offset by claim payments of $173.4 million and operating expenditures of $69.5 million.

      Net cash used by investing activities was $15.0 million for the three months ended March 31, 2005, as compared to $13.7 million for the same period in 2004. For the first quarter of 2005, investment purchases totaled $25.9 million, proceeds from sales and maturities of investments totaled $11.3 million, and purchases of real estate, furniture, fixtures and equipment totaled $0.4 million. For the first quarter of 2004, investment purchases totaled $22.2 million, proceeds from sales and maturities of investments totaled $8.5 million and purchases of real estate, furniture, fixtures and equipment totaled $0.1 million.

      Net cash used by investing activities was $109.0 million for the year ended December 31, 2004, $53.6 million for the year ended December 31, 2003 and $52.9 million for the year ended December 31, 2002. In 2004, investment purchases totaled $145.3 million, proceeds from sales and maturities of

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investments totaled $39.1 million and net purchases of real estate, furniture, fixtures and equipment totaled $2.8 million. In 2003, investment purchases totaled $90.7 million, proceeds from sales and maturities of investments totaled $37.7 million and net purchases of real estate, furniture, fixtures and equipment totaled $0.6 million. In 2002, investment purchases totaled $78.2 million, proceeds from sales and maturities of investments totaled $27.0 million, net purchases of real estate, furniture, fixtures and equipment totaled $1.6 million and proceeds from the sale of a subsidiary totaled $0.1 million.

      There were no financing activities in the three months ended March 31, 2005 or the three months ended March 31, 2004. Net cash used by financing activities was $7.4 million for the year ended December 31, 2004. In 2004, AMERISAFE entered into a trust preferred securities transaction pursuant to which it issued $25.8 million of subordinated notes. The proceeds from this issuance were offset by the redemption of $27.2 million of Series E preferred stock and the repayment of the remaining $6.0 million under a bank line of credit.

      Net cash provided by financing activities was $8.3 million for the year ended December 31, 2003. In 2003, AMERISAFE entered into a trust preferred securities transaction pursuant to which it issued $10.3 million of subordinated notes. The proceeds from this issuance were offset by the repayment of $2.0 million under a bank line of credit.

      Net cash used by financing activities was $1.0 million for the year ended December 31, 2002. This resulted solely from repayment of $1.0 million of long-term debt.

      Interest on the outstanding subordinated notes accrues at a floating rate equal to the three-month LIBOR plus a marginal rate. Our $10.3 million issuance of subordinated notes, due 2034, has a marginal rate of 4.10%, and, as of March 31, 2005, had an effective rate of 7.2%. These notes are prepayable at par beginning in January 2009. Our $25.8 million issuance of subordinated notes, due 2034, has a marginal rate of 3.80% and, as of March 31, 2005, had an effective rate of 6.9%. These notes are prepayable at par beginning in April 2009.

      AMERISAFE is a holding company that transacts business through its operating subsidiaries, including American Interstate, Silver Oak Casualty and American Interstate of Texas. AMERISAFE’s primary assets are the capital stock of these operating subsidiaries. The ability of AMERISAFE to fund its operations depends upon the surplus and earnings of its subsidiaries and their ability to pay dividends to AMERISAFE. Payment of dividends by our insurance subsidiaries is restricted by state insurance laws, including laws establishing minimum solvency and liquidity thresholds. See “Business—Regulation—Dividend Limitations.” Based on reported capital and surplus at December 31, 2004, American Interstate would have been permitted under Louisiana insurance law to pay dividends to AMERISAFE in 2005 in an amount up to $11.2 million without approval by the Louisiana Department of Insurance.

      During 2004, Converium Reinsurance (North America) reported a significant loss, resulting in a downgrade in its A.M. Best rating. At March 31, 2005, our amounts recoverable from Converium were $80.0 million. Subsequent to March 31, 2005, Converium paid us $7.0 million. These amounts related to five agreements providing reinsurance coverage for the 1999 and 2000 accident years and runoff. Although Converium continued to reimburse us under the terms of our reinsurance agreements, we initiated discussions with Converium to seek to reduce the credit risk associated with the amounts due to us. Effective June 30, 2005, we entered into a commutation agreement with Converium. Under this agreement, Converium will pay us $61.3 million in exchange for a termination and full release of three of our five reinsurance agreements with Converium. Under the commutation agreement, all liabilities reinsured with Converium under these three reinsurance agreements have reverted back to us. The reinsurance agreements have been terminated, and we and Converium have fully released each other from all liabilities under or relating to these three reinsurance agreements. We recorded a pre-tax loss of $6.7 million related to this commutation agreement. Converium remains obligated to us under the remaining two agreements. At June 30, 2005, the amounts recoverable from Converium under the

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remaining two reinsurance agreements was $6.9 million. We are continuing to evaluate alternatives to further reduce the credit risk associated with these amounts.

Investment Portfolio

      The first priority of our investment strategy is capital preservation, with a secondary focus on maximizing an appropriate risk adjusted return. We presently expect to maintain sufficient liquidity from funds generated from operations to meet our anticipated insurance obligations and operating and capital expenditure needs, with excess funds invested in accordance with our investment guidelines. Our investment portfolio is managed by an independent asset manager that operates under investment guidelines approved by our board of directors. We allocate our portfolio into three categories; cash and cash equivalents, fixed maturity securities and equity securities. Cash and cash equivalents include cash on deposit, commercial paper, short-term municipal securities, pooled short-term money market funds and certificates of deposit. Our fixed maturity securities include obligations of the U.S. Treasury or U.S. agencies, obligations of states and their subdivisions, long-term certificates, U.S. dollar-denominated obligations of U.S. corporations, mortgage-backed securities, mortgages guaranteed by the Federal National Mortgage Association and the Government National Mortgage Association, asset-backed securities and preferred stocks that are mandatorily redeemable or are redeemable at the option of the holder. Our equity securities include U.S. dollar-denominated common stocks of U.S. corporations, master limited partnerships and nonredeemable preferred stock.

      Under Louisiana and Texas law, as applicable, each of American Interstate, Silver Oak Casualty and American Interstate of Texas is required to invest only in securities that are either interest-bearing or eligible for dividends, and must limit its investment in the securities of any single issuer to five percent of the insurance company’s assets. As of March 31, 2005, we were in compliance with these requirements.

      We employ diversification policies and balance investment credit risk and related underwriting risks to minimize our total potential exposure to any one business sector or security. Our investment portfolio, including cash and cash equivalents, had a carrying value of $407.7 million as of March 31, 2005, and is summarized in the table below by type of investment.

					Percentage
			Carrying Value		of Portfolio
			(In thousands)
Fixed maturity securities:
	State and political subdivisions		$	172,102		42.2%
	Mortgage-backed securities			88,145		21.6%
	U.S. Treasury securities and obligations of U.S. government agencies			44,690		11.0%
	Corporate bonds			23,836		5.8%
	Asset-backed securities			2,200		0.5%
	Redeemable preferred stocks			1,720		0.7%
		Total fixed maturity securities		332,693		81.8%
Equity securities:
	Common stocks			42,881		10.5%
	Nonredeemable preferred stocks			5,738		1.2%
		Total equity securities		48,619		11.7%
Total investments, excluding cash and cash equivalents			$	381,312		93.5%
Cash and cash equivalents				26,356		6.5%
Total investments, including cash and cash equivalents			$	407,668		100.0%

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      We regularly evaluate our investment portfolio to identify other-than-temporary impairments in the fair values of the securities held in our investment portfolio. We consider various factors in determining whether a decline in the fair value of a security is other-than-temporary, including:

• how long and by how much the fair value of the security has been below its cost;

• the financial condition and near-term prospects of the issuer of the security, including any specific events that may affect its operations or earnings;

• our intent and ability to keep the security for a sufficient time period for it to recover its value;

• any downgrades of the security by a rating agency; and

• any reduction or elimination of dividends, or nonpayment of scheduled interest payments.

      As of March 31, 2005, there were no other-than-temporary declines in the fair values of the securities held in our investment portfolio.

      The gross unrealized losses of our fixed maturity and equity securities as of March 31, 2005 were as follows:

			Aggregate		Aggregate			Fair Value as %
			Fair Value		Unrealized Loss			of Cost Basis
			(In thousands)
Fixed maturity securities with unrealized losses:
	Exceeding $50,000 at March 31, 2005 and for:
		Less than one year (ten issues)	$	50,297	$	(876	)		98.3	%
		Longer than one year		3,617		(142	)		96.1	%
	Less than $50,000 at March 31, 2005 (134 issues)			137,496		(2,007	)		98.5	%
Equity securities with unrealized losses:
	Exceeding $50,000 at March 31, 2005 and for:
		Less than one year (five issues)		3,754		(434	)		88.5	%
		Longer than one year (two issues)		837		(22	)		97.3	%
	Less than $50,000 at March 31, 2005 (196 issues)		$	12,710	$	(890	)		93.0	%

      As of March 31, 2005, we did not hold any securities with unrealized losses that were in excess of 20% of the security’s book value as of that date.

Contractual Obligations and Commitments

      We manage risk on certain long-duration claims by settling these claims through the purchase of annuities from unaffiliated life insurance companies. In the event these companies are unable to meet their obligations under these annuity contracts, we remain primarily liable to the claimants, but our reinsurers remain obligated to indemnify us for all or part of these obligations in accordance with the terms of our reinsurance contracts. As of December 31, 2004, the present value of these annuities was $47.4 million, as estimated by our annuity providers. Each of the life insurance companies issuing these annuities, or the entity guaranteeing the life insurance company, has an A.M. Best rating of “A-” (Excellent) or better.

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      We lease equipment and office space under noncancelable operating leases. Future minimum lease payments at December 31, 2004, were as follows:

	Future Minimum
Year	Lease Payments
	(In thousands)
2005	$	479
2006		303
2007		185
2008		88
2009		58
2010		50
	$	1,163

      Rental expense was approximately $956,000, 1.1 million and 1.1 million for the years ended December 31, 2004, 2003 and 2002, respectively.

      The table below provides information with respect to our long-term debt and contractual commitments as of December 31, 2004.

		Payment Due By Period
				Less Than						More Than
Contractual Obligations		Total		1 Year		1-3 Years		4-5 Years		5 Years
		(In thousands)
Subordinated notes(1)		$	36,090	$	0	$	0	$	0	$	36,090
Loss and loss adjustment expenses(2)			432,880		100,043		95,004		38,817		199,016
Loss-based insurance assessments(3)			16,724		3,865		3,670		1,500		7,689
Capital lease obligations			1,530		0		1,530		0		0
Operating lease obligations			1,163		479		576		108		0
Purchase obligations			135		65		70		0		0
	Total	$	488,522	$	104,452	$	100,850	$	40,425	$	242,795

(1)

Amounts do not include interest payments associated with these obligations. Interest rates on our subordinated notes are variable and may change on a quarterly basis. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for further discussion of our subordinated notes.

(2)

The loss and loss adjustment expense payments due by period in the table above are based upon the loss and loss adjustment expense estimates as of December 31, 2004 and actuarial estimates of expected payout patterns and are not contractual liabilities as to a time certain. Our contractual liability is to provide benefits under the policy. As a result, our calculation of loss and loss adjustment expense payments due by period is subject to the same uncertainties associated with determining the level of loss and loss adjustment expenses generally and to the additional uncertainties arising from the difficulty of predicting when claims (including claims that have not yet been reported to us) will be paid. For a discussion of our loss and loss adjustment expense process, see “Business—Loss Reserves.” Actual payments of loss and loss adjustment expenses by period will vary, perhaps materially, from the table above to the extent that current estimates of loss and loss adjustment expenses vary from actual ultimate claims amounts and as a result of variations between expected and actual payout patterns. See “Risk Factors—Risks Related to Our Business—Our loss reserves are based on estimates and may be inadequate to cover our actual

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losses” for a discussion of the uncertainties associated with estimating loss and loss adjustment expenses.

(3)

We are subject to various annual assessments imposed by certain of the states in which we write insurance policies. These assessments are generally based upon the amount of premiums written or losses paid during the applicable year. Assessments based on premiums are generally paid within one year after the calendar year in which the policies are written, while assessments based on losses are generally paid within one year after the loss is paid. When we establish a reserve for loss and loss adjustment expenses for a reported claim, we accrue our obligation to pay any applicable assessments. If settlement of the claim is to be paid out over more than one year, our obligation to pay any related loss-based assessments extends for the same period of time. Because our reserves for loss and loss adjustment expenses are based on estimates, our accruals for loss-based insurance assessments are also based on estimates. Actual payments of loss and loss adjustment expenses may differ, perhaps materially, from our reserves. Accordingly, our actual loss-based insurance assessments may vary, perhaps materially, from our accruals.

Off-Balance Sheet Arrangements

      We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Quantitative and Qualitative Disclosures About Market Risk

      Market risk is the risk of potential economic loss principally arising from adverse changes in the fair value of financial instruments. The major components of market risk affecting us are credit risk, interest rate risk and equity price risk. We currently have no exposure to foreign currency risk.

      Credit Risk. Credit risk is the potential loss arising principally from adverse changes in the financial condition of the issuers of our fixed maturity securities and the financial condition of our reinsurers. We address the credit risk related to the issuers of our fixed maturity securities by investing in fixed maturity securities that are rated “BBB” or higher by Standard & Poor’s. We also independently, and through our independent asset manager, monitor the financial condition of all issuers of our fixed maturity securities. To limit our risk exposure, we employ stringent diversification policies that limit the credit exposure to any single issuer or business sector.

      We are subject to credit risk with respect to our reinsurers. Although our reinsurers are obligated to reimburse us to the extent we cede risk to them, we are ultimately liable to our policyholders on all risks we have reinsured. As a result, reinsurance contracts do not limit our ultimate obligations to pay claims and we might not collect amounts recoverable from our reinsurers. We address this credit risk by initially selecting reinsurers with an A.M. Best rating of “A-” (Excellent) or better and by performing, along with our reinsurance broker, quarterly credit reviews of our reinsurers. If one of our reinsurers suffers a credit downgrade, we may consider various options to lessen the risk of asset impairment including commutation, novation and letters of credit. See “—Liquidity and Capital Resources.”

      Interest Rate Risk. We had fixed maturity securities with a fair value of $327.2 million and a carrying value of $332.7 million as of March 31, 2005 that are subject to interest rate risk. We are also subject to interest rate risk on our subordinated debt securities, which have quarterly adjustable interest rates based on LIBOR plus a fixed margin. Interest rate risk is the risk that we may incur losses due to adverse changes in interest rates. Fluctuations in interest rates have a direct impact on the market valuation of our fixed maturity securities and the cost to service our subordinated debt securities. We manage our exposure to interest rate risk through a disciplined asset and liability matching and capital management process. In the management of this risk, the characteristics of duration, credit and variability of cash flows are critical elements. These risks are assessed regularly and balanced within the context of our liability and capital position.

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      The table below summarizes the interest rate risk associated with our fixed maturity securities by illustrating the sensitivity of the fair value and carrying value of our fixed maturity securities as of March 31, 2005 to selected hypothetical changes in interest rates, and the associated impact on our shareholders’ deficit. We classify our fixed maturity securities, other than redeemable preferred stock, as held-to-maturity and carry them on our balance sheet at cost or amortized cost, as applicable. Our redeemable preferred stock is classified as available-for-sale and carried on our balance sheet at fair value. Temporary changes in the fair value of our fixed maturity securities that are held-to-maturity, such as those resulting from interest rate fluctuations, do not impact the carrying value of these securities and, therefore, do not affect our shareholders’ deficit. However, temporary changes in the fair value of our fixed maturity securities that are held as available-for-sale do impact the carrying value of these securities and are reported in our shareholders’ deficit as a component of other comprehensive income, net of deferred taxes. The selected scenarios in the table below are not predictions of future events, but rather are intended to illustrate the effect such events may have on the fair value and carrying value of our fixed maturity securities and on our shareholders’ deficit.

											Hypothetical
											Percentage
								Estimated			(Increase)
			Estimated					Change in			Decrease in
Hypothetical Change			Change in					Carrying			Shareholders’
in Interest Rates	Fair Value		Fair Value			Carrying Value		Value			Deficit
200 basis point increase	$	305,481	$	(21,740	)	$	332,576	$	(117	)		(0.08	)%
100 basis point increase		315,953		(11,268	)		332,634		(59	)		(0.04	)%
No change		327,221		—			332,693		—			—
100 basis point decrease		339,373		12,152			332,756		63			0.04	%
200 basis point decrease		352,532		25,311			332,814		121			0.09	%

      Equity Price Risk. Equity price risk is the risk that we may incur losses due to adverse changes in the market prices of the equity securities we hold in our investment portfolio, which include common stocks, nonredeemable preferred stocks and master limited partnerships. We classify our portfolio of equity securities as available-for-sale and carry these securities on our balance sheet at fair value. Accordingly, adverse changes in the market prices of our equity securities result in a decrease in the value of our total assets and an increase in our stockholders’ deficit. As of March 31, 2005, the equity securities in our investment portfolio had a fair value of $48.6 million, representing 6.2% of our total assets on that date. In order to minimize our exposure to equity price risk, we invest primarily in mid-to-large capitalization issues and seek to diversify our equity holdings across several business sectors. In addition, we currently limit the percentage of equity securities held in our investment portfolio to 12% of the carrying value and 15% of the market value of our total investment portfolio.

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BUSINESS

Overview

      We are a specialty provider of workers’ compensation insurance focused on small to mid-sized employers engaged in hazardous industries, principally construction, trucking, logging, agriculture, oil and gas, maritime and sawmills. Since commencing operations in 1986, we have gained significant experience underwriting the complex workers’ compensation exposures inherent in these industries. We provide coverage to employers under state and federal workers’ compensation laws. These laws prescribe wage replacement and medical care benefits that employers are obligated to provide to their employees who are injured in the course and scope of their employment. Our workers’ compensation insurance policies provide benefits to injured employees for, among other things, temporary or permanent disability, death and medical and hospital expenses. The benefits payable and the duration of those benefits are set by state or federal law. The benefits vary by jurisdiction, the nature and severity of the injury and the wages of the employee. The employer, who is the policyholder, pays the premiums for coverage.

      Hazardous industry employers tend to have less frequent but more severe claims as compared to employers in other industries due to the nature of their businesses. Injuries that occur are often severe in nature including death, dismemberment, paraplegia and quadriplegia. As a result, employers engaged in hazardous industries pay substantially higher than average rates for workers’ compensation insurance compared to employers in other industries, as measured per payroll dollar. The higher premium rates are due to the nature of the work performed and the inherent workplace danger of our target employers. For example, our construction employers generally paid premium rates equal to $7.60 per $100 of payroll to obtain workers’ compensation coverage for all of their employees in 2004, including clerical employees for which the average rate was $0.37 per $100 of payroll.

      We employ a proactive, disciplined approach in underwriting employers and providing comprehensive services intended to lessen the overall incidence and cost of work place injuries. We provide safety services at employers’ workplaces as a vital component of our underwriting process and to promote safer workplaces. We utilize intensive claims management practices that we believe permit us to reduce the overall cost of our claims. In addition, our audit services ensure that our policyholders pay the appropriate premiums required under the terms of their policies and enable us to monitor payroll patterns or aberrations that cause underwriting, safety or fraud concerns.

      We believe that the higher premiums typically paid by our policyholders, together with our disciplined underwriting and safety, claims and audit services, provide us with the opportunity to earn attractive returns on equity.

      We began operations in 1986 by focusing on workers’ compensation insurance for logging contractors in the southeast United States. In 1994, we expanded our focus to include the other hazardous industries we serve today. AMERISAFE is an insurance holding company and was incorporated in Texas in 1985. Our insurance subsidiaries are domiciled in Louisiana and Texas.

Our Competitive Strengths

      We believe we enjoy the following competitive strengths:

      Focus on Hazardous Industries. We focus on providing workers’ compensation insurance to employers engaged in hazardous industries. We have extensive experience insuring these types of employers and have a history of profitable underwriting in these industries. As a result, we believe we are able to take advantage of opportunities for continued premium and market share growth. Our specialized knowledge of these hazardous industries helps us better serve our policyholders, which leads to greater employer loyalty and policy retention. Our policy renewal rate on voluntary business we elected to quote for renewal was 87.9% in 2002, 91.4% in 2003 and 93.0% in 2004.

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      Focus on Small to Mid-Sized Employers. We believe large insurance companies generally do not target small to mid-sized employers in hazardous industries due to their smaller premium size, type of operations, mobile workforce and extensive service needs. We provide enhanced customer services to our policyholders. For example, unlike many of our competitors, our premium payment plans enable our policyholders to better match their premium payments with their payroll costs. Our premium payment plans are not only attractive to our policyholders but also allow us to monitor the payroll patterns of our policyholders and identify any aberrations that may cause safety, underwriting or fraud concerns. In addition, we believe that because many of our policyholders are owner-operated small to mid-sized businesses with more limited resources, they rely on our services and expertise to assist them in improving workplace safety and managing workplace injuries when they occur.

      Specialized Underwriting Expertise. Our focus on employers engaged in hazardous industries has provided us with an in-depth understanding of our policyholders’ business operations and the risks of accidents inherent in those operations. We have developed industry specific risk analysis and rating tools to assist our underwriters in risk selection and pricing. For example, when underwriting a trucking employer, we use these tools to analyze numerous factors, including the age, condition and types of vehicles used, distances traveled, whether the trucks are used to transport truckload or less than truckload cargo, the nature of the cargo and whether trucking employees are required to load and unload cargo, tarp and secure their own loads and drive regular or irregular routes. These factors were developed based on our historical experience in writing workers’ compensation insurance policies for trucking employers.

      Our 15 underwriting professionals average over 11 years of experience underwriting workers’ compensation insurance, most of which has focused on hazardous industries. In addition, our underwriting professionals serve specific state markets, thereby gaining valuable knowledge and expertise in the statutory benefit schemes and market conditions of their assigned states. We are highly disciplined when quoting and binding new business, and we do not delegate underwriting authority to agencies that sell our insurance. In 2004, we offered quotes on approximately one out of every five applications submitted. We believe this disciplined underwriting approach provides us a competitive advantage in evaluating potential policyholders.

      Comprehensive Safety Services. Most of our policyholders utilize mobile workforces, often in rural areas, due to the nature of their business operations. We provide proactive safety reviews of employers’ workplaces, regardless of the location. These safety reviews are a vital component of our underwriting process and also assist our policyholders in loss prevention and encourage the safest workplaces possible by deploying experienced field safety professionals, or FSPs, to their worksites. Our 48 FSPs have an average of approximately 15 years of workplace safety or related industry experience. From January 1, 2004 through March 31, 2005, approximately 84% of our new voluntary business policyholders were subject to pre-quotation safety inspections where our FSPs visited the employer worksites to evaluate working conditions and existing safety procedures. On an ongoing basis, we perform periodic on-site safety surveys on all of our voluntary business policyholders. We believe our proactive safety services are essential in achieving underwriting profitability in the industries we target.

      Our safety services are valuable to our policyholders because we provide them with the opportunity to reduce their long-term cost of workers’ compensation insurance by enhancing workplace safety and reducing the incidence and cost of workplace injuries.

      Proactive Claims Management. As of March 31, 2005, our employees managed more than 97% of our claims in-house utilizing intensive claims management practices that emphasize a personal approach and quality, cost-effective medical treatment. Our claims management staff includes 92 field case managers, or FCMs, who average approximately 17 years of experience in the workers’ compensation insurance industry and five medical-only case managers. Our FCMs are located in our 49 claims field offices in the geographic areas where our policyholders are located, which facilitates more immediate, direct contact with our policyholders and their injured employees. We currently average approximately

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60 open indemnity claims per FCM, which we believe is significantly less than the average for the industry.

      We seek to limit the number of claim disputes with injured employees by intervening early in the claims process. We encourage immediate notification of workplace injuries using our toll-free claims reporting system. When a severe injury occurs, the policyholder’s pre-designated FCM promptly visits the injured employee or the employee’s family members to discuss the benefits provided and treatment options. Our focus is to facilitate a favorable medical outcome for the injured employee to allow that employee to return to work as quickly as possible.

      Guiding injured workers to appropriate medical providers is an important part of our approach to claims management. Because of our experience with similar injuries and our relationships with local medical providers, we can arrange for quality, cost-effective medical services to injured employees. We seek to select and develop relationships with medical providers in each of the regional and local markets in which our policyholders operate. We emphasize implementation of the most expeditious and cost-effective treatment programs for each employer rather than imposing a single standardized system on all employers and their employees. In order to support our personal claims approach, qualified staff nurses are available to our FCMs to assist in facilitating effective medical outcomes. In coordination with this process, we use a full complement of medical cost containment tools to ensure the optimum medical savings possible. These tools include peer review, utilization review, provider networks and quantity purchase discounting for durable medical supplies, pharmacy and diagnostic testing.

      We believe our intensive claims management practices allow us to achieve a more favorable claim outcome, accelerate an employee’s return to work and more rapidly close claims, all of which ultimately lead to lower overall costs. In addition, we believe our practices lessen the likelihood of litigation. Only 10.7% of all claims reported for accident year 2003 were open as of March 31, 2005.

      Strong Distribution Network. We market our insurance through approximately 1,600 independent agencies and our wholly owned insurance agency subsidiary. These agencies are concentrated in the 29 states and the District of Columbia where we currently market and sell insurance. We compensate these agencies by paying a commission based on the premium collected from the policyholder. As of March 31, 2005, independent agencies produced approximately 79.7% of our voluntary in-force premiums. We are selective in establishing and maintaining relationships with independent agencies. We establish and maintain relationships only with those agencies that provide quality applications from prospective policyholders that are reasonably likely to accept our quotes.

      Customized Information Systems. We have developed customized information technology that we believe enables our FSPs, FCMs and field premium auditors to efficiently perform their duties. In addition, our business intelligence system enables all of our employees nationwide to seamlessly access, manage and analyze the data that underlies our business. We believe these technologies provide us with a significant advantage in the marketplace.

      Experienced Management Team. The members of our senior management team average over 18 years of insurance industry experience. The majority of this experience has been focused on workers’ compensation insurance exposures in construction, trucking, logging and other hazardous industries while employed with our company. We believe the experience, depth and continuity of our management, combined with our business strategy, has allowed us to more appropriately price our insurance policies and contributed to our producing, on average, lower combined ratios as compared to the workers’ compensation insurance industry over the past ten years.

Strategy

      We believe the net proceeds from this offering will provide us with the additional capital necessary to increase the amount of insurance we are able to write. We will scrutinize the potential for achieving

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underwriting profits and adequate returns on capital as we expand our business. We plan to pursue profitable growth and favorable returns on equity using the following strategies:

      Expand in our Existing Markets. Our current market share in our six largest states in terms of premiums written does not exceed 3.0% of the workers’ compensation market in any one state, according to NCCI’s most recent market analyses. Competition in our target markets is fragmented by state and employer industry focus. We believe that our specialized underwriting expertise and safety, claims and audit services position us to profitably increase our market share in our existing principal markets, with minimal increase in field service employees.

      Prudent and Opportunistic Geographic Expansion. While we actively market our insurance in 29 states and the District of Columbia, approximately 42.9% of our voluntary in-force premiums were generated in six states as of March 31, 2005. We are licensed in an additional 16 states and the U.S. Virgin Islands. Our existing licenses and rate filings will expedite our ability to write policies in these markets when we decide it is prudent to do so.

      Focus on Underwriting Profitability. We intend to maintain our underwriting discipline and profitability throughout market cycles. Our strategy is to focus on underwriting workers’ compensation insurance in hazardous industries and to maintain adequate rate levels commensurate with the risks we underwrite. We will also continue to strive for improved risk selection and pricing, as well as reduced frequency and severity of claims through comprehensive workplace safety reviews, rapid closing of claims through personal, direct contact with our policyholders and their employees, and effective medical cost containment measures.

      Leverage Investments in Information Technology. In October 2000, we launched our customized information system, ICAMS, that we believe significantly enhances our ability to select risk, write profitable business and cost-effectively administer our billing, claims and audit functions. Since the launch, we have introduced automated analytical tools and have continued to improve and enhance our ICAMS system and tools. We believe our technology is scalable and can be modified at minimal cost to accommodate our growth. In addition, we believe this scalability has lowered, and will continue to lower, our expense ratio as we continue to achieve premium growth over time.

      Maintain Capital Strength. We plan to manage our capital to achieve our growth and profitability goals while maintaining the current operating leverage of our insurance company subsidiaries. To accomplish this objective, we intend to maintain underwriting profitability throughout market cycles, deploy a portion of the proceeds of this offering toward the judicious growth of our business, optimize our use of reinsurance, reduce our current financial leverage, and maximize an appropriate risk adjusted return on our growing investment portfolio.

Operating History

      We commenced operations in 1986 to underwrite workers’ compensation insurance for employers engaged in the logging industry. Beginning in 1994, we expanded our customer base by insuring employers in other hazardous occupation industries. We believe we were able to operate profitably by applying disciplined underwriting criteria based on our experience insuring employers in these hazardous industries. Integral to our underwriting processes was the implementation of comprehensive safety reviews, active in-house claims management, mandatory premium audits and strong relationships with agents and employers.

      Beginning in 1997 and into 2000, we employed a strategy to increase revenue through rapid geographic expansion and underwriting workers’ compensation insurance for employers engaged in non-hazardous industries, such as service and retail businesses. This strategy did not produce the results anticipated, and as a result our weighted average gross accident year loss ratio for the period 1997 through 1999 was 119.3%, as compared to 82.9% for the period 1994 through 1996.

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      In September 2000, we undertook several strategic initiatives to improve the profitability of our existing in-force book of business and new business. These initiatives included the following:

•  Renewed focus on core hazardous industries. We undertook action to non-renew policies with higher frequency, non-hazardous industries and refocused our efforts on employers engaged in the hazardous industries that we underwrite today. These core hazardous industries represented 88.7% of our voluntary gross premiums written in 2004 compared to 73.4% in 2000. Principally as a result of our renewed focus on hazardous industries, we have been able to reduce claims frequency sharply. In 2004, we had 7,010 claims reported compared to 28,315 claims in 2000, while gross earned premiums were $256.7 million in 2004 and $267.2 million in 2000.

•  Commenced re-underwriting our book of business. We commenced re-underwriting our core hazardous industry book of business to improve our risk selection and establish rates commensurate with the risks we were underwriting. Since January 1, 2001, we have made 51 filings with state regulatory agencies to increase our loss cost multipliers to maintain rates at profitable levels.

•  Reduced or ceased underwriting in certain states. We reduced or ceased underwriting in states where we lacked a sufficient level of premium production to effectively deploy our field resources or where we believed the rate environment did not adequately compensate us for the risks we were underwriting.

•  Increased pre-quotation inspection of employers on new business. As we expanded geographically and began underwriting policies for employers engaged in non-hazardous industries, the ability of our safety services personnel to review new and existing business became constrained. As a result, we had difficulty deploying our safety personnel to inspect employer worksites efficiently and began to outsource safety inspections. In conjunction with our refocus on core hazardous industries, we began mandating, with limited exceptions, a pre-quotation safety inspection of employers for new business that we utilize today. Our pre-quotation inspection rate of new voluntary policyholders increased from approximately 29.0% in 2000 to approximately 84.0% in 2004.

•  Took action to manage substantially all claims in-house. We made the strategic decision to take substantially all of our claims in-house and limit reliance on third-party administrators. We believe this action has reduced the number of open claims and improved our ability to close claims promptly and therefore reduce costs. At December 31, 2004, we managed 97.0% of claims in-house utilizing our intensive claims management practices as compared to 85.0% at December 31, 2000. We have also reduced the number of third-party administrators that we utilize to seven at year-end 2004 from 44 at the end of 2000.

•  Implemented incentive program. Effective January 1, 2001, we implemented an incentive program under which our underwriters and field safety professionals are compensated in part based on the achievement of certain loss ratio targets. We believe this program has contributed to our ability to maintain underwriting discipline.

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      We believe these actions have contributed to improved underwriting profitability as measured on an accident year basis. As shown in the table below, during the period 1995 through 2004, our weighted average accident year gross and net loss ratios were 93.9% and 67.3%, respectively. The weighted average accident year gross and net loss ratios for this same time period for the workers’ compensation insurance industry were 85.2% and 83.6%, respectively.

																															Weighted
Accident Year Loss Ratio	1995			1996			1997			1998			1999			2000			2001			2002			2003			2004			Average
Gross Basis:
AMERISAFE(1)		61.8	%		62.1	%		84.5	%		107.3	%		143.5	%		121.1	%		94.7	%		79.1	%		71.3	%		67.8	%		93.9	%
Workers’ Compensation Industry(2)		70.0	%		74.2	%		87.0	%		99.3	%		110.0	%		107.1	%		97.7	%		79.5	%		72.2	%		73.9	%		85.2	%
Net Basis:
AMERISAFE(1)		52.4	%		57.4	%		76.7	%		62.7	%		65.3	%		54.6	%		68.5	%		83.2	%		71.0.	%		68.3	%		67.3	%
Workers’ Compensation Industry(2)		71.1	%		75.0	%		86.6	%		96.1	%		101.9	%		100.3	%		90.0	%		79.4	%		75.2	%		75.8	%		83.6	%

(1)	Cumulative development through December 31, 2004.
(2)	Source: A.M. Best, statutory basis.

      The principal difference between our gross and net loss experience relates to the policy years 1998 through 2000, during which we were able to purchase reinsurance on favorable pricing and other terms.

      We believe that the strategic actions taken since September 2000 to refocus our underwriting operations on core hazardous industries while developing further discipline in underwriting, safety services, claims management and premium audit has positioned us to achieve profitable underwriting results and favorable returns on equity.

Industry

     Overview

      Workers’ compensation is a statutory system under which an employer is required to pay for its employees’ medical, disability, vocational rehabilitation and death benefit costs for work-related injuries or illnesses. Most employers satisfy this requirement by purchasing workers’ compensation insurance. The principal concept underlying workers’ compensation laws is that employees injured in the course and scope of their employment have only the legal remedies available under workers’ compensation laws and do not have any other recourse against their employer. An employer’s obligation to pay workers’ compensation does not depend on any negligence or wrongdoing on the part of the employer and exists even for injuries that result from the negligence or fault of another person, a co-employee or, in most instances, the injured employee.

      Workers’ compensation insurance policies generally provide that the insurance carrier will pay all benefits that the insured employer may become obligated to pay under applicable workers’ compensation laws. Each state has a regulatory and adjudicatory system that quantifies the level of wage replacement to be paid, determines the level of medical care required to be provided and the cost of permanent impairment and specifies the options in selecting medical providers available to the injured employee or the employer. These state laws generally require two types of benefits for injured employees: (1) medical benefits, which include expenses related to diagnosis and treatment of the injury, as well as any required rehabilitation, and (2) indemnity payments, which consist of temporary wage replacement, permanent disability payments and death benefits to surviving family members. To fulfill these mandated financial obligations, virtually all employers are required to purchase workers’ compensation insurance or, if permitted by state law or approved by the U.S. Department of Labor, to self-insure. The employers may purchase workers’ compensation insurance from a private insurance carrier, a state-sanctioned assigned risk pool or a self-insurance fund, which is an entity that allows employers to obtain workers’ compensation coverage on a pooled basis, typically subjecting each employer to joint and several liability for the entire fund.

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      Workers’ compensation was the fourth-largest property and casualty insurance line in the United States in 2004, according to A.M. Best. Direct premiums written in 2004 for the workers’ compensation insurance industry were approximately $54 billion, and direct premiums written for the property and casualty industry as a whole were approximately $466 billion, according to A.M. Best. Premium volume in the workers’ compensation insurance industry is estimated to have increased 11% since 2003, while the property and casualty industry experienced a 5% increase in net premiums written in 2004 compared to 2003, according to NCCI. According to the most recent market data reported by the NCCI, which is the official ratings bureau in the majority of states in which we are licensed, total premiums reported for the specific occupational class codes for which we underwrite business was $17 billion. Total premiums reported for all occupational class codes reported by the NCCI for these same jurisdictions was $37 billion.

Industry Developments

      During the period from 1994 to 2001, we believe that price competition and rising loss costs, despite declines in the frequency of losses, severely eroded underwriting profitability in the workers’ compensation insurance industry. According to NCCI, the workers’ compensation insurance industry’s accident year combined ratios rose from 100% in 1995 to a high of 139% in 1999. As a result, NCCI estimated that workers’ compensation loss reserves for private carriers were deficient by $12.0 billion at December 31, 2004, which are significantly up from just $2 billion in 1995, yet down from a high of $21 billion in 2001. We believe the workers’ compensation insurance industry is slowly transitioning to a more competitive market environment.

      Rising Medical Claim Costs. According to NCCI, workers’ compensation medical claims costs have risen approximately 137% over the ten-year period ended December 31, 2004 driven primarily by increased utilization and prescription drug costs.

      Rising Indemnity Claim Costs. According to NCCI, indemnity claim costs, which include wage replacement, have risen 87% for the ten-year period ended December 31, 2004, which is lower than the rate at which medical claim costs have risen.

      Declining Investment Performance. Unfavorable investment conditions have also adversely affected workers’ compensation insurance industry returns on equity. Because workers’ compensation claims are generally paid over a longer period of time as compared to other types of insurance claims, workers’ compensation insurers have the opportunity to invest premiums received for longer periods of time. Therefore, the performance of the investments funded with premiums received is an important part of a workers’ compensation insurance company’s business model. The ratio of investment gain on insurance transactions (including net investment income, realized gains and other income) to premiums for private carriers has declined from a high of 21% in 1998 to a projected rate of 10% in 2004, according to NCCI.

      Reduction in Market Capacity. We believe that price competition, rising loss costs and low investment returns in recent years have led to poor operating results and have caused some workers’ compensation insurers to suffer severe capital impairment. These conditions have forced some insurers to withdraw from the marketplace and enter insolvency proceedings, precipitating a reduction in market capacity. Notwithstanding this reduction in market capacity, the volume of workers’ compensation insurance premiums has shown steady growth, increasing from $25 billion in 1999 to an estimated $46 billion of net premiums written in 2004, an 84% increase, driven mainly by rate increases.

     Industry Outlook

      We believe the challenges faced by the workers’ compensation insurance industry over the past decade have created significant opportunity for workers’ compensation insurers to increase the amount of business that they write. The year 2002 marked the first year in five years that private carriers in the property and casualty insurance industry experienced an increase in annual after-tax returns on surplus,

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including capital gains, according to NCCI. Workers’ compensation insurance industry calendar year combined ratios declined for the first time in seven years, falling from 122% (with 1.9% attributable to the September 11, 2001 terrorist attacks) to 105% in 2004 as premium rates have increased and claims frequency has declined. In addition, claims frequency has declined. From 1990 through 2003, the cumulative decline in lost-time claims frequency was 42.0%. The NCCI estimates that lost-time claims frequency declined an additional 3.4% in 2004. We believe that opportunities remain for us to provide needed underwriting capacity at attractive rates and upon terms and conditions more favorable to insurers than in the past.

Policyholders

      As of March 31, 2005, we had approximately 6,100 voluntary business policyholders with an average annual workers’ compensation policy premium of approximately $38,000. As of March 31, 2005, our ten largest voluntary business policyholders accounted for approximately 2.6% of our in-force premiums. Our policy renewal rate on voluntary business that we elected to quote for renewal was 87.9% in 2002, 91.4% in 2003 and 93.0% in 2004.

      In addition to our voluntary workers’ compensation business, we underwrite workers’ compensation policies for employers assigned to us and assume reinsurance premiums from mandatory poolings arrangements, in each case to fulfill our obligations under residual market programs implemented by the states in which we operate. In addition, we separately underwrite general liability insurance policies for our workers’ compensation policyholders in the logging industry on a select basis. Our assigned risk business fulfills our statutory obligation to participate in residual market plans in six states. See “—Regulation—Residual Market Programs” below. For the year ended December 31, 2004 and the three months ended March 31, 2005, our assigned risk business accounted for 3.6% and 3.7%, respectively, of our gross premiums written, and our assumed premiums from mandatory pooling arrangements accounted for 3.0% and 2.2%, respectively, of our gross premiums written. In addition, our general liability insurance business accounted for only 1.0% and 0.9%, respectively, of our gross premiums written for the year ended December 31, 2004 and the three months ended March 31, 2005.

     Targeted Industries

      We provide workers’ compensation insurance primarily to employers in the following targeted hazardous industries:

      Construction. Includes a broad range of operations such as highway and bridge construction, building and maintenance of pipeline and powerline networks, excavation, commercial construction, roofing, iron and steel erection, tower erection and numerous other specialized construction operations. In 2004, our average policy premium for voluntary workers’ compensation within the construction industry was $41,227, or $7.60 per $100 of payroll.

      Trucking. Includes a large spectrum of diverse operations including contract haulers, regional and local freight carriers, special equipment transporters and other trucking companies that conduct a variety of short- and long-haul operations. In 2004, our average policy premium for voluntary workers’ compensation within the logging industry was $46,666 or $7.29 per $100 of payroll.

      Logging. Includes tree harvesting operations ranging from labor intensive chainsaw felling and trimming to sophisticated mechanized operations using heavy equipment. In 2004, our average policy premium for voluntary workers’ compensation within the logging industry was $18,468, or $15.16 per $100 of payroll.

      Agriculture. Including crop maintenance and harvesting, grain and produce operations, nursery operations, meat processing and livestock feed and transportation. In 2004, our average policy premium for voluntary workers’ compensation within the agricultural industry was $29,325, or $9.63 per $100 of payroll.

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      Oil and Gas. Including various oil and gas activities including gathering, transportation, processing, production and field service operations. In 2004, our average policy premium for voluntary workers’ compensation within the oil and gas industry was $65,686, or $6.29 per $100 of payroll.

      Maritime. Including ship building and repair, pier and marine construction, inter-coastal construction and stevedoring. In 2004, our average policy premium for voluntary workers’ compensation within the maritime industry was $46,164, or $9.03 per $100 of payroll.

      Sawmills. Including sawmills and various other lumber-related operations. In 2004, our average policy premium for the sawmill industry was $37,105, or $7.32 per $100 of payroll.

      Our gross premiums are derived from:

• Direct Premiums. Includes premiums from workers’ compensation and general liability insurance policies that we issue to:

• employers who seek to purchase insurance directly from us and who we voluntarily agree to insure, which we refer to as our voluntary business; and

• employers assigned to us under residual market programs implemented by some of the states in which we operate, which we refer to as our assigned risk business.

• Assumed Premiums. Includes assumed reinsurance premiums from our participation in mandatory pooling arrangements under residual market programs implemented by some of the states in which we operate.

      As of March 31, 2005, only 1.1% of our voluntary in-force premiums were derived from general liability policies.

      Gross premiums written during the years ended December 31, 2002, 2003 and 2004 and the allocation of those premiums among the hazardous industries we target are presented in the table below.

									Percentage
			Gross Premiums Written						of Gross Premiums Written
			2002		2003		2004		2002		2003		2004
			(In thousands)
Voluntary business:
	Construction		$	61,558	$	80,693	$	101,300		33.2%		36.1%		38.3%
	Trucking			36,392		47,104		57,822		19.7%		21.1%		21.8%
	Logging			32,156		32,008		30,340		17.4%		14.3%		11.5%
	Agriculture			6,574		8,502		11,203		3.6%		3.8%		4.2%
	Oil and Gas			7,157		7,221		7,226		3.9%		3.2%		2.7%
	Maritime			5,326		6,076		5,909		2.9%		2.7%		2.2%
	Sawmills			3,760		4,009		5,566		2.0%		1.8%		2.1%
	Other			21,164		24,239		28,117		11.4%		10.8%		10.6%
		Total voluntary business		174,087		209,852		247,481		94.1%		93.9%		93.4%
Assigned risk business				7,415		9,216		9,431		4.0%		4.1%		3.6%
Assumed premiums				3,592		4,522		8,050		1.9%		2.0%		3.0%
		Total	$	185,093	$	223,590	$	264,962		100.0%		100.0%		100.0%

     Geographic Distribution

      We are licensed to provide workers’ compensation insurance in 45 states, the District of Columbia and the U.S. Virgin Islands. We operate on a geographically diverse basis with no more than 11.0% of our gross premiums written in 2004 derived from any one state. The table below identifies, for the years

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ended December 31, 2003 and 2004 and the three months ended March 31, 2005, the states in which the percentage of our gross premiums written exceeded 3.0% for any of the periods presented.

	Percentage of Gross Premiums Written
	Year Ended
	December 31,						Three Months
							Ended
State	2003			2004			March 31, 2005
Georgia		9.4	%		9.5	%		11.4	%
Louisiana		11.8	%		10.6	%		10.5	%
Florida		4.6	%		4.9	%		8.0	%
North Carolina		5.9	%		6.3	%		6.2	%
Oklahoma		3.9	%		3.3	%		5.2	%
Texas		7.9	%		6.5	%		5.1	%
Pennsylvania		3.9	%		4.5	%		4.9	%
Alaska		3.3	%		4.4	%		4.8	%
Virginia		5.2	%		5.2	%		4.7	%
Tennessee		3.5	%		3.9	%		4.6	%
Illinois		5.7	%		6.4	%		4.3	%
South Carolina		3.9	%		4.6	%		3.9	%
Minnesota		3.9	%		3.6	%		3.7	%
Arkansas		5.2	%		4.7	%		3.2	%
Mississippi		3.6	%		3.9	%		3.0	%
Wisconsin		2.3	%		3.3	%		2.8	%
Alabama		3.2	%		2.7	%		2.6	%

Lines of Business

     Workers’ Compensation

      Workers’ compensation insurance provides coverage to employers under state and federal workers’ compensation laws. These laws prescribe benefits that employers are obligated to provide to their employees who are injured in the course and scope of their employment. Our workers’ compensation insurance policies also provide employer liability coverage, which provides coverage for an employer if an injured employee sues the employer for damages as a result of the employee’s injury.

      Our insurance encompasses a variety of options designed to fit the needs of our policyholders. The most basic insurance policy, accounting for approximately 99.0% of our gross premiums written for the year ended December 31, 2004 and the three months ended March 31, 2005, is a guaranteed cost contract. Under our guaranteed cost contracts, policyholders pay premiums based on a percentage of their payroll determined by job classification. Our premium rates for these policies vary depending upon certain factors, including the type of work to be performed by employees and the general business of the policyholder. In return for premium payments, we assume statutorily imposed obligations of the policyholder to provide workers’ compensation benefits to its employees. There are no policy limits on our liability for workers’ compensation claims as there are for other forms of insurance. We conduct a premium audit at the expiration of the policy to verify that the policyholder’s correct payroll expense and job classifications were reported to us.

      A policyholder who desires to assume financial risk in exchange for reduced premiums may elect a deductible that makes the policyholder responsible for the first portion of any claim. We also offer loss sensitive plans on a limited basis, including dividend plans. These plans provide for a portion of the premium to be returned to the policyholder in the form of a dividend, based on the policyholder’s losses during the policy period.

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      We have three underwriting insurance subsidiaries, American Interstate, Silver Oak Casualty and American Interstate of Texas. Our principal subsidiary, American Interstate, is licensed to provide workers’ compensation insurance in 45 states, the District of Columbia and the U.S. Virgin Islands. Silver Oak Casualty is licensed in eight states and the District of Columbia and American Interstate of Texas is licensed only in Texas. We utilize Silver Oak Casualty and American Interstate of Texas to file alternative workers’ compensation rate structures that permit us to offer our workers’ compensation insurance to a broader range of potential policyholders. We currently intend to pursue licensing of Silver Oak Casualty and American Interstate of Texas in additional states.

     General Liability

      General liability insurance is a form of casualty insurance that covers a policyholder’s liability resulting from its act or omission that causes bodily injury or property damage to a third party. With general liability insurance, the amount of a covered loss is the amount of the claim or payment made on the policyholder’s behalf, subject to the deductible, limits of liability and other features of the insurance policy. We offer general liability insurance coverage only to our workers’ compensation policyholders in the logging industry on a select basis. As of March 31, 2005, only 1.1% of our voluntary in-force premiums were derived from general liability policies.

Sales and Marketing

      We sell our workers’ compensation insurance through agencies. As of March 31, 2005, our insurance was sold through approximately 1,600 independent agencies and our wholly owned insurance agency subsidiary, Amerisafe General Agency Insurance, which is licensed in 24 states. We are selective in establishing and maintaining relationships with independent agencies. We establish and maintain relationships only with those agencies that provide quality application flow from prospective policyholders that are reasonably likely to accept our quotes. We compensate these agencies by paying a commission based on the premium collected from the policyholder. Our average commission rate for our independent agencies was 7.0% for the year ended December 31, 2004 and 7.1% for the three months ended March 31, 2005. Beginning January 1, 2005, we pay our insurance agency subsidiary a commission rate of 8.0%. We do not pay contingent commissions. Neither our independent agencies nor our insurance agency subsidiary has authority to underwrite or bind coverage.

      As of March 31, 2005, independent agencies accounted for approximately 79.7% of our voluntary in-force premiums, and no independent agency accounted for more than 1.5% of our voluntary in-force premiums at that date.

Underwriting and Rate Making

      Our underwriting strategy is to focus on employers in certain hazardous industries that operate in those states where our underwriting efforts are the most profitable and efficient. We analyze each prospective policyholder on its own merits relative to known industry trends and statistical data. Our underwriting guidelines specify that we do not write workers’ compensation insurance for certain hazardous activities, including sub-surface mining and the use of explosives.

      Underwriting is a multi-step process that begins with the receipt of an application from one of our agencies. We initially review the application to confirm that the prospective policyholder meets certain established criteria, including that it is engaged in one of our targeted hazardous industries and industry classes and operates in the states we target. If the application satisfies these criteria, the application is forwarded to our underwriting department for further review.

      Our underwriting department reviews the application to determine if the application meets our underwriting criteria and whether all required information has been provided. If additional information is required, the underwriting department requests additional information from the agency. This initial review process is generally completed within three days after the application is received by us. Once this

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initial review process is complete, our underwriting department requests that a pre-quotation safety inspection be performed.

      After the pre-quotation safety inspection has been completed, our underwriting professionals review the results of the inspection to determine if a rate quote should be made and, if so, prepare the quote. The rate quote must be reviewed and approved by our underwriting department before it is delivered to the agency. All decisions by our underwriting department, including decisions to decline applications, are subject to review and approval by our management-level underwriters.

      In the majority of states, workers’ compensation insurance rates are based upon the published “loss costs.” Loss costs are derived from wage and loss data reported by insurers to the state’s statistical agent, in most states the NCCI. The state agent then promulgates loss costs for specific job descriptions or class codes. Insurers file requests for adoption of a loss cost multiplier, or LCM, to be applied to the loss costs to support operating costs and profit margins. In addition, most states allow pricing flexibility above and below the filed LCM, within certain limits.

      We obtain approval of our rates, including our LCMs, from state regulatory authorities. To maintain rates at profitable levels, we regularly monitor and adjust our LCMs. In 2004, we made 12 filings with state regulatory agencies to increase our LCMs. Similarly, in 2003 and 2002, we made 10 filings and 17 filings, respectively. In each instance, our rate increases were approved. Our effective LCM has increased from 1.14 for the 2001 policy year to 1.52 for the 2004 policy year, reflecting an improved rate environment. In addition, our effective LCM further increased to 1.55 for the three months ended March 31, 2005. If we are unable to charge rates in a particular state or industry to produce satisfactory results, we seek to control and reduce our premium volume in that state or industry and redeploy our capital in other states or industries that offer greater opportunity to earn an underwriting profit.

      Our underwriting department is managed by experienced underwriting professionals who specialize in the hazardous industries that we target. As of March 31, 2005, we had 60 employees in our underwriting department, including 15 underwriting professionals and 45 support-level staff members. The average length of underwriting experience of our underwriting professionals exceeds 11 years.

      Our underwriting professionals participate in an incentive compensation program under which bonuses are paid quarterly based upon achieving premium underwriting volume and loss ratio targets. The determination of whether targets have been satisfied is made 18 months after the relevant incentive compensation period.

Safety

      Our safety inspection process begins with a request from our underwriting department to perform a pre-quotation safety inspection. Our safety inspections focus on a prospective policyholder’s operations, loss exposures and existing safety controls to prevent potential losses. The factors considered in our inspection include employee experience, turn-over, training, previous loss history and corrective actions, and workplace conditions, including equipment condition and, where appropriate, use of fall protection, respiratory protection or other safety devices. Our FSPs travel to employers’ worksites to perform these safety inspections. This initial in-depth analysis allows our underwriting professionals to make decisions on both insurability and pricing. In certain circumstances, we will agree to provide workers’ compensation insurance only if the employer agrees to implement and maintain the safety management practices that we recommend. From January 1, 2004 through March 31, 2005, approximately 84% of our new voluntary business policyholders were inspected prior to our offering a premium quote. The remaining voluntary business policyholders were not inspected prior to a premium quote for a variety of reasons, including small premium size or the policyholder was previously a policyholder subject to our safety inspections.

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      After an employer becomes a policyholder, we continue to emphasize workplace safety through periodic workplace visits, assisting the policyholder in designing and implementing enhanced safety management programs, providing current industry-specific safety-related information and conducting rigorous post-accident management. Generally, we may cancel or decline to renew an insurance policy if the policyholder does not implement or maintain reasonable safety management practices that we recommend.

      Our safety department is comprised of 48 FSPs, including three field vice presidents. Our FSPs participate in an incentive compensation program under which bonuses are paid quarterly based upon an FSP’s production and their policyholders’ aggregate loss ratios. The results are measured 18 months after the inception of the subject policy period.

Claims

      We have structured our claims operation to provide immediate, intensive and personal management of all claims to guide injured employees through medical treatment, rehabilitation and recovery with the primary goal of returning the injured employee to work as promptly as practicable. We seek to limit the number of claim disputes with injured employees through early intervention in the claims process.

      We have 49 claims offices located throughout the markets we serve. Our FCMs are located in the geographic areas where our policyholders are based. We believe the presence of our FCMs in the field enhances our ability to guide an injured employee to the appropriate conclusion in a friendly, dignified and supportive manner. Our FCMs have broad authority to manage claims from occurrence of a workplace injury through resolution, including authority to retain many different medical providers at our expense, including not only our recommended medical providers but also nurse case managers, independent medical examiners, vocational specialists, rehabilitation specialists and other specialty providers of medical services necessary to achieve a quality outcome.

      Following notification of a workplace injury, an FCM will contact the policyholder, the injured employee and/or the treating physician to determine the nature and severity of the injury. If a serious injury occurs, the FCM will promptly visit the injured employee or the employee’s family members to discuss the benefits provided and will also visit the treating physician to discuss the proposed treatment plan. Our FCM assists the injured employee in receiving appropriate medical treatment and encourages the use of our recommended medical providers and facilities. For example, our FCM may suggest that a treating physician refer an injured worker to another physician or treatment facility that we believe has had positive outcomes for other workers with similar injuries. We actively monitor the number of open cases handled by a single FCM in order to maintain focus on each specific injured employee. As of March 31, 2005, we averaged approximately 60 open indemnity claims per FCM, which we believe is significantly less than the industry average.

      Locating our FCMs in the field also allows us to build professional relationships with local medical providers. In selecting medical providers, we rely, in part, on the recommendations of our FCMs who have developed professional relationships within their geographic areas. We also seek input from our policyholders and other contacts in the markets that we serve. While cost factors are considered in selecting medical providers, we consider the most important factor in the selection process to be the medical provider’s ability to achieve a quality outcome. We define quality outcome as the injured worker’s rapid, conclusive recovery and return to sustained, full capacity employment.

      While we seek to promptly settle valid claims, we also aggressively defend against claims we consider to be non-meritorious. Litigation expenses accounted for less than 5.0% of our gross claims and claim settlement expenses in 2004 and for the three months ended March 31, 2005. As of March 31, 2005, we had closed approximately 89.3% of our 2003 reported claims and approximately 98.6% of our pre-2003 reported claims, thereby substantially reducing the risk of future adverse claims development. Where possible, we purchase annuities on longer life claims to close the claim while still providing an appropriate level of benefits to an injured employee. We also mitigate against potential losses from

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improper premium reporting or delinquent premium payment by collecting from the policyholder a deposit, typically representing 15% of total premium, at the inception of the policy, which deposit can be utilized to offset losses from inadequate premium submissions.

Premium Audits

      We conduct premium audits on all of our voluntary business policyholders annually, upon the expiration of each policy, including when the policy is renewed. The purpose of these audits is to verify that policyholders have accurately reported their payroll expenses and employee job classifications, and therefore have paid us the premium required under the terms of their policies. In addition to annual audits, we selectively perform interim audits on certain classes of business if significant or unusual claims are filed or if the monthly reports submitted by a policyholder reflect a payroll pattern or any aberrations that cause underwriting, safety or fraud concerns.

Loss Reserves

      We record reserves for estimated losses under insurance policies that we write and for loss adjustment expenses related to the investigation and settlement of policy claims. Our reserves for loss and loss adjustment expenses represent the estimated cost of all reported and unreported loss and loss adjustment expenses incurred and unpaid at any given point in time. In establishing our reserves, we do not use loss discounting, which involves recognizing the time value of money and offsetting estimates of future losses by future expected investment income.

      When a claim is reported, we establish an initial case reserve for the estimated amount of our loss based on our estimate of the most likely outcome of the claim at that time. Generally, a case reserve is established within 14 days after the claim is reported. The estimated amount of loss for a reported claim is based upon various factors, including:

• type of loss;

• severity of the injury or damage;

• age and occupation of the injured employee;

• estimated length of temporary disability;

• anticipated permanent disability;

• our knowledge of the circumstances surrounding the claim;

• insurance policy provisions, including coverage, related to the claim;

• jurisdiction of the occurrence; and

• benefits defined by applicable statute.

      In addition to case reserves, we establish reserves on an aggregate basis for loss and loss adjustment expenses that have been incurred but not reported, commonly referred to as IBNR. Case reserves and IBNR together constitute our total reserve for loss and loss adjustment expenses.

      Our reserves for loss and loss adjustment expenses are estimated using case-by-case valuations and statistical analyses. In establishing these estimates, we make assumptions regarding a number of factors, including:

• frequency and severity of future claims;

• length of time to achieve ultimate settlement of claims;

• projected inflation of medical costs and wages;

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• insurance policy coverage interpretations; and

• jury determinations.

      We rely on our historical experience and industry information to estimate values for these assumptions because they cannot be measured directly. We assume that the historical effects of these unmeasured assumptions are representative of future effects. When we have reason to expect a change in the effect of one of these assumptions, we perform an analysis to quantify an expected adjustment to this assumption. In establishing reserves for loss and loss adjustment expenses, we do not make assumptions regarding the broadening of coverage by legislative action or judicial interpretation or for the extraordinary future emergence of new types of losses not sufficiently represented in our historical experience or which cannot yet be quantified.

      In establishing our reserves for loss and loss adjustment expenses, we also consider estimates prepared by our independent actuaries using various standard actuarial techniques. These techniques may include:

• the Case Incurred Development method, which analyzes patterns and changes in our reserves and paid loss and loss adjustment expenses over monthly, quarterly and annual periods;

• the Paid Development method, which analyzes patterns in our paid loss and loss adjustment expenses over monthly, quarterly and annual periods;

• the Bornhuetter-Ferguson method, which analyzes our actual reported losses and our expected future loss and loss adjustment expenses related to open claims;

• the Paid-to-Paid method, which analyzes certain paid loss adjustment expenses and paid losses; and

• the Activity Cost method, which analyzes activity in our claims department.

      Our independent actuaries review statistical information to determine which methods are most appropriate and whether adjustments are needed within the particular methods. This supplementary information may include:

• open and closed claim counts;

• statistics related to open and closed claim count percentages;

• claim closure rates;

• average case reserves and average loss and loss adjustment expenses incurred on open claims;

• reported and ultimate claim severity;

• reported and projected ultimate loss ratios; and

• loss payment patterns.

      On a quarterly basis, we review our reserves for loss and loss adjustment expenses to determine whether adjustments in our estimates are required. As part of our review, we consider the estimated amount of our losses for open claims based on the most likely outcome of the open claims at that time. In addition, we review our reserves by analyzing trends in our loss and loss adjustment expenses incurred and paid, as well as utilizing the Paid-to-Paid method. We compare the results of our review to the most recent estimates prepared by our independent actuaries and make any further adjustments that we determine are appropriate. Based on this review, we develop our own estimates of what our reserves for loss and loss adjustment expenses should be at the end of each quarterly period.

      As of December 31, 2002, our independent actuaries estimated our reserves for loss and loss adjustment expenses, net of amounts recoverable from reinsurers and excluding reserves related to our obligations under mandatory pooling arrangements, to be $151.5 million, which was less than our

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recorded net reserves of $152.9 million. As of December 31, 2003 and 2004, our independent actuaries estimated our net reserves to be $190.6 million and $248.8 million, respectively, which estimates were higher than our recorded net reserves of $183.0 million and $243.3 million, respectively. After evaluating these actuarial analyses, together with the other factors and assumptions that we considered, we concluded that our recorded net reserves as of those dates appropriately reflected our liabilities for loss and loss adjustment expenses. At the end of each year, we engage our independent actuaries to prepare a complete actuarial opinion concerning the adequacy of our loss reserves.

      There is inherent uncertainty in estimating our reserves for loss and loss adjustment expenses. It is possible that our actual incurred loss and loss adjustment expenses will not conform to the assumptions inherent in the determination of our reserves. Accordingly, the ultimate settlement of losses and the related loss adjustment expenses may vary significantly from our estimates included in our financial statements.

Reconciliation of Loss Reserves

      The table below shows the reconciliation of loss reserves on a gross and net basis for the years ended December 31, 2003 and 2004 and the three months ended March 31, 2005, reflecting changes in losses incurred and paid losses.

			Year Ended December 31,
							Three Months Ended
			2003		2004		March 31, 2005
			(In thousands)
Balance, beginning of year			$	346,542	$	377,559	$	432,880
Less amounts recoverable from reinsurers				193,634		194,558		189,624
Net balance, beginning of year				152,908		183,001		243,256
Incurred related to:
	Current year			126,977		160,773		43,189
	Prior years			2,273		13,413		2,729
		Total incurred		129,250		174,186		45,918
Paid related to:
	Current year			32,649		40,312		2,062
	Prior years			66,508		73,619		27,817
		Total paid		99,157		113,931		29,879
Net balance, end of year				183,001		243,256		259,295
Plus amounts recoverable from reinsurers				194,558		189,624		183,259
Balance, end of year			$	377,559	$	432,880	$	442,554

      Our gross reserves for loss and loss adjustment expenses of $442.6 million as of March 31, 2005 are expected to cover all unpaid loss and loss adjustment expenses related to open claims as of that date, as well as IBNR reserves, which represented 15.0% of our gross reserves on that date. As of March 31, 2005, we had 5,565 open claims, with an average of $79,525 in unpaid loss and loss adjustment expenses per open claim. During the three months ended March 31, 2005, 1,602 new claims were reported, and 1,793 claims were closed.

      As of December 31, 2004, our gross reserves for loss and loss adjustment expenses were $432.9 million, of which our IBNR reserves represented 17.2%. The increase in our reserves from December 31, 2004 to March 31, 2005 was due to our premium growth during this time period, which was offset by an increase in paid loss and loss adjustment expenses related to prior accident years. As of December 31, 2004, we had 5,756 open claims, with an average of $75,205 in unpaid loss and loss

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adjustment expenses per open claim. During the year ended December 31, 2004, 7,010 claims were reported and 7,080 claims were closed.

      As of December 31, 2003, our gross reserves for loss and loss adjustment expenses were $377.6 million, of which our IBNR reserves represented 13.4%. The increase in our reserves from December 31, 2003 to December 31, 2004 was due to our premium growth during this time period and an increase in our reserves for prior accident years from $2.3 million in 2003 to $13.4 million in 2004. The increase for prior accident years related primarily to the 2002 accident year, which increased by $9.4 million as a result of claim settlements in excess of our established case reserves and increased estimates in our reserves for that accident year. As of December 31, 2003, we had 5,826 open claims, with an average of $64,806 in unpaid loss and loss adjustment expenses per open claim. During the year ended December 31, 2003, 6,293 new claims were reported and 7,426 claims were closed.

     Loss Development

      The table below shows the net loss development for business written each year from 1994 through 2004. The table reflects the changes in our loss and loss adjustment expense reserves in subsequent years from the prior loss estimates based on experience as of the end of each succeeding year on a GAAP basis.

      The first line of the table shows, for the years indicated, our liability including the incurred but not reported loss and loss adjustment expenses as originally estimated, net of amounts recoverable from reinsurers. For example, as of December 31, 1996, it was estimated that $44.0 million would be sufficient to settle all claims not already settled that had occurred on or prior to December 31, 1996, whether reported or unreported. The next section of the table sets forth the re-estimates in later years of incurred losses, including payments, for the years indicated. The next section of the table shows, by year, the cumulative amounts of loss and loss adjustment expense payments, net of amounts recoverable from reinsurers, as of the end of each succeeding year. For example, with respect to the net loss reserves of $44.0 million as of December 31, 1996, by December 31, 2004 (eight years later) $36.4 million had actually been paid in settlement of the claims that relate to liabilities as of December 31, 1996.

      The “cumulative redundancy/(deficiency)” represents, as of December 31, 2004, the difference between the latest re-estimated liability and the amounts as originally estimated. A redundancy means that the original estimate was higher than the current estimate. A deficiency means that the current estimate is higher than the original estimate.

Analysis of Loss and Loss Adjustment Expense Reserve Development

	Year Ended December 31,
	1994		1995		1996		1997			1998			1999			2000			2001			2002			2003			2004
	(In thousands)
Reserve for loss and loss adjustment expenses, net of reinsurance recoverables	$	31,243	$	43,299	$	43,952	$	55,096		$	43,625		$	72,599		$	86,192		$	119,020		$	152,908		$	183,001		$	243,256
Net reserve estimated as of:
One year later		28,101		36,613		35,447		54,036			49,098			75,588			96,801			123,413			155,683			196,955
Two years later		23,757		39,332		34,082		60,800			50,764			82,633			98,871			116,291			168,410
Three years later		21,026		28,439		34,252		63,583			57,750			86,336			92,740			119,814
Four years later		20,510		28,700		35,193		68,754			59,800			86,829			93,328
Five years later		20,992		29,647		38,318		69,610			60,074			87,088
Six years later		21,808		31,524		38,339		70,865			61,297
Seven years later		22,518		31,185		39,459		70,684
Eight years later		22,277		32,161		38,888
Nine years later		23,020		31,627
Ten years later		22,413
Net cumulative redundancy (deficiency)	$	8,830	$	11,672	$	5,064	$	(15,588	)	$	(17,672	)	$	(14,489	)	$	(7,136	)	$	(794	)	$	(15,502	)	$	(13,954	)

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	Year Ended December 31,
	1994		1995		1996			1997			1998			1999			2000			2001			2002			2003			2004
	(In thousands)
Cumulative amount of reserve paid, net of reserve recoveries, through:
One year later		10,646		17,716		19,143			35,005			26,140			45,095			51,470			51,114			66,545			73,783
Two years later		16,911		23,158		27,843			46,735			37,835			62,141			62,969			71,582			101,907
Three years later		18,567		26,058		30,766			54,969			45,404			67,267			70,036			84,341
Four years later		19,674		27,039		32,576			60,249			48,184			70,894			73,680
Five years later		20,008		28,007		34,765			62,361			50,045			72,744
Six years later		20,626		29,394		35,313			64,296			50,831
Seven years later		21,526		29,603		36,367			64,659
Eight years later		21,555		30,331		36,379
Nine years later		22,162		30,242
Ten years later		21,774
Net reserve— December 31	$	31,243	$	43,299	$	43,952		$	55,096		$	43,625		$	72,599		$	86,192		$	119,020		$	152,908		$	183,001		$	243,256
Reinsurance recoverables		9,699		12,127		9,525			12,463			37,086			183,818			293,632			264,013			193,634			194,558			189,624
Gross reserve— December 31	$	40,942	$	55,426	$	53,477		$	67,559		$	80,711		$	256,417		$	379,824		$	383,033		$	346,542		$	377,559		$	432,880
Net re-estimated reserve	$	22,413	$	31,627	$	38,888		$	70,684		$	61,297		$	87,088		$	93,328		$	119,814		$	168,410		$	196,955
Re-estimated reinsurance recoverables		9,641		17,679		27,504			35,763			124,943			282,006			384,482			347,107			270,576			221,959
Gross re-estimated reserve	$	32,054	$	49,306	$	66,392		$	106,447		$	186,240		$	369,094		$	477,810		$	466,921		$	438,986		$	418,914
Gross cumulative redundancy (deficiency)	$	8,888	$	6,120	$	(12,915	)	$	(38,888	)	$	(105,529	)	$	(112,677	)	$	(97,986	)	$	(83,888	)	$	(92,444	)	$	(41,355	)

      Our net cumulative redundancy (deficiency) set forth in the table above is net of amounts recoverable from our reinsurers, including Reliance Insurance Company, one of our former reinsurers. In 2001, Reliance was placed under regulatory supervision by the Pennsylvania Insurance Department and was subsequently placed into liquidation. As a result, between 2001 and 2003, we recognized losses related to uncollectible amounts due from Reliance aggregating $20.3 million. The table below recalculates our net cumulative redundancy (deficiency) as adjusted to add back amounts recoverable from Reliance and illustrates the extent to which our underwriting results were adversely affected by Reliance.

	Year Ended December 31,
	1994		1995		1996		1997			1998			1999			2000			2001			2002			2003
	(In thousands)
Net cumulative redundancy (deficiency)	$	8,830	$	11,672	$	5,064	$	(15,588	)	$	(17,672	)	$	(14,489	)	$	(7,136	)	$	(794	)	$	(15,502	)	$	(13,954	)
Amounts recoverable from Reliance Insurance Company		—		—		—		—			—			—			—			17,000			19,000			20,300
Adjusted net cumulative redundancy (deficiency)	$	8,830	$	11,672	$	5,064	$	(15,588	)	$	(17,672	)	$	(14,489	)	$	(7,136	)	$	16,206		$	3,498		$	6,346

Investments

      We derive net investment income from our invested assets. As of March 31, 2005, the amortized cost of our investment portfolio was $405.0 million and the fair value of the portfolio was $402.2 million.

      Our investment strategy is to maximize after tax income and total return on invested assets while maintaining high quality and low risk investments within the portfolio. Our investment portfolio is managed by Hibernia Asset Management, LLC, a registered investment advisory firm and a wholly owned subsidiary of Hibernia National Bank. We pay Hibernia an investment management fee based on the market value of assets under management. The investment committee of our board of directors has established investment guidelines and periodically reviews portfolio performance for compliance with our guidelines.

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      See “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Investments” for further information on the composition and results of our investment portfolio.

      The table below shows the carrying values of various categories of securities held in our investment portfolio, the percentage of the total carrying value of our investment portfolio represented by each category and the annualized tax-equivalent yield for the three months ended March 31, 2005 based on the carrying value of each category as of March 31, 2005:

							Annualized
					Percentage		Tax-Equivalent
			Carrying Value		of Portfolio		Yield
			(In thousands)
Fixed maturity securities:
	State and political subdivisions			172,102		42.2%		5.3	%
	Mortgage-backed securities			88,145		21.6%		5.1	%
	U.S. Treasury securities and obligations of U.S. government agencies			44,690		11.0%		4.1	%
	Corporate bonds			23,836		5.8%		4.9	%
	Asset-backed securities			2,200		0.5%		4.7	%
	Redeemable preferred stocks			1,720		0.7%		5.9	%
		Total fixed maturity securities		332,693		81.8%
Equity securities:
	Common stocks			42,881		10.5%		1.9	%
	Nonredeemable preferred stocks			5,738		1.2%		5.1	%
		Total equity securities		48,619		11.7%
Total investments, excluding cash and cash equivalents			$	381,312		93.5%
Cash and cash equivalents				26,356		6.5%		2.2	%
Total investments, including cash and cash equivalents			$	407,668		100.0%

      As of March 31, 2005, our fixed maturity securities had a carrying value of $332.7 million, which represented 81.8% of the carrying value of our investments, including cash and cash equivalents. The table below summarizes the credit quality of our fixed maturity securities as of March 31, 2005, as rated by Standard and Poor’s.

		Percentage
		of Total
Credit Rating		Carrying Value
“AAA”			87.0	%
“AA”			5.0
“A”			4.0
“BBB”			4.0
	Total		100.0	%

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      The table below shows the composition of our fixed maturity securities by remaining time to maturity as of March 31, 2005. For securities that are redeemable at the option of the issuer and have a carrying value that is greater than par value, the maturity used for the table below is the earliest redemption date. For securities that are redeemable at the option of the issuer and have a carrying value that is less than par value, the maturity used for the table below is the final maturity date.

		As of March 31, 2005
Remaining Time to Maturity		Carrying Value		Percentage
		(In thousands)
Less than one year		$	10,668		3.2%
One to five years			124,430		37.4%
Five to ten years			86,308		25.9%
More than ten years			19,236		5.8%
Mortgage-backed securities			88,059		26.5%
Asset-backed securities			2,272		0.7%
Redeemable preferred stocks			1,720		0.5%
	Total	$	332,693		100.0%

Reinsurance

      We purchase reinsurance to reduce our net liability on individual risks and claims and to protect against catastrophic losses. Reinsurance involves an insurance company transferring to, or ceding, a portion of the exposure on a risk to a reinsurer. The reinsurer assumes the exposure in return for a portion of our premium. The cost and limits of reinsurance we purchase can vary from year to year based upon the availability of quality reinsurance at an acceptable price and our desired level of retention. Retention refers to the amount of risk that we retain for our own account. Under excess of loss reinsurance, covered losses in excess of the retention level up to the limit of the program are paid by the reinsurer. Our excess of loss reinsurance is written in layers, in which our reinsurers accept a band of coverage up to a specified amount. Any liability exceeding the limit of the program reverts to us as the ceding company. Reinsurance does not legally discharge us from primary liability for the full amount due under our policies. However, our reinsurers are obligated to indemnify us to the extent of the coverage provided in our reinsurance agreements.

      We believe reinsurance is critical to our business. Our reinsurance purchasing strategy is to protect against unforeseen and/or catastrophic loss activity that would adversely impact our income and capital base. We only select financially strong reinsurers with an A.M. Best rating of “A-” (Excellent) or better at the time we enter into a reinsurance contract. In addition, to minimize our exposure to significant losses from reinsurer insolvencies, we evaluate the financial condition of our reinsurers and monitor concentrations of credit risk. We do not purchase finite reinsurance.

     2005 Excess of Loss Reinsurance Treaty Program

      Effective January 1, 2005, we entered into a new excess of loss reinsurance treaty program related to our voluntary and assigned risk business that applies to losses incurred between January 1, 2005 and the date on which our reinsurance agreements are terminated. Our reinsurance treaty program provides us with reinsurance coverage for each loss occurrence up to $30.0 million, subject to applicable deductibles and retentions. However, for any loss occurrence involving only one person, our reinsurance coverage is limited to a maximum of $10.0 million, subject to applicable deductibles and retentions. We currently have ten reinsurers participating in our 2005 reinsurance treaty program. Under certain circumstances, including a downgrade of a reinsurer’s A.M. Best rating to “B++” (Very Good) or below, our reinsurers may be required to provide us with security for amounts due under the terms of our reinsurance program. This security may take the form of, among other things, cash advances or the

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issuance of a letter of credit to us. If security is required because of a ratings downgrade, the form of security must be mutually agreed between the reinsurer and us.

      Our reinsurance treaty program provides coverage in the following four layers:

• First Layer. Affords coverage for the first $5.0 million of each loss occurrence. We retain the first $1.0 million of each loss and are subject to an annual aggregate deductible of approximately $5.6 million for losses between $1.0 million and $5.0 million before our reinsurers are obligated to reimburse us. The annual aggregate deductible is calculated as a percentage of net premiums earned. After the deductible is satisfied, we retain 10.0% of each loss between $1.0 million and $5.0 million. This layer also affords coverage for up to an aggregate of $4.0 million for certain losses caused by terrorism. In addition, with respect to our employers liability and general liability insurance policies, this layer requires that we obtain additional reinsurance to limit our ultimate net loss for each loss occurrence to $2.0 million.

• Second Layer. Affords coverage up to $5.0 million for each loss occurrence in excess of $5.0 million. The aggregate limit for all claims under this layer is $10.0 million.

• Third Layer. Affords coverage up to $10.0 million for each loss occurrence in excess of $10.0 million, with a limit of $5.0 million for any one person. The aggregate limit for all claims under this layer is $20.0 million.

• Fourth Layer. Affords coverage up to $10.0 million for each loss occurrence in excess of $20.0 million, with a limit of $5.0 million for any one person. The aggregate limit for all claims under this layer is $20.0 million.

      The agreements under our 2005 reinsurance treaty program may be terminated by us or our reinsurers upon 90 days prior notice on any December 31. In addition, we may terminate the participation of one or more of our reinsurers under certain circumstances as permitted by the terms of our reinsurance agreements.

      The table below sets forth the reinsurers participating in our 2005 reinsurance program:

	A.M. Best
Reinsurer	Rating
Amlin Underwriting		A
Aspen Insurance UK		A
Brit Syndicates		A
Chubb Re/ Federal Insurance Company		A++
Hannover Re		A
IOA Re/ Catlin Insurance Company		A
Liberty Syndicate		A
M.J. Harrington		A
Partner Reinsurance Company		A+
Platinum Underwriters Reinsurance		A

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      Due to the nature of reinsurance, we have receivables from reinsurers that apply to accident years prior to 2005. The table below summarizes our amounts recoverable from reinsurers as of March 31, 2005.

				Amount Recoverable
		A.M. Best		as of March 31,
Reinsurer		Rating		2005
				(In thousands)
Converium Reinsurance (North America)(1)			B-	$	79,964
American Reinsurance Company			A		28,007
Odyssey America Reinsurance Company			A		21,551
St. Paul Fire and Marine Insurance Company			A		12,666
Clearwater Insurance Company			A		10,981
SCOR Reinsurance Company			B++		8,199
Hannover Re(2)			A		3,847
Connecticut General Life Insurance Company			A-		2,602
Phoenix Life Insurance Company			A		1,850
Overseas Partners US Reinsurance Company			NR-5		1,777
Other (26 reinsurers)			—		18,254
	Total			$	189,698

(1)

Effective June 30, 2005, we entered into a commutation agreement with Converium under which we received a cash payment of $61.3 million in exchange for a termination and release of three of our five reinsurance agreements with Converium. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Liquidity and Capital Resources” for further discussion of the commutation agreement with Converium.

(2)

Current participant in our 2005 reinsurance program.

Terrorism Reinsurance

      The Terrorism Risk Insurance Act is effective for the period from November 26, 2002 until December 31, 2005. The Terrorism Risk Insurance Act may provide us with reinsurance coverage under certain circumstances and subject to certain limitations. The Secretary of the U.S. Department of the Treasury must certify an act for it to constitute an act of terrorism. The definition of terrorism excludes domestic acts of terrorism or acts of terrorism committed in the course of a war declared by Congress. Losses arising from an act of terrorism must exceed $5.0 billion to qualify for reimbursement. If an event is certified, the federal government will reimburse losses not to exceed $100.0 billion in any year. Each insurance company is responsible for a deductible based on a percentage of direct earned premiums in the previous calendar year. For losses in excess of the deductible, the federal government will reimburse 90% of the insurer’s loss, up to the insurer’s proportionate share of the $100.0 billion. The Terrorism Risk Insurance Act is set to expire on December 31, 2005, and the U.S. Department of the Treasury has recommended that Congress not extend the law in its current form. If this law is not extended or is extended in a scaled-back form, which is the current proposal by the U.S. Department of the Treasury, reinsurance for losses arising from terrorism may be unavailable or prohibitively expensive, and we may be further exposed to losses arising from acts of terrorism. See “— Regulation— Federal and State Legislative and Regulatory Changes.”

Technology

      We use our internally developed and other management information systems as an integral part of our operations and make a substantial ongoing investment in improving our systems. We provide our

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field premium auditors, field safety professionals and field case managers with computer and communication equipment to more timely and efficiently complete the underwriting process. This technology also helps to facilitate communication and to report and monitor claims. All of our systems development and infrastructure operation and maintenance is performed by our 34 information technology professionals, with limited assistance from outside vendors.

Core Systems

      ICAMS. Our internally developed Insurance Claims and Accounting Management System, or ICAMS, is an application designed to support our workers’ compensation insurance lines of business. ICAMS provides comprehensive rating, analysis, quotation, audit, claims, policy issuance and policy-level accounting transaction processes. By combining the information it obtains in its underwriting process with information on claims billing and claims management, we are able to enhance our services to our policyholders.

      RealSafe. RealSafe is an internally developed application that supports our field safety professionals, as well as safety, claims and underwriting departments in our home office, by providing risk assessment and reporting of information to support safety and loss control initiatives.

      Document Management System. Our document management system is a purchased application currently being used by our underwriting, audit, finance and treasury departments to scan, index and store imaged documents to facilitate the movement of work items from one authority level to the next. The system will ultimately include all departments. The system allows departmental management to closely monitor and modify employee workloads as needed.

      Freedom Enterprise. FFS-Enterprise is a Fiserv product that functions as our general ledger and accounts payable systems using an MS SQL database platform. We also use Fiserv companion products for report writing, check printing and annual statement preparation. Transactions can be manually entered into Enterprise, interfaced via an ASCII file or copied and pasted from a spreadsheet application. Enterprise is currently set up to accept transaction detail by department, cost center, line of business and state. Enterprise also offers the capability of batch processing, which enables off-peak hour work.

      Visual Audit. Visual Audit is a purchased application used by our field premium auditors to input information necessary to complete an interim or final premium audit.

      Information Warehouse. Information Warehouse is an internally developed SQL Server-based set of OLAP cubes, queries and processes that extracts operational data from ICAMS and other of our applications and transforms that data for porting to Freedom Enterprise and fnet.

      fnet. fnet is an internally developed data analysis portal. fnet is populated by our Information Warehouse, and used throughout our company to generate key performance statistics.

Operating Systems

      We use Microsoft Active Directory services to provide application access, domain authentication and network services. Our server hardware is predominately Compaq/ HP, but includes Dell servers as well. Our production servers are under manufacturer warranties.

Business Continuity/Disaster Recovery

      Our Storage Area Network solution provides us with continuous operations using mirrored servers and storage situated in two separate corporate buildings, with built-in failover capabilities to minimize business interruption. We utilize software from Veritas for backup and recovery purposes. Full system backups are performed nightly using one on-site and one off-site facility for tape storage.

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Competition

      The insurance industry, in general, is highly competitive and there is significant competition in the workers’ compensation insurance industry. Competition in the insurance business is based on many factors, including coverage availability, claims management, safety services, payment terms, premium rates, policy terms, types of insurance offered, overall financial strength, financial ratings assigned by independent rating organizations, such as A.M. Best, and reputation. Some of the insurers with which we compete have significantly greater financial, marketing and management resources and experience than we do. We may also compete with new market entrants in the future.

      We believe the workers’ compensation market for the hazardous industries we target is underserved and competition is fragmented and not dominated by one or more competitors. Our competitors include other insurance companies, individual self insured companies, state insurance pools and self-insurance funds. More than 350 insurance companies participate in the workers’ compensation market. The insurance companies with which we compete vary state by state and by the industries we target.

      We believe our competitive advantages include our safety service and claims management practices, our A.M. Best rating of “A-” (Excellent) and our ability to reduce claims through implementation of our work safety programs. In addition, we believe that our insurance is competitively priced and our premium rates are typically lower than those for policyholders assigned to the state insurance pools, allowing us to provide a viable alternative for policyholders in those pools.

Ratings

      Many insurance buyers and agencies use the ratings assigned by A.M. Best and other rating agencies to assist them in assessing the financial strength and overall quality of the companies from which they are considering purchasing insurance. We were assigned a rating of “A-” (Excellent) by A.M. Best. An “A-” rating is the fourth highest of 15 rating categories used by A.M. Best. In June 2005, A.M. Best placed our rating under review with negative implications, citing concerns about our risk adjusted capital, credit risk associated with amounts recoverable from our reinsurers and the somewhat limited financial flexibility of our holding company, AMERISAFE. As a result of our commutation with Converium Reinsurance (North America), one of our reinsurers, and the application of the proceeds from this offering, we expect that our under review status will be returned to stable and that A.M. Best will affirm our “A-” (Excellent) rating in late 2005.

      In evaluating a company’s financial and operating performance, A.M. Best reviews the company’s profitability, indebtedness and liquidity, as well as its book of business, the adequacy and soundness of its reinsurance, the quality and estimated fair value of its assets, the adequacy of its loss reserves, the adequacy of its surplus, its capital structure, the experience and competence of its management and its market presence. This rating is intended to provide an independent opinion of an insurer’s ability to meet its obligations to policyholders and is not an evaluation directed at investors.

Employees

      As of March 31, 2005, we had 465 employees. We have employment agreements with some of our executive officers, which are described under “Management— Employment Agreements.” None of our employees is subject to collective bargaining agreements. We believe that our employee relations are good.

Properties

      We own our 45,000 square foot executive offices located in DeRidder, Louisiana, and lease an additional 28,000 square feet of office space in DeRidder, Louisiana. In addition, we lease space at other locations for our service and claims representative offices.

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Legal Proceedings

      In the ordinary course of our business, we are involved in the adjudication of claims resulting from workplace injuries. We are not involved in any legal or administrative claims that we believe are likely to have a materially adverse effect on our business, financial condition or results of operations.

Regulation

Holding Company Regulation

      Nearly all states have enacted legislation that regulates insurance holding company systems. Each insurance company in a holding company system is required to register with the insurance supervisory agency of its state of domicile and furnish information concerning the operations of companies within the holding company system that may materially affect the operations, management or financial condition of the insurers within the system. Under these laws, the respective state insurance departments may examine us at any time, require disclosure of material transactions and require prior notice of or approval for certain transactions. All transactions within a holding company system affecting an insurer must have fair and reasonable terms and are subject to other standards and requirements established by law and regulation.

Changes of Control

      The insurance holding company laws of nearly all states require advance approval by the respective state insurance departments of any change of control of an insurer. “Control” is generally presumed to exist through the direct or indirect ownership of 10% or more of the voting securities of a domestic insurance company or any entity that controls a domestic insurance company. In addition, insurance laws in many states contain provisions that require pre-notification to the insurance commissioners of a change of control of a non-domestic insurance company licensed in those states. Any future transactions that would constitute a change of control of American Interstate, Silver Oak Casualty or American Interstate of Texas, including a change of control of AMERISAFE, would generally require the party acquiring control to obtain the prior approval of the department of insurance in the state in which the insurance company being acquired is incorporated and may require pre-notification in the states where pre-notification provisions have been adopted. Obtaining these approvals may result in the material delay of, or deter, any such transaction.

      These laws may discourage potential acquisition proposals and may delay, deter or prevent a change of control of AMERISAFE, including through transactions, and in particular unsolicited transactions, that some or all of the shareholders of AMERISAFE might consider to be desirable.

State Insurance Regulation

      Insurance companies are subject to regulation and supervision by the department of insurance in the state in which they are domiciled and, to a lesser extent, other states in which they conduct business. American Interstate and Silver Oak Casualty are primarily subject to regulation and supervision by the Louisiana Department of Insurance, Workers’ Compensation Commission and Insurance Rating Commission. American Interstate of Texas is primarily subject to regulation and supervision by the Texas Department of Insurance and Workers’ Compensation Commission. These state agencies have broad regulatory, supervisory and administrative powers, including among other things, the power to grant and revoke licenses to transact business, license agencies, set the standards of solvency to be met and maintained, determine the nature of, and limitations on, investments and dividends, approve policy forms and rates in some states, periodically examine financial statements, determine the form and content of required financial statements, and periodically examine market conduct.

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      Detailed annual and quarterly financial statements and other reports are required to be filed with the department of insurance in all states in which we are licensed to transact business. The financial statements of American Interstate, Silver Oak Casualty and American Interstate of Texas are subject to periodic examination by the department of insurance in each state in which it is licensed to do business.

      In addition, many states have laws and regulations that limit an insurer’s ability to withdraw from a particular market. For example, states may limit an insurer’s ability to cancel or not renew policies. Furthermore, certain states prohibit an insurer from withdrawing one or more lines of business from the state, except pursuant to a plan that is approved by the state insurance department. The state insurance department may disapprove a plan that may lead to market disruption. Laws and regulations that limit cancellation and non-renewal and that subject program withdrawals to prior approval requirements may restrict our ability to exit unprofitable markets.

      Insurance agencies are subject to regulation and supervision by the department of insurance in the state in which they are licensed. Amerisafe General Agency, Inc. is licensed in 24 states and is domiciled in Louisiana. Amerisafe General is primarily subject to regulation and supervision by the Louisiana Department of Insurance. This agency regulates the solicitation of insurance and the qualification and licensing of agents and agencies who may desire to conduct business in Louisiana.

State Insurance Department Examinations

      We are subject to periodic examinations by state insurance departments in the states in which we operate. The Louisiana Department of Insurance generally examines each of its domiciliary insurance companies on a triannual basis. The last examination of American Interstate and Silver Oak Casualty occurred in 2002. We have been informally notified that our next examination is scheduled for the end of 2005 or the beginning of 2006. American Interstate of Texas was formed in December 2004 and began operations in January 2005. Under Texas insurance law, American Interstate of Texas will be subject to examination each year in its first three years of operations.

Guaranty Fund Assessments

      In most of the states where we are licensed to transact business, there is a requirement that property and casualty insurers doing business within each such state participate in a guaranty association, which is organized to pay contractual benefits owed pursuant to insurance policies issued by impaired, insolvent or failed insurers. These associations levy assessments, up to prescribed limits, on all member insurers in a particular state on the basis of the proportionate share of the premium written by member insurers in the lines of business in which the impaired, insolvent or failed insurer is engaged. Some states permit member insurers to recover assessments paid through full or partial premium tax offsets.

      Property and casualty insurance company insolvencies or failures may result in additional security fund assessments to us at some future date. At this time, we are unable to determine the impact, if any, such assessments may have on our financial position or results of operations. We have established liabilities for guaranty fund assessments with respect to insurers that are currently subject to insolvency proceedings.

Residual Market Programs

      Many of the states in which we conduct business or intend to conduct business, require that all licensed insurers participate in a program to provide workers’ compensation insurance to those employers who have not or cannot procure coverage from a carrier on a negotiated basis. The level of required participation in such programs is generally determined by calculating the volume of our voluntarily business in that state as a percentage of all voluntarily business in that state by all insurers. The resulting factor is the proportion of premium we must accept as a percentage of all of premiums in policies residing in that state’s residual market program.

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      Companies generally can fulfill their residual market obligations by either issuing insurance policies to employers assigned to them, or participating in a reinsurance pool where the results of all policies provided through the pool are shared by the participating companies. Currently, we utilize both methods, depending on management’s evaluation of the most cost-efficient method to adopt in each state that allows a choice of assigned risk or participation in a pooling arrangement. In general, we believe that assigned risk produces better results as we apply our cost management approach to these involuntary policyholders. We currently have assigned risk in Alabama, Alaska, Georgia, North Carolina, South Carolina, and Virginia.

Second Injury Funds

      A number of states operate trust funds that reimburse insurers and employers for claims paid to injured employees for aggravation of prior conditions or injuries. The state-managed trust funds are funded through assessments against insurers and self-insurers providing workers’ compensation coverage in a specific state. Our recoveries from state-managed trust funds for the years ended December 31, 2002, 2003 and 2004 were approximately $6.4 million, $7.3 million and $8.1 million, respectively.

Dividend Limitations

      Under Louisiana law, American Interstate and Silver Oak Casualty cannot pay dividends to their shareholders in excess of the lesser of 10% of statutory surplus, or statutory net income, excluding realized investment gains, for the preceding 12-month period without the prior approval of the Louisiana Commissioner of Insurance. However, net income from the previous two calendar years may be carried forward to the extent that it has not already been paid out as dividends. Based on reported capital and surplus at December 31, 2004, this requirement limits American Interstate’s ability to make distributions to AMERISAFE in 2005 to approximately $11.2 million without approval by the Louisiana Department of Insurance. Further, under Texas law, American Interstate of Texas cannot pay dividends to its shareholder in excess of the greater of 10% of statutory surplus, or statutory net income, for the preceding 12-month period without the prior approval of the Texas Commissioner of Insurance.

Federal Law and Regulations

      As of March 31, 2005, 2.5% of our voluntary in-force premiums were derived from employers engaged in the maritime industry. As a provider of workers’ compensation insurance for employers engaged in the maritime industry, we are subject to the United States Longshore and Harbor Workers’ Compensation Act, or the USL&H Act, and the Merchant Marine Act of 1920, or Jones Act. We are also subject to regulations related to the USL&H Act and the Jones Act.

      The USL&H Act, which is administered by the U.S. Department of Labor, generally covers exposures on the navigable waters of the United States and in adjoining waterfront areas, including exposures resulting from stevedoring. The USL&H Act requires employers to provide medical benefits, compensation for lost wages and rehabilitation services to longshoremen, harbor workers and other maritime workers who may suffer injury, disability or death during the course and scope of their employment. The Department of Labor has the authority to require us to make deposits to serve as collateral for losses incurred under the USL&H Act.

      The Jones Act is a federal law, the maritime employer provisions of which provide injured offshore workers, or seamen, with a remedy against their employers for injuries arising from negligent acts of the employer or co-workers during the course of employment on a ship or vessel.

Privacy Regulations

      In 1999, Congress enacted the Gramm-Leach-Bliley Act, which, among other things, protects consumers from the unauthorized dissemination of certain personal information. Subsequently, a majority of states have implemented additional regulations to address privacy issues. These laws and

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regulations apply to all financial institutions, including insurance and finance companies, and require us to maintain appropriate policies and procedures for managing and protecting certain personal information of our policyholders and to fully disclose our privacy practices to our policyholders. We may also be exposed to future privacy laws and regulations, which could impose additional costs and impact our results of operations or financial condition. In 2000, the National Association of Insurance Commissioners, or the NAIC, adopted the Privacy of Consumer Financial and Health Information Model Regulation, which assisted states in promulgating regulations to comply with the Gramm-Leach-Bliley Act. In 2002, to further facilitate the implementation of the Gramm-Leach-Bliley Act, the NAIC adopted the Standards for Safeguarding Customer Information Model Regulation. Several states have now adopted similar provisions regarding the safeguarding of policyholder information. We have established policies and procedures to comply with the Gramm-Leach-Bliley related privacy requirements.

     Federal and State Legislative and Regulatory Changes

      From time to time, various regulatory and legislative changes have been proposed in the insurance industry. Among the proposals that have in the past been or are at present being considered are the possible introduction of federal regulation in addition to, or in lieu of, the current system of state regulation of insurers and proposals in various state legislatures (some of which proposals have been enacted) to conform portions of their insurance laws and regulations to various model acts adopted by the NAIC. We are unable to predict whether any of these laws and regulations will be adopted, the form in which any such laws and regulations would be adopted or the effect, if any, these developments would have on our operations and financial condition.

      On November 26, 2002, in response to the tightening of supply in certain insurance and reinsurance markets resulting from, among other things, the September 11, 2001 terrorist attacks, the Terrorism Risk Insurance Act was enacted. The Terrorism Risk Insurance Act is designed to ensure the availability of insurance coverage for losses resulting from acts of terror in the United States. This law established a federal assistance program through the end of 2005 to help the property and casualty insurance industry cover claims related to future terrorism-related losses and requires such companies to offer coverage for certain acts of terrorism. As a result, any terrorism exclusions in policies in-force prior to the enactment of the Terrorism Risk Insurance Act are void and, absent authorization or failure of the insured to pay increased premiums resulting from the terrorism coverage, we are prohibited from adding certain terrorism exclusions to policies written. Although we are protected by federally funded terrorism reinsurance as provided for in the Terrorism Risk Insurance Act, there is a substantial deductible that must be met, the payment of which could have an adverse effect on our results of operations. The Terrorism Risk Insurance Act is set to expire on December 31, 2005, and the U.S. Department of the Treasury has recommended that Congress not extend the law in its current form. If this law is not extended or is extended in a scaled-back form, which is the current proposal by the U.S. Department of the Treasury, these changes could also adversely affect us by causing our reinsurers to increase premium rates or withdraw from certain markets where terrorism coverage is required.

     The National Association of Insurance Commissioners

      The NAIC is a group formed by state Insurance Commissioners to discuss issues and formulate policy with respect to regulation, reporting and accounting of insurance companies. Although the NAIC has no legislative authority and insurance companies are at all times subject to the laws of their respective domiciliary states and, to a lesser extent, other states in which they conduct business, the NAIC is influential in determining the form in which such laws are enacted. Model Insurance Laws, Regulations and Guidelines, which we refer to as the Model Laws, have been promulgated by the NAIC as a minimum standard by which state regulatory systems and regulations are measured. Adoption of state laws that provide for substantially similar regulations to those described in the Model

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Laws is a requirement for accreditation by the NAIC. The NAIC provides authoritative guidance to insurance regulators on current statutory accounting issues by promulgating and updating a codified set of statutory accounting practices in its Accounting Practices and Procedures manual. The Louisiana and Texas legislatures have adopted these codified statutory accounting practices.

      Under Louisiana law, American Interstate and Silver Oak Casualty are required to maintain minimum capital and surplus of $3.0 million. Under Texas law, American Interstate of Texas is required to maintain minimum capital and surplus of $1.0 million. Property and casualty insurance companies are subject to certain risk based capital requirements by the NAIC. Under those requirements, the amount of capital and surplus maintained by a property and casualty insurance company is to be determined based on the various risk factors related to it. As of December 31, 2004, American Interstate, Silver Oak Casualty, and American Interstate of Texas exceeded the minimum risk based capital requirements.

      The key financial ratios of NAIC’s Insurance Regulatory Information System, or IRIS, which ratios were developed to assist insurance departments in overseeing the financial condition of insurance companies, are reviewed by experienced financial examiners of the NAIC and state insurance departments to select those companies that merit highest priority in the allocation of the regulators’ resources. IRIS identifies 12 industry ratios and specifies “usual values” for each ratio. Departure from the usual values on four or more of the ratios can lead to inquiries from individual state insurance commissioners as to certain aspects of an insurer’s business.

      The 2004 IRIS results for American Interstate and Silver Oak Casualty showed their investment yield ratios were outside the usual range for such ratio, which was consistent with the insurance industry as a whole. In addition, the 2004 IRIS results for Silver Oak Casualty showed its net written premium-to-surplus ratio and one-year reserve development-to-surplus ratio were above the usual ranges for such ratios. These two ratios were above the IRIS usual values because of Silver Oak Casualty’s small surplus base.

     Statutory Accounting Practices

      Statutory accounting practices, or SAP, are a basis of accounting developed to assist insurance regulators in monitoring and regulating the solvency of insurance companies. SAP is primarily concerned with measuring an insurer’s surplus to policyholders. Accordingly, statutory accounting focuses on valuing assets and liabilities of insurers at financial reporting dates in accordance with appropriate insurance law and regulatory provisions applicable in each insurer’s domiciliary state.

      Generally accepted accounting principles, or GAAP, are concerned with a company’s solvency, but are also concerned with other financial measurements, principally income and cash flows. Accordingly, GAAP gives more consideration to appropriate matching of revenue and expenses and accounting for management’s stewardship of assets than does SAP. As a direct result, different assets and liabilities and different amounts of assets and liabilities will be reflected in financial statements prepared in accordance with GAAP as opposed to SAP.

      Statutory accounting practices established by the NAIC and adopted, in part by the Louisiana and Texas insurance regulators, determine, among other things, the amount of statutory surplus and statutory net income of American Interstate, Silver Oak Casualty and American Interstate of Texas and thus determine, in part, the amount of funds that are available to pay dividends to AMERISAFE.

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MANAGEMENT

Directors, Executive Officers and Key Employees

      The table below sets forth information about our directors, executive officers and key employees. Our directors will be divided into three classes with the number of directors in each class as nearly equal as possible. Each director will serve a three-year term. Executive officers serve at the request of our board of directors.

Name	Age		Position
Directors and Executive Officers
Mark R. Anderson(1)		53	Chairman and Director
C. Allen Bradley, Jr.(3)		54	President, Chief Executive Officer and Director
Geoffrey R. Banta		56	Executive Vice President and Chief Financial Officer
Arthur L. Hunt		60	Executive Vice President, General Counsel and Secretary
Craig P. Leach		55	Executive Vice President, Sales and Marketing
Paul B. Queally(1)		41	Director
Sean M. Traynor(2)		36	Director
Jared A. Morris(3)		30	Director Nominee
			Director Nominee
			Director Nominee
Key Employees
Allan E. Farr		46	Senior Vice President, Enterprise Risk Management
Kelly R. Goins		39	Senior Vice President, Underwriting Operations
Cynthia P. Harris		51	Senior Vice President, Human Resources/Client Services
Leon J. Lagneaux		54	Senior Vice President, Safety Operations
Henry O. Lestage, IV		44	Senior Vice President, Claims Operations
Edwin R. Longanacre		47	Senior Vice President, Information Technology
Lasa L. Simmons		48	Senior Vice President, Premium Audit
Angela S. Lannen		59	Vice President, Treasurer
G. Janelle Frost		35	Assistant Vice President, Controller

(1)	Term expires at the annual meeting of shareholders in 2006.
(2)	Term expires at the annual meeting of shareholders in 2007.
(3)	Term expires at the annual meeting of shareholders in 2008.

      Set forth below is certain background information relating to our directors, executive officers and key employees.

      Mark R. Anderson has served as Chairman of our board of directors since December 2003 and as a Director since 1986. He was our Chief Executive Officer from 1997 until December 2003, and President of our subsidiary, American Interstate, from 1987 until November 2002. Mr. Anderson began his insurance career when he joined our company in 1979. He has served on various legislative insurance advisory committees in Louisiana, and has served as a workers’ compensation rate and reform consultant to several southern insurance commissioners.

      C. Allen Bradley, Jr. has served as our President since November 2002, our Chief Executive Officer since December 2003 and a Director since June 2003. From November 2002 until December

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2003 he served as our Chief Operating Officer. Since joining our company in 1994, Mr. Bradley has had principal responsibility for the management of our underwriting operations (December 2000 through June 2005) and safety services (September 2000 through November 2002) and has served as our General Counsel (September 1997 through December 2003) and Secretary (September 1997 through November 2002). Prior to joining our company, he was engaged in the private practice of law.

      Geoffrey R. Banta has served as our Executive Vice President and Chief Financial Officer since December 2003. Prior to joining our company in 2003, he held the positions of President and Chief Executive Officer from 2001 until November 2003, and Chief Operating Officer from 1996 until 2001, at Scruggs Consulting, an actuarial and management consulting firm. From 1994 to 1996, Mr. Banta was Chief Financial Officer of the Atlanta Casualty Companies, an issuer of non-standard auto insurance whose holding company was a subsidiary of American Financial Group Holdings, Inc.

      Arthur L. Hunt has served as our General Counsel since December 2003, Secretary since 2002 and Executive Vice President since 1999. He has been employed with our company since 1991 and served as our Chief Operating Officer from 1997 until 1999, and as a Director from 1994 until June 2003.

      Craig P. Leach has served as our Executive Vice President, Sales and Marketing since November 2002. He has served in a variety of sales and key marketing positions within our company since beginning his insurance career in 1980, including Senior Vice President, Sales and Marketing from 1997 until November 2002.

      Paul B. Queally has served as a Director of our company since 1997. He is currently a general partner of Welsh, Carson, Anderson & Stowe, a private equity investment firm, that he joined in 1996. Mr. Queally also serves as a director of MedCath Corporation, Concentra Operating Corporation, AmCOMP Incorporated and several private companies.

      Sean M. Traynor has served as a Director of our company since April 2001. He is currently a general partner of Welsh, Carson, Anderson & Stowe, a private equity investment firm, that he joined in 1999. Mr. Traynor also serves as a director for US Oncology, Inc., Select Medical Corporation and Ameripath, Inc.

      Jared A. Morris is a Director Nominee. Since 2002, Mr. Morris has been an officer and a principal owner of several subprime finance companies. He was an Assistant Vice President, Underwriter of CIT Business Credit, a commercial finance company, from 2000 until 2002.

      Allan E. Farr has served as our Senior Vice President, Enterprise Risk Management since April 2004. He has been employed with our company since 1998 and served as Vice President, Underwriting Services from 1999 until 2004.

      Kelly R. Goins has served as our Senior Vice President, Underwriting Operations since March 2005. She has been employed with our company since 1986 and served as Vice President, Underwriting Operations from 2000 until March 2005.

      Cynthia P. Harris has served as our Senior Vice President, Human Resources/ Client Services since January 2003. She has been employed with our company since 1977 and served as Vice President, Policyholder Services and Administration from 1992 until December 2002.

      Leon J. Lagneaux has served as our Senior Vice President, Safety Operations since March 2005. He has been employed with our company since 1994 and served as Vice President, Safety Operations from 1999 until March 2005.

      Henry O. Lestage, IV has served as our Senior Vice President, Claims Operations since September 2000. He has been employed with our company since 1987 and served as Vice President, Claims Operations from 1998 until 2000.

      Edward R. Longanacre has served as our Senior Vice President, Information Technology since March 2005. He has been employed with our company since 2000 and held the position of Vice

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President, Information Technology from September 2004 until March 2005 and Information Technology Director from 2000 until September 2004.

      Lasa L. Simmons has served as our Senior Vice President, Premium Audit since March 2005. She has been employed with our company since 1985 and held the position of Vice President, Premium Audit Manager from 1999 until March 2005.

      Angela S. Lannen has served as our Vice President, Treasurer since January 2001. She has been employed with our company since 1999 and served as Planning and Analysis Manager from 1999 until December 2000.

      G. Janelle Frost has served as our Assistant Vice President, Controller since May 2004. She has been employed with our company since 1992 and served as Deputy Controller from 1998 to April 2004.

Board Composition

      We are managed under the direction of our board of directors. Upon completion of this offering, our board will consist of seven directors, five of whom will not be, and will never have been, employees of our company, nor will they have any other relations with us that would result in their being considered other than independent under applicable U.S. federal securities laws and the current listing requirements of the Nasdaq National Market. There are no family relationships among any of our directors or executive officers.

      Upon completion of this offering, the board is expected to approve Corporate Governance Guidelines and a Code of Business Conduct and Ethics for all directors, officers and employees, copies of which will be available on our website and upon written request by our shareholders at no cost.

Number of Directors; Removal; Vacancies

      Our articles of incorporation and bylaws provide that the number of directors shall be fixed from time to time by our board of directors. Our board of directors will be divided into three classes with the number of directors in each class as nearly equal as possible. Each director will serve a three-year term. The classification and term of office for each of our directors upon completion of this offering is noted in the table listing our directors and executive officers under “—Directors, Executive Officers and Key Employees.” Pursuant to our bylaws, each director will serve until his or her successor is duly elected and qualified, unless he or she dies, resigns, retires, becomes disqualified or is removed. Our bylaws also provide that any director may be removed for cause, at any meeting of shareholders called for that purpose, by the affirmative vote of the holders of at least two-thirds of the shares of our stock entitled to vote for the election of directors.

      Our bylaws further provide that newly created directorships in our board may be filled by election at an annual or special meeting of our shareholders called for that purpose or by our board of directors, provided that our board may not fill more than two newly created directorships during the period between any two successive annual meetings of our shareholders. Any director chosen to fill a newly created directorship will hold office until the next election of one or more directors by the shareholders. Any other vacancies in our board may be filled by election at an annual or special meeting of our shareholders called for that purpose or by the affirmative vote of a majority of the remaining directors then in office, even if less than a quorum. Any director chosen to fill a vacancy not resulting from a newly created directorship will hold office for the unexpired term of his or her predecessor.

Board Committees

      Our board has an audit committee and a compensation committee and, upon completion of this offering, will have a nominating and corporate governance committee. Each committee will consist of three persons. All of the members of our audit committee, compensation committee and nominating and corporate governance committee will be “independent” as defined by the rules of the National

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Association of Securities Dealers, or NASD, and, in the case of the audit committee, by the rules of the NASD and the SEC.

      Audit Committee. The audit committee will be comprised of three directors. Membership of the audit committee will include                     (Chair),                     and                     . The audit committee will oversee our accounting and financial reporting processes and the audits of our financial statements. The functions and responsibilities of the audit committee will include:

• establishing, monitoring and assessing our policies and procedures with respect to business practices, including the adequacy of our internal controls over accounting and financial reporting;

• engaging our independent auditors and conducting an annual review of the independence of our independent auditors;

• pre-approving any non-audit services to be performed by our independent auditors;

• reviewing the annual audited financial statements and quarterly financial information with management and the independent auditors;

• reviewing with the independent auditors the scope and the planning of the annual audit;

• reviewing the findings and recommendations of the independent auditors and management’s response to the recommendations of the independent auditors;

• overseeing compliance with applicable legal and regulatory requirements, including ethical business standards;

• preparing the audit committee report to be included in our annual proxy statement;

• establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters;

• establishing procedures for the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; and

• reviewing the adequacy of the audit committee charter on an annual basis.

      Our independent auditors will report directly to the audit committee. Each member of the audit committee has the ability to read and understand fundamental financial statements. Our board has determined that will                     meet the requirements of an “audit committee financial expert” as defined by the rules of the SEC.

      We will provide for appropriate funding, as determined by the audit committee, for payment of compensation to our independent auditors, any independent counsel or other advisors engaged by the audit committee and for administrative expenses of the audit committee that are necessary or appropriate in carrying out its duties.

      Compensation Committee. The compensation committee will be comprised of three directors. Membership of the compensation committee will include                     (Chair),                     and                     . The compensation committee will establish, administer and review our policies, programs and procedures for compensating our executive officers and directors. The functions and responsibilities of the compensation committee will include:

• evaluating the performance of and determining the compensation for our executive officers, including our chief executive officer;

• administering and making recommendations to our board with respect to our equity incentive plans;

• overseeing regulatory compliance with respect to compensation matters;

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• reviewing and approving employment or severance arrangements with senior management;

• reviewing our director compensation policies and making recommendations to our board;

• preparing the compensation committee report to be included in our annual proxy statement; and

• reviewing the adequacy of the compensation committee charter.

      Nominating and Corporate Governance Committee. The nominating and corporate governance committee will be comprised of three directors. Membership of the nominating and corporate governance committee will include                     (Chair),                     and                     . The functions and responsibilities of the nominating and corporate governance committee will include:

• developing and recommending corporate governance principles and procedures applicable to our board and employees;

• recommending committee composition and assignments;

• identifying individuals qualified to become directors;

• recommending director nominees;

• recommending whether incumbent directors should be nominated for re-election to our board; and

• reviewing the adequacy of the nominating and corporate governance committee charter.

Compensation Committee Interlocks and Insider Participation

      None of the members of our compensation committee will be, or will have been, employed by us. None of our executive officers currently serves, or in the past three years has served, as a member of the board of directors, compensation committee or other board committee performing equivalent functions of another entity that has one or more executive officers serving on our board or compensation committee. See “—Board Composition.”

Director Compensation

      It is anticipated that upon completion of this offering, directors who are also our employees will receive no compensation for serving as directors. Non-employee directors will receive an annual cash retainer of $          , and the chair of the audit committee will receive an additional annual cash retainer of $          . Under our 2005 non-employee director restricted stock plan, non-employee directors will also receive an annual award of a number of shares of restricted stock equal to $          divided by the closing price of our common stock on the date of our annual shareholders meeting at which the non-employee director is elected or re-elected as a member of the board. Upon completion of this offering, our non-employee directors will receive initial grants of restricted stock. See “—2005 Equity Incentive Plans—Non-Employee Director Restricted Stock Plan.” We also expect to reimburse all directors for reasonable out-of-pocket expenses they incur in connection with their service as directors.

Management Compensation and Incentive Plans

      Our compensation policies are designed to maximize shareholder value over the long term. Through our compensation and incentive plans we seek to attract and retain select employees, officers and directors and motivate these individuals to devote their best efforts to our business and financial success.

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      The table below sets forth information about the compensation of our chief executive officer and each of our other executive officers for the year ended December 31, 2004.

			Annual Compensation
							Other Annual		All Other
Name and Principal Position		Year	Salary		Bonus(1)		Compensation(2)		Compensation(3)
Mark R. Anderson		2004	$	352,000	$	40,000		—	$	4,132
	Chairman and Director
C. Allen Bradley, Jr.		2004		275,000		125,000		—		4,132
	President, Chief Executive Officer and Director
Geoffrey R. Banta		2004		200,000		80,000		—		2,412
	Executive Vice President and Chief Financial Officer
Arthur L. Hunt		2004		215,000		80,000		—		4,132
	Executive Vice President, General Counsel and Secretary
Craig P. Leach		2004		215,000		70,000		—		4,132
	Executive Vice President, Sales and Marketing

(1)	Reflects bonuses earned in 2004. In all cases, the bonuses were paid in 2005 and were accrued as of December 31, 2004.
(2)	Perquisites and other personal benefits received by our executive officers in 2004 are not included in the Summary Compensation Table because the aggregate amount of this compensation did not meet disclosure thresholds established under the SEC’s regulations.
(3)	Consists of (a) 401(k) plan matching contributions of $4,100 for Messrs. Anderson, Bradley, Hunt and Leach, and $2,380 for Mr. Banta, and (b) life insurance premiums paid by us in the amount of $32 for each of our executive officers.

Option Grants in Last Fiscal Year

      There were no options granted to our executive officers during the year ended December 31, 2004.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values

      There were no options exercised by our executive officers during the year ended December 31, 2004. The table below indicates for each of our executive officers the number of shares of our common stock underlying exercisable and unexercisable stock options granted under our 1998 Amended and Restated Stock Option and Restricted Stock Purchase Plan, or the 1998 equity incentive plan, and held on December 31, 2004. Based on an assumed initial public offering price of $           per share, none of our executive officers held unexercised in-the-money options on December 31, 2004.

	Number of Securities				Value of Unexercised
	Underlying Unexercised				In-the-Money Options at
	Options at Fiscal Year-End				Fiscal Year-End
Name	Exercisable		Unexercisable		Exercisable		Unexercisable
Mark R. Anderson		742,275		0		—		—
C. Allen Bradley, Jr.		137,444		0		—		—
Geoffrey R. Banta		0		0		—		—
Arthur L. Hunt		204,924		0		—		—
Craig P. Leach		174,925		0		—		—

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      In June 2005, we terminated our 1998 equity incentive plan and cancelled all outstanding options under the 1998 equity incentive plan, including the options listed in the table above.

2005 Equity Incentive Plans

Equity Incentive Plan

      The purpose of our 2005 equity incentive plan is to attract and retain officers and other key employees and to provide them with appropriate incentives and rewards for superior performance. A summary of the provisions of the 2005 incentive plan is set forth below. This summary is qualified in its entirety by the detailed provisions of the 2005 incentive plan, a copy of which has been filed as an exhibit to the registration statement of which this prospectus is a part. Our board of directors and shareholders will have approved the 2005 incentive plan prior to the closing of this offering.

      Types of Awards and Eligibility. Our 2005 incentive plan permits awards in the form of incentive stock options, as defined in Section 422(b) of the Internal Revenue Code of 1986, non-qualified stock options, restricted shares of common stock and restricted stock units. The maximum number of shares of common stock that may be issued pursuant to option grants and restricted stock and restricted stock unit awards under the 2005 incentive plan is            million shares, subject to the authority of our board to adjust this amount in the event of a merger, consolidation, reorganization, stock dividend, stock split, combination of shares, recapitalization or similar transaction affecting our common stock. Officers and other persons employed by or performing services for us are eligible to participate in the 2005 incentive plan. However, only employees (including our officers) can receive grants of incentive stock options.

      Subject to completion of this offering, our board has approved grants of options to our officers and employees to purchase an aggregate of approximately                      shares of our common stock, including grants of options to purchase                      shares to Mr. Anderson,                      shares to Mr. Bradley,                      shares to Mr. Banta,                      shares to Mr. Hunt and                      shares to Mr. Leach. These options will have an exercise price equal to the initial public offering price of our common stock in this offering, and will be subject to pro rata vesting over a five-year period.

      Administration. The 2005 incentive plan will be administered by the compensation committee of our board of directors. Subject to the terms of the 2005 incentive plan, the compensation committee may select participants to receive awards, determine the types of awards and terms and conditions of awards, and interpret provisions of the 2005 incentive plan.

      Stock Options. Stock options granted under the 2005 incentive plan will have an exercise price of not less than 100% of the fair value of our common stock on the date of grant. However, any stock options granted to holders of more than 10% of our voting stock will have an exercise price of not less than 110% of the fair value of our common stock on the date of grant. Stock option grants are exercisable, subject to vesting requirements determined by the compensation committee, for periods of up to ten years from the date of grant, except for any grants to holders of more than 10% of our voting stock, which will have exercise periods limited to a maximum of five years. Stock options generally expire 90 days after the cessation of an optionee’s services. However, in the case of an optionee’s death or disability, the unexercised portion of a stock option remains exercisable for up to one year after the optionee’s death or disability. Stock options granted under the 2005 incentive plan are not transferable, except by will or the laws of descent and distribution.

      Restricted Stock Awards. A restricted stock award is the grant or sale of common stock with restrictions on transferability, and subject to vesting as determined by the compensation committee. Restricted stock awards under the 2005 incentive plan may be made without additional consideration or in consideration for a payment by the participant that is less than the fair value of our common stock on the date of grant. For as long as an award of restricted stock is subject to vesting, there is a risk of forfeiture if the individual leaves our employment prior to full vesting of the award. Restrictions may lapse separately or in combination at relevant times, such as after a specified period of employment or

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the satisfaction of pre-established criteria, in installments or otherwise, all as the compensation committee may determine. Except to the extent provided otherwise under the award agreement relating to the restricted stock award, a participant awarded restricted stock will have all of the rights of a shareholder, including, without limitation, the right to vote and the right to receive dividends. Restricted stock awards under the 2005 incentive plan cannot be transferred except as agreed by the compensation committee, and in accordance with applicable U.S. federal and state securities laws.

      Restricted Stock Units. The compensation committee may authorize the grant or sale of restricted stock units subject to the conditions and restrictions, and for the restriction period, which will generally be at least one year, that it determines in its discretion. Each restricted stock unit is equivalent in value to one share of common stock and entitles the grantee to receive or purchase one share of common stock for each restricted stock unit at the end of the restriction period applicable to such restricted stock unit, subject to the fulfillment during the restriction period of such conditions as the compensation committee may specify. During the applicable restricted period for a given restricted stock unit, the grantee will not have any right to transfer the rights associated with the restricted stock units and will have no ownership or voting rights with respect to the restricted stock units or the underlying shares of common stock.

      Amendment or Termination. While our board of directors may terminate or amend the 2005 incentive plan at any time, no amendment may adversely impair the rights of participants with respect to outstanding awards. In addition, an amendment will be contingent upon approval of our shareholders to the extent required by law or if the amendment would increase the aggregate number of shares of common stock for awards under the 2005 incentive plan, decrease the minimum exercise price or change the class of employees eligible to receive incentive stock options under the plan. Unless terminated earlier, the 2005 incentive plan will terminate in 2015, but will continue to govern unexpired awards.

      Change of Control. At the discretion of the compensation committee at the time of award, agreements for option, restricted stock and restricted stock unit awards may contain provisions providing for the acceleration of the options, restricted stock or restricted stock units upon a change of control of our company.

Non-Employee Director Restricted Stock Plan

      The purpose of our 2005 non-employee director restricted stock plan is to attract and retain directors. A summary of the provisions of the 2005 non-employee director plan is set forth below. This summary is qualified in its entirety by the detailed provisions of the 2005 non-employee director plan, a copy of which has been filed as an exhibit to the registration statement of which this prospectus is a part. Our board of directors and shareholders will have approved the 2005 non-employee director plan prior to the closing of this offering.

      Type of Award and Eligibility. The 2005 non-employee director plan provides for the automatic grant of restricted stock awards to our non-employee directors. The aggregate number of shares of restricted stock that may be issued under the plan is                      shares, subject to the authority of our board to adjust this amount in the event of a merger, consolidation, reorganization, stock dividend, stock split, combination of shares, recapitalization or similar transaction affecting our common stock.

      Administration and Terms. The 2005 non-employee director plan will be administered by the compensation committee of our board of directors. Restricted stock awards to non-employee directors are generally subject to terms including non-transferability, immediate vesting upon death or total disability of a director, forfeiture of unvested shares upon termination of service by a director and acceleration of vesting upon a change of control of our company.

      Automatic Grants. Under the 2005 non-employee director plan, each non-employee director, upon his or her first election to the board, will automatically be granted an initial restricted stock award for a

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number of full shares equal to $          divided by the closing price of our common stock on the date of our annual shareholders meeting at which the non-employee director is elected. Upon completion of this offering, our non-employee directors will receive their initial grants of restricted stock pro-rated for the number of whole months between June 1, 2005 and the first anniversary of the most recent annual shareholders meeting and using the initial public offering price of our common stock in this offering.

      The plan also provides for an annual restricted stock award for a number of full shares equal to $          divided by the closing price of our common stock on the date of our annual shareholders meeting at which the non-employee director is re-elected as a member of the board. If a non-employee director is elected to the board after an annual shareholders meeting to fill a vacancy or a directorship resulting from an increase in the number of directors, the non-employee director will receive a pro-rated grant of restricted stock based upon the number of whole months he or she will serve until the first anniversary of the most recent annual shareholders meeting and using the closing price of our common stock on the date of grant. Each restricted stock award will vest on the date of the next annual shareholders meeting following the date of grant, subject to the non-employee director’s continued service.

Employment Agreements

      The following information summarizes the employment agreements for our chief executive officer and our other executive officers.

      Mark R. Anderson. We have an employment agreement with Mr. Anderson that expires on January 1, 2007, unless extended. Beginning January 1, 2007, the term of this agreement is automatically extended for an additional one year term unless either party delivers notice to the other party of its intention not to extend the term. During the term, Mr. Anderson will serve as Chairman of our board. The agreement provides for an annual base salary of no less than $200,000 during 2005 and $175,000 during 2006 and subsequent years. Mr. Anderson is also entitled to receive an annual bonus, if any, in an amount determined by our compensation committee and may participate in present and future benefit, pension and profit sharing plans that are provided to our executive officers from time to time.

      If we terminate Mr. Anderson’s employment without cause, as defined in his employment agreement, prior to January 1, 2007, he will be entitled to receive his base salary, bonus and any other benefits to which he is entitled in the same manner, method, terms and installments up to and ending on January 1, 2007 as if his employment had not been terminated before that date. In addition, Mr. Anderson has agreed during the term of his employment by us not to engage in any business competitive with us or solicit our employees, agents, consultants or policyholders without our prior written consent. Under the terms of his agreement, Mr. Anderson is permitted to engage in other business activities not related to the business and interests of our company, so long as such business activities do not create any conflict of interest with us.

      Other executive officers. We have an employment agreement with each of Messrs. Bradley, Banta, Hunt and Leach. Each agreement expires on January 1, 2008, unless extended. Beginning January 1, 2008, the term of each agreement is automatically extended for an additional one year term unless either party delivers notice to the other party of its intention not to extend the term. The agreements provide for an annual base salary of no less than $275,000 for Mr. Bradley, $200,000 for Mr. Banta and $215,000 for each of Mr. Hunt and Mr. Leach. They are also entitled to receive an annual bonus in an amount, if any, determined by our compensation committee. Each executive officer may participate in present and future benefit, pension and profit sharing plans that are provided to our executive officers from time to time.

      If we terminate the employment of Messrs. Bradley, Banta, Hunt or Leach without cause, as defined in the employment agreements, the terminated executive officer will be entitled to receive his base salary for a period of 12 months (or, in the case of Mr. Bradley, 18 months) payable in regular installments after the date of his termination. In addition, we have agreed to pay each executive officer

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the actual cost of continuing health coverage premiums for a period of 12 months (or, in the case of Mr. Bradley, 18 months) after the date of his termination. Each of these executive officers has further agreed during the term of his employment by us not to engage in any business competitive with us or solicit our employees, agents, consultants or policyholders without our prior written consent. If Messrs. Bradley, Banta, Hunt or Leach are terminated by us without cause, the prohibitions on engaging in competitive activities or soliciting our employees, agents, consultants or policyholders extend for a period of 12 months (or, in the case of Mr. Bradley, 18 months) after the date of termination. If these executive officers are terminated by us with cause or as a result of a resignation, as defined in the employment agreements, or if an executive officer elects not to renew the term of his employment agreement, we have the option to extend the restriction on engaging in competitive activities or soliciting our employees, agents, consultants or policyholders for a period of 12 months (or, in the case of Mr. Bradley, 18 months) after the date of termination or non-renewal by (a) delivering a written notice to the executive officer within 180 days after his termination or non-renewal stating that we irrevocably exercise the option, and (b) paying his base salary and the actual cost of his COBRA continuing health coverage premiums for a period of 12 months (or, in the case of Mr. Bradley, 18 months) after the date of his termination or non-renewal.

Limitations of Liability and Indemnification of Directors and Officers

      As permitted by Texas law, our articles of incorporation provide that our directors will not be personally liable to us or our shareholders for or with respect to any acts or omissions in the performance of such person’s duties as a director to the fullest extent permitted by applicable law. Our articles of incorporation and bylaws provide that we must indemnify our directors and officers to the fullest extent permitted by Texas law. Our bylaws further provide that we must pay or reimburse reasonable expenses incurred by one of our directors or officers who was, is or is threatened to be made a named defendant or respondent in a proceeding to the maximum extent permitted under Texas law. We believe that these provisions are necessary to attract and retain qualified persons as directors and officers.

      We have entered into indemnification agreements with our directors and officers. These agreements, among other things, require us to indemnify the director or officer to the fullest extent permitted by Texas law, including indemnification for judgments, penalties, fines, settlements and reasonable expenses actually incurred by the director or officer in any action or proceeding, including any action by or in our right, arising out of the person’s services as our director or officer or as the director or officer of any subsidiary of ours or any other company or enterprise to which the person provides services at our request. We have been informed that, in the opinion of the SEC, personal liability of directors for violation of the federal securities laws cannot be limited and that indemnification by us for any such violation is unenforceable.

      The indemnification provisions contained in our articles of incorporation and bylaws are exclusive of any other right that a person may have or acquire under any statute, bylaw, resolution of shareholders or directors or otherwise. In addition, we maintain insurance on behalf of our directors and officers insuring them against any liability asserted against them in their capacities as directors or officers or arising out of their service in these capacities.

      We are not aware of any pending or threatened litigation or proceeding involving any of our directors, officers, employees or agencies in which indemnification would be required or permitted. We believe that the provisions of our articles of incorporation and bylaws and our indemnification agreements are necessary to attract and retain qualified persons to serve as directors and officers of our company.

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PRINCIPAL AND SELLING SHAREHOLDERS

      The tables below contain information about the beneficial ownership of our common stock and our Series C convertible preferred stock prior to and following the completion of this offering for:

• each of our directors;

• each of our executive officers;

• all directors and executive officers as a group;

• each beneficial owner of more than five percent of our common stock or Series C convertible preferred stock; and

• each of the selling shareholders.

      The tables below list the number of shares and percentage of shares beneficially owned based on 21,581,864 shares of our common stock and 300,000 shares of our Series C convertible preferred stock outstanding as of August 1, 2005. Holders of our Series C convertible preferred stock are entitled to vote on all matters to be voted on by our shareholders and vote as a single class with the holders of our common stock.

      Beneficial ownership of our common stock and Series C convertible preferred stock is determined in accordance with the rules of the SEC, and generally includes voting power or investment power with respect to securities held. Except as indicated and subject to applicable community property laws, to our knowledge the persons named in the tables below have sole voting and investment power with respect to all shares of common stock or Series C convertible preferred stock shown as beneficially owned by them.

Directors and Executive Officers

	Beneficial Ownership								Beneficial Ownership
	Prior to the Offering								After the Offering
			Percentage of			Percentage				Percentage of	Percentage
	Number of		Outstanding			of Total			Number of	Outstanding	of Total
Name of Beneficial Owner	Shares		Shares			Vote(1)			Shares	Shares(2)	Vote(1)
Common Stock:
Mark R. Anderson		536,548		2.5	%		2.1	%
C. Allen Bradley, Jr.		28,302		*			*
Jared A. Morris(3)		3,442,823		16.0	%		13.4	%
Paul B. Queally(4)(5)		9,135		*			*
Sean M. Traynor(5)		100		*			*
Geoffrey R. Banta		0		—			—
Arthur L. Hunt		51,887		*			*
Craig P. Leach		56,604		*			*
All directors and executive officers as a group (8 persons)		4,125,399		19.1	%		16.0	%

* Less than 1%.

(1) Combined voting power of common stock and Series C convertible preferred stock. Each share of common stock is entitled to one vote and each share of Series C convertible preferred stock is entitled to one vote for each share of common stock into which it is convertible. Upon completion of this offering and based on an assumed initial public offering price of $                     share, the conversion price used to determine the number of shares of our common stock into which each

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	share of Series C convertible preferred stock is convertible will be reduced from $7.24308 per share to $                     per share.
(2)	Percentage assumes that                      shares of our outstanding Series A preferred stock are exchanged for                      shares of common stock upon completion of this offering.
(3)	All shares are beneficially owned through the Jared Morris 1997 Trust, of which Jared Morris is a trustee. The address for the Jared Morris 1997 Trust is 5000 Quorum Drive, Suite 200, Dallas, Texas 75254.
(4)	Includes 9,135 shares of common stock and an additional                      shares of common stock to be acquired upon completion of the offering upon the exchange of                      shares of Series A preferred stock.
(5)	Each of Paul B. Queally and Sean M. Traynor is a general partner of Welsh Carson and may be deemed to have shared voting and investment power with respect to the securities held by Welsh Carson.

Other Five Percent Holders

	Beneficial Ownership								Beneficial Ownership
	Prior to the Offering								After the Offering
			Percentage of			Percentage					Percentage of			Percentage
	Number of		Outstanding			of Total			Number of		Outstanding			of Total
Name of Beneficial Owner	Shares		Shares			Vote(1)			Shares		Shares(2)			Vote(1)
Common Stock:
Welsh Carson(3)		14,568,060		67.5	%		56.6	%
Abbott Capital 1330 Investors I, L.P.(4)		2,761,256		11.3	%		10.7	%
Teachers Annuity Association of America(5)		2,761,256		11.3	%		9.7	%
Sprout Group(6)		1,673,830		7.8	%		6.5	%
Series C Convertible Preferred Stock:
Abbott Capital 1330 Investors I, L.P.(4)		200,000		66.7	%		10.7	%		200,000		66.7	%
Northwestern Mutual Life Insurance Company(7)		50,000		16.7	%		2.7	%		50,000		16.7	%
Jackson National Life Insurance Company(8)		49,251		16.4	%		2.6	%		49,251		16.4	%

(1)	Combined voting power of common stock and Series C convertible preferred stock. Each share of common stock is entitled to one vote and each share of Series C convertible preferred stock is entitled to one vote for each share of common stock into which it is convertible. Upon completion of this offering and based on an assumed initial public offering price of $                     share, the conversion price used to determine the number of shares of our common stock into which each share of Series C convertible preferred stock is convertible will be reduced from $7.24308 per share to $                     per share.
(2)	Percentage assumes that                      shares of our outstanding Series A preferred stock are exchanged for                      shares of common stock upon completion of this offering.
(3)	Represents (a) 14,452,624 shares of common stock held by Welsh, Carson, Anderson & Stowe VII, L.P., and an additional                      shares of common stock to be acquired upon completion of the offering upon the exchange of         shares of Series A preferred stock, and (b) 115,436 shares of common stock held by WCAS Healthcare Partners, L.P., and an additional         shares of common stock to be acquired upon completion of the offering upon the exchange of                      shares of Series A preferred stock. Each of the following general partners of Welsh

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	Carson may be deemed to have shared voting and investment power with respect to the securities held by Welsh Carson and, in addition, beneficially owns shares of common stock, if any, as indicated parenthetically: Patrick J. Welsh (115,436 shares held by The Patrick Welsh 2004 Irrevocable Trust), Russell L. Carson (115,436 shares), Bruce K. Anderson (115,436 shares held by The Bruce K. Anderson 2004 Irrevocable Trust), Richard H. Stowe (17,315 shares), Anthony DeNicola (4,617 shares), Thomas A. McInerney (23,087 shares), Robert A. Minicucci (17,315 shares), Priscilla Newman, Lawrence Sorrel and Laura Van Buren (2,886 shares). The number of shares and percentage of outstanding shares after the offering assume that the underwriters do not exercise the option to purchase additional shares. The address for these Welsh Carson entities is 320 Park Avenue, Suite 2500, New York, New York 10022.
(4)	Beneficial ownership prior to the offering includes 2,761,256 shares of common stock that may be acquired pursuant to the conversion of Series C convertible preferred stock convertible within 60 days of August 1, 2005. Beneficial ownership after the offering includes                      shares of common stock that may be acquired pursuant to the conversion of Series C convertible preferred stock convertible within 60 days of August 1, 2005. The address for Abbott Capital 1330 Investors I, L.P. is c/o Abbott Capital Management, LLC, 1211 Avenue of the Americas, Suite 4300, New York, New York 10036.
(5)	Beneficial ownership prior to the offering includes 2,761,256 shares of common stock that may be acquired pursuant to the conversion of Series D convertible preferred stock into non-voting common stock, and the subsequent conversion of the non-voting common stock into common stock, within 60 days of August 1, 2005. Beneficial ownership after the offering includes                      shares of common stock that may be acquired pursuant to the conversion of Series D convertible preferred stock into non-voting common stock, and the subsequent conversion of the non-voting common stock into common stock, within 60 days of August 1, 2005. The address for Teachers Annuity Association of America is 730 Third Avenue, New York, New York 10017.
(6)	Represents (a) 658,340 shares of common stock held by Sprout Growth II, L.P., and an additional                      shares of common stock to be acquired upon completion of the offering upon the exchange of                      shares of Series A preferred stock, (b) 805,277 shares of common stock held by Sprout Capital VII, L.P., and an additional                      shares of common stock to be acquired upon completion of the offering upon the exchange of                      shares of Series A preferred stock, (c) 9,355 shares of common stock held by Sprout CEO Fund, L.P., and an additional                      shares of common stock to be acquired upon completion of the offering upon the exchange of                      shares of Series A preferred stock; (d) 33,476 shares of common stock held by DLJ Capital Corporation, and an additional                      shares of common stock to be acquired upon completion of the offering upon the exchange of                      shares of Series A preferred stock; and (e) 167,382 shares of common stock held by DLJ First ESC, L.P., and an additional                      shares of common stock to be acquired upon completion of the offering upon the exchange of                      shares of Series A preferred stock. The address for these entities is c/o Sprout Group, 11 Madison Avenue, 13th Floor, New York, New York 10010.
(7)	The address for Northwestern Mutual Life Insurance Company is 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
(8)	The address for Jackson National Life Insurance Company is c/o PPM America, Inc., 225 West Wacker Drive, Chicago, Illinois 60606.

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Selling Shareholders

      To the extent the underwriters sell more than                      shares of our common stock, the selling shareholders have granted the underwriters a 30-day option to purchase up to  additional shares of common stock at the initial public offering price, less the underwriting discount, to cover over-allotments, if any. We will not receive any of the proceeds from the sale of shares by the selling shareholders. The table below assumes the over-allotment option is exercised in full.

				Beneficial Ownership
				After the Offering
	Number of		Number of Common
	Common Shares		Shares to be Sold if		Percentage of
	Beneficially Owned		Over-Allotment Option	Number of	Outstanding		Percentage of
Selling Shareholder	Prior to the Offering		Exercised in Full	Shares	Shares(1)		Total Vote(2)
Welsh Carson		14,568,060
Sprout Group		1,673,830
Kenneth Melkus(3)		2,802				*		*
Laura Van Buren(3)		2,526				*		*
Piper Jaffray, Inc.(3)		2,802				*		*

*  Less than 1%.

(1)	Percentage assumes that                      shares of our outstanding Series A preferred stock are exchanged for                      shares of common stock upon completion of this offering.
(2)	Combined voting power of common stock and Series C convertible preferred stock. Each share of common stock is entitled to one vote and each share of Series C convertible preferred stock is entitled to one vote for each share of common stock into which it is convertible. Upon completion of this offering and based on an assumed initial public offering price of $                     share, the conversion price used to determine the number of shares of our common stock into which each share of Series C convertible preferred stock is convertible will be reduced from $7.24308 per share to $                     per share.
(3)	Each of Mr. Melkus, Ms. Van Buren and Piper Jaffray, Inc. has not had a material relationship with us or any of our affiliates within the past three years.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Registration Rights Agreement

      We have entered into a registration rights agreement with the holders of our convertible preferred stock and certain holders of our common stock, including Mark R. Anderson, Paul B. Queally, Sean M. Traynor, the Jared Morris 1997 Trust, Welsh Carson and Sprout Group. Under the registration rights agreement, these holders may require us to register any or all of their shares of common stock (including shares of common stock issuable upon conversion of our outstanding convertible preferred stock) under the Securities Act of 1933, or the Securities Act, upon the request of:

• the holders of a majority of certain shares of our common stock, including shares held by Paul B. Queally, Sean M. Traynor, Welsh Carson and Sprout Group;

• the holders of 33% of the shares of our common stock previously issued upon exercise of certain warrants issued by us in 1998, including shares held by Paul B. Queally, Welsh Carson and Sprout Group; or

• beginning 180 days after this offering, the holders of a majority of our convertible preferred stock.

      In addition, the holders of our convertible preferred stock and common stock that are party to the registration rights agreement have the right to request that we:

• register shares of their common stock (including shares of common stock issuable upon conversion of our outstanding convertible preferred stock) with an anticipated aggregate sale price of at least $1.0 million under the Securities Act on a Form S-3 registration statement; and

• include shares of their common stock in any registration statement whenever we propose to register our common stock under the Securities Act.

      We have agreed to pay all expenses, other than underwriting discounts and commissions, in connection with these registrations, including legal and accounting fees incurred by the company, printing costs and the fees of one law firm for the selling shareholders. In addition, we have agreed to indemnify these holders of our common stock and convertible preferred stock against certain liabilities, including liabilities under the Securities Act.

Stockholders Agreements

      We have entered into stockholders agreements with certain holders of our capital stock, including Mark R. Anderson, Paul B. Queally, the Jared Morris 1997 Trust, Welsh Carson, Sprout Group, Abbott Capital 1330 Investors, Northwestern Mutual Life Insurance Company and Jackson National Life Insurance Company. Under the terms of the stockholders agreements, the parties thereto have agreed, among other things, to vote to elect certain persons to our board. Welsh Carson’s designees are Paul B. Queally and Sean M. Traynor. In accordance with their terms, the stockholders agreements will terminate upon completion of this offering.

Concentra Inc.

      We have entered into arm’s length agreements with certain subsidiaries of Concentra Inc., pursuant to which they provide us with health care management, cost containment and claims management services. Affiliates of our principal shareholder, Welsh Carson, beneficially own a majority of the outstanding shares of common stock of Concentra. Two of our directors, Paul B. Queally and Sean M. Traynor, are general partners of Welsh Carson. In addition, Mr. Queally is the Chairman of the Board and a director of Concentra. Under the terms of these agreements, we made aggregate payments to subsidiaries of Concentra of approximately $2.3 million, $1.6 million and $0.8 million in 2004, 2003 and 2002, respectively.

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DESCRIPTION OF CAPITAL STOCK

      Upon completion of this offering, we will be authorized to issue                      shares of capital stock, consisting of:

•                      shares of preferred stock, par value $0.01 per share, of which:

• 1,500,000 shares are designated as Series A preferred stock;

• 1,500,000 shares are designated as Series B preferred stock;

• 300,000 shares are designated as Series C convertible deferred pay preferred stock;

• 200,000 shares are designated as Series D non-voting convertible deferred pay preferred stock; and

• 500,000 shares are designated as Series E preferred stock;

•                      shares of common stock, par value $0.01 per share; and

• 5,000,000 shares of convertible non-voting common stock, par value $0.01 per share.

      As of August 1, 2005, the following shares of our capital stock were outstanding:

• 848,082 shares of Series A preferred stock;

• 300,000 shares of Series C convertible preferred stock;

• 200,000 shares of Series D convertible preferred stock;

• 35,930 shares of Series E preferred stock; and

• 21,581,864 shares of common stock.

      There are no shares of Series B preferred stock or non-voting common stock outstanding. There were 45 holders of record of our common stock as of August 1, 2005.

      In connection with this offering, our articles of incorporation require that we use proceeds from the offering to redeem all outstanding shares of Series E preferred stock and 50% of the net proceeds, or approximately $                     million, to redeem outstanding shares of Series A preferred stock, unless our board of directors determines in good faith that the preferred stock redemption would cause us not to maintain our current A.M. Best rating or would contravene applicable law. In addition, as permitted under our articles of incorporation, the holders of our Series A preferred stock have elected to exchange any remaining shares of Series A preferred stock outstanding after the redemption for shares of our common stock. Upon completion of this offering and after giving effect to the sale of shares by us and the redemption and/or exchange of all outstanding shares of our Series A preferred stock and Series E preferred stock, we expect                      shares of our common stock, 300,000 shares of our Series C convertible preferred stock and 200,000 shares of Series D convertible preferred stock will be outstanding. No shares of our Series A preferred stock, Series B preferred stock, Series E preferred stock or non-voting common stock will be outstanding upon completion of this offering.

      The following summary of certain provisions of our common stock and convertible preferred stock is qualified in its entirety by the detailed provisions of our articles of incorporation and bylaws, copies of which have been filed as exhibits to the registration statement of which this prospectus is a part, and by the provisions of applicable law. See “Where You Can Find More Information.”

Common Stock and Non-Voting Common Stock

      Voting. Each holder of our common stock is entitled to one vote for each share on all matters to be voted on by our shareholders, and vote together as a single class with the holders of our Series C convertible preferred stock. Holders of shares of non-voting common stock are not entitled to vote on any matter to be voted on by our shareholders, except as required by Texas law.

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      Dividends. Holders of common stock and non-voting common stock are entitled to receive dividends, on an equal basis, at the time and in the amount as our board may from time to time determine, subject to any preferential amounts payable to holders of all series of our outstanding preferred stock. Our articles of incorporation prohibit us from paying dividends on our common stock and non-voting common stock (other than in additional shares of common stock or non-voting common stock, as applicable) without the consent of the holders of two-thirds of the outstanding shares of our convertible preferred stock. If holders of our convertible preferred stock consent to the payment of a dividend by us, we must pay a dividend to the holders of our convertible preferred stock on an as-converted to common stock or non-voting common stock, as applicable, basis equal to the dividend we pay to the holders of our common stock and non-voting common stock.

      Liquidation. Upon a liquidation and dissolution of our company, the holders of common stock and non-voting common stock are entitled to receive, on an equal basis, all assets available for distribution to shareholders, subject to any preferential amounts payable to holders of our then-outstanding series of preferred stock.

      Conversion of Non-Voting Common Stock. Shares of our non-voting common stock are issuable upon conversion of our Series D convertible preferred stock. Each share of non-voting common stock may be converted at any time, and without cost to the shareholder, into one share of common stock.

Convertible Preferred Stock

      Voting. Each holder of our Series C convertible preferred stock is entitled to one vote for each share of our common stock into which the Series C convertible preferred stock is convertible on all matters to be voted on by our shareholders and vote together as a single class with holders of our common stock. The Series D convertible preferred stock is non-voting. However, the holders of Series C convertible preferred stock and Series D convertible preferred stock each have the right to vote as a separate series on any amendment to our articles of incorporation or on any action to be taken by us that would adversely affect the rights, privileges and preferences of the convertible preferred stock.

      Dividends. Prior to completion of this offering, holders of convertible preferred stock are entitled to receive pay-in-kind dividends at a rate of $7.00 per share per annum payable in shares of Series E preferred stock. Under the terms of our articles of incorporation, upon the redemption and exchange of all outstanding shares of our Series A preferred stock in connection with this offering, holders of our convertible preferred stock will no longer be entitled to receive these pay-in-kind dividends. However, if the holders of two-thirds of our outstanding convertible preferred stock consent to the declaration or payment of a dividend by us to the holders of our common stock or non-voting common stock, the holders of our outstanding convertible preferred stock will receive a dividend payable on an as-converted to common stock or non-voting common stock, as applicable, basis equal to the dividend to be paid to the holders of our common stock and non-voting common stock.

      Liquidation Rights. Upon any liquidation, dissolution or winding up of our company, holders of our convertible preferred stock are entitled to receive, in cash, an amount equal to the greater of:

• $100 for each share of convertible preferred stock outstanding, plus the cash value, calculated at $100 per share, of all accrued and unpaid dividends; and

• the amount distributable to the holders of our convertible preferred stock upon liquidation, dissolution or winding up had the holders converted their shares into common stock or non-voting common stock, as the case may be, in accordance with the terms of the convertible preferred stock immediately prior to liquidation, dissolution or winding up.

      All liquidation payments in respect of shares of our convertible preferred stock are required to be paid before any distribution is made in respect of our common stock.

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      Conversion. The Series C convertible preferred stock is convertible into our common stock, and the Series D convertible preferred stock is convertible into our non-voting common stock, in each case at a conversion rate calculated by multiplying the number of shares to be converted by $100 and dividing the result by the then-applicable conversion price, as adjusted from time to time. As of August 1, 2005, the conversion price was $7.24308 per share. Upon completion of this offering, the conversion price will be $           per share. Our convertible preferred stock is convertible:

• at any time at the option of the holder;

• at our option at any time following the consummation of any public offering of our equity securities or a change of control of our company if the closing price for our common stock for the prior 20 trading days is, or the proceeds from the change of control results in a value for our outstanding common stock of, at least $9.05 per share; and

• automatically upon consummation of a public offering of our common stock with gross proceeds to us of at least $40.0 million at a price to public of at least $9.05 per share, subject to adjustment to reflect stock splits, combinations and stock dividends.

      Redemption. Following a change of control of our company, holders of our convertible preferred stock have the right to require us to redeem their shares at a redemption price of $100 plus the cash value, calculated at $100 per share, of all accrued and unpaid dividends. Our articles of incorporation define a change of control of our company for this purpose to include:

• the sale, lease or transfer of all or substantially all of our assets in one or a series of related transactions to any person; or

• the acquisition of beneficial ownership by any person, other than Welsh Carson, in one or a series of related transactions, of our voting stock representing more than 50% of the voting power of all outstanding shares of our voting stock, whether by merger, consolidation or otherwise, other than by way of a public offering of our equity securities.

      In addition, we may at any time, on 30 days’ notice, redeem all, but not less than all, shares of convertible preferred stock at a redemption price of $103.50 plus the cash value, calculated at $100 per share, of all accrued and unpaid dividends. Until payment of the redemption price, we may not make any payment or distribution upon any preferred stock, common stock or non-voting common stock.

Blank Check Preferred Stock

      Upon completion of this offering, our board of directors will have the authority, without further action by the shareholders, to issue up to            million shares of preferred stock in one or more series. In addition, our board may fix the rights, preferences and privileges of any series of preferred stock it may determine to issue. These rights may include a preferential return in the event of our liquidation, the right to receive dividends if declared by our board, special dividend rates, conversion rights, redemption rights, superior voting rights to the common stock, the right to protection from dilutive issuances of securities, or the right to approve corporate actions. Any or all of these rights may be superior to the rights of the common stock. As a result, preferred stock could be issued with terms that could delay or prevent a change of control or make removal of our management more difficult. In addition, issuance of preferred stock may decrease the market price of our common stock. At present, we have no plans to issue any additional shares of preferred stock.

Anti-Takeover Provisions

      Texas Business Corporation Act. Upon completion of this offering, we will be subject to Part 13 of the Texas Business Corporation Act. In general, that statute prohibits a publicly held Texas corporation from engaging, under certain circumstances, in a “business combination” with any “affiliated

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shareholder” for a period of three years following the date that the shareholder became an affiliated shareholder unless:

• prior to that date, the corporation’s board of directors approved either the business combination or the transaction that resulted in the shareholder becoming an affiliated shareholder; or

• not less than six months after that date, the business combination is approved at a meeting of shareholders duly called for that purpose, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting shares that are not beneficially owned by the affiliated shareholder.

      Part 13 of the TBCA defines a “business combination” to include:

• any merger, share exchange or conversion involving the corporation and the affiliated shareholder;

• any sale, lease, exchange, mortgage, pledge, transfer or other disposition of 10% or more of the assets of the corporation involving the affiliated shareholder;

• subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the affiliated shareholder;

• the adoption of a plan or proposal for our liquidation or dissolution proposed by or pursuant to an agreement with the affiliated shareholder;

• a reclassification, recapitalization or merger proposed by or pursuant to an agreement with the affiliated shareholder that has the effect of increasing the proportionate ownership percentage of the affiliated shareholder; or

• the receipt by the affiliated shareholder of the benefit of any loan, advance, guarantee, pledge or other financial benefit provided by or through the corporation.

      In general, Part 13 of the TBCA defines an “affiliated shareholder” as any shareholder who beneficially owns 20% or more of the corporation’s outstanding voting shares, as well as any entity or person affiliated with or controlling or controlled by the shareholder.

      A Texas corporation may opt out of Part 13 of the TBCA with an express provision in its original articles of incorporation or an express provision in its articles of incorporation or bylaws resulting from an amendment approved by the affirmative vote of at least two-thirds of the outstanding voting shares that are not beneficially owned by the affiliated shareholder. We have not opted out of the provisions of Part 13 of the TBCA.

      Louisiana and Texas Insurance Law. Two of our three insurance company subsidiaries, American Interstate and Silver Oak Casualty, are incorporated in Louisiana and the other, American Interstate of Texas, is incorporated in Texas. Under Louisiana and Texas insurance law, advance approval by the state insurance department is required for any change of control of an insurer. “Control” is presumed to exist through the direct or indirect ownership of 10% or more of the voting securities of a domestic insurance company or any entity that controls a domestic insurance company. Obtaining these approvals may result in the material delay of, or deter, any such transaction.

      Charter and Bylaw Provisions. The following summary of certain provisions of our articles of incorporation and bylaws is qualified in its entirety by our articles of incorporation and bylaws, copies of which have been filed as exhibits to the registration statement of which this prospectus is a part.

      Our articles of incorporation provide that upon completion of this offering any action required or permitted to be taken by our shareholders may only be effected at a duly called meeting of shareholders. In addition, our articles of incorporation:

• prohibit shareholders from taking action by written consent, unless the consent is unanimous;

• prohibit the use of cumulative voting in the election of directors; and

96

• authorize our board to issue blank check preferred stock to increase the amount of outstanding shares.

      Under cumulative voting, a minority shareholder holding a sufficient percentage of a class of shares may be able to ensure the election of one or more directors.

      Our articles of incorporation provide that special meetings of our shareholders may be called only by the chairman of our board, our president, a majority of our board of directors or by holders of at least 25% of the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors of AMERISAFE. Should any shareholder desire to present business at any meeting, including nominating a candidate for director, they must comply with certain advance notice provisions in our bylaws.

      Our articles of incorporation and bylaws provide that the authorized number of our directors is fixed by our board of directors. In addition, our bylaws provide that our board of directors will be divided into three classes with the number of directors in each class as nearly equal as possible. Each director will serve a three-year term. The classification and term of office for each of our directors upon completion of this offering is noted in the table listing our directors and executive officers under “— Directors, Executive Officers and Key Employees.” As a result, any effort to obtain control of our board of directors by causing the election of a majority of the board of directors may require more time than would be required without a classified board.

      Our bylaws provide that vacancies in our board may be filled by election at an annual or special meeting of our shareholders called for that purpose or by the affirmative vote of a majority of the remaining directors then in office, even if less than a quorum. Any newly created directorships may be filled by election at an annual or special meeting of our shareholders called for that purpose or by our board, provided that our board may not fill more than two newly created directorships during the period between any two successive annual meetings of our shareholders. Our bylaws provide that, at any meeting of shareholders called for that purpose, any director may be removed for cause by the affirmative vote of the holders of at least two-thirds of the shares of our stock entitled to vote for the election of directors.

      As described above, our board will be authorized to issue up to            million shares of preferred stock and to determine the price and the rights, preferences and privileges of these shares, without shareholder approval, which could also delay or prevent a change of control transaction.

      These provisions contained in our articles of incorporation and bylaws could delay or discourage certain types of transactions involving an actual or potential change of control of us or our management (including transactions in which shareholders might otherwise receive a premium for their shares over the then-current prices) and may limit the ability of shareholders to remove current management or approve transactions that shareholders may deem to be in their best interests and, therefore, could adversely affect the price of our common stock.

Transfer Agent and Registrar

      The transfer agent and registrar for our common stock is                     . The address of the transfer agent and registrar is                                         and its telephone number is                     .

Listing

      We intend to apply to have our shares of common stock approved for listing on the Nasdaq National Market under the symbol “AMSF.”

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SHARES ELIGIBLE FOR FUTURE SALE

      Prior to completion of this offering, there has not been a public market for our common stock. Future sales of our common stock in the public market, or the perception that sales may occur, could adversely affect the market price of our common stock and could impair our future ability to raise capital through the sale of our equity securities.

      Upon completion of this offering, we will have approximately                      shares of common stock outstanding, which includes the                      shares of common stock sold by us in this offering,                      shares issued upon exchange of our Series A preferred stock (based on an assumed initial public offering price of $           per share, which is the mid-point of the price range set forth on the cover page of this prospectus), and the                      shares of restricted stock to be issued to our non-employee directors. Of these shares, the                      shares sold in this offering and any shares issued upon exercise of the underwriters’ over-allotment option will be freely tradable without restriction or further registration under the Securities Act, unless the shares are held by any of our “affiliates” as that term is defined in Rule 144 of the Securities Act, in which case they may only be sold in compliance with the limitations described below. The remaining                      shares were issued and sold by us in reliance on exemptions from the registration requirements of the Securities Act and are eligible for public sale if registered under the Securities Act or sold in accordance with Rule 144.

      Upon completion of this offering,                      shares will be issuable upon the exercise of outstanding options that we intend to grant to our executive officers and other employees, at an exercise price equal to the initial public offering price. In addition,                      shares of our common stock will be issuable upon the conversion of our convertible preferred stock, subject to adjustment pursuant to the terms of our convertible preferred stock.

Lock-Up Agreements

      Except as described below, each of our directors, our officers and the selling shareholders has agreed with the underwriters not to sell, contract to sell, pledge, dispose of or hedge any shares of stock (or securities convertible into, or exchangeable for, shares of our common stock) for a period of 180 days under agreements, referred to as “lock-up agreements,” without the consent of the underwriters. The conditions of these lock-up agreements may be waived by the underwriters. Upon completion of this offering,                      shares of our common stock will be subject to lock-up agreements.

Rule 144 Sales by Affiliates

      Affiliates of our company must comply with Rule 144 of the Securities Act when they sell shares of our common stock. In general, under these rules, persons who acquire shares of common stock, other than in a public offering registered with the SEC, are required to hold those shares for a period of one year. Shares acquired in a registered public offering or held for more than one year may be sold by an affiliate subject to certain conditions. An affiliate would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:

• one percent of the number of shares of common stock then outstanding (approximately                      shares immediately after the offering); and

• the average weekly trading volume of the common stock on the Nasdaq National Market during the four calendar weeks preceding the filing with the SEC of a notice on Form 144 with respect to the sale.

Sales under Rule 144 are also subject to other requirements regarding the manner of sale, notice and the availability of current public information about our company.

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Rule 144(k)

      Under Rule 144(k) of the Securities Act, a person who is not, and has not been at any time during the 90 days preceding a sale, one of our affiliates and who has beneficially owned the shares proposed to be sold for at least two years is entitled to sell the shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.

      Of the                      shares of common stock outstanding as of the date of this prospectus, or issuable upon conversion of our outstanding shares of convertible preferred stock as of the date of this prospectus,                      shares of such common stock would be available to be sold pursuant to Rule 144, including                      shares of common stock that could be sold pursuant to Rule 144(k), in each case subject to the terms of the lock-up agreements and registration rights agreement described above.

      We intend to file a Form S-8 registration statement following completion of this offering to register shares of common stock issuable under our equity incentive plans. These shares will be available-for-sale in the public market, subject to Rule 144 volume limitations applicable to affiliates.

Registration Rights

      We have granted registration rights to certain holders of our common stock and holders of our convertible preferred stock. Upon completion of this offering and assuming the over-allotment option is not exercised, these holders will own approximately                      shares of our common stock (including shares of common stock issuable upon conversion of our convertible preferred stock assuming a conversion price of $           per share) that they may require us to register for sale under the Securities Act pursuant to the registration rights agreement. See “Certain Relationships and Related Transactions— Registration Rights Agreement.”

99

UNDERWRITING

      Subject to the terms and conditions set forth in the underwriting agreement between us, the selling shareholders and the underwriters named below, for whom Friedman, Billings, Ramsey & Co., Inc., or FBR, Keefe, Bruyette & Woods, Inc. and William Blair & Company, L.L.C. are acting as representatives, we have agreed to sell to the underwriters, and the underwriters have agreed to purchase, the following respective number of shares of common stock:

Underwriter		Number of Shares
Friedman, Billings, Ramsey & Co., Inc.
Keefe, Bruyette & Woods, Inc.
William Blair & Company, L.L.C.
	Total

      The selling shareholders have granted the underwriters an option exercisable during the 30-day period after the date of this prospectus to purchase on a pro rata basis, at the initial public offering price less underwriting discounts and commissions, up to an additional                      shares of common stock for the sole purpose of covering over-allotments, if any. To the extent that the underwriters exercise the option, the underwriters will be committed, subject to certain conditions, to purchase that number of additional shares.

      Under the terms and conditions of the underwriting agreement, the underwriters are committed to purchase all of the shares offered by this prospectus other than the shares subject to the over-allotment option, if any shares are purchased. We and the selling shareholders have agreed to indemnify the underwriters against certain civil liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect of such liabilities.

      The underwriters initially propose to offer the common stock directly to the public at the initial public offering price set forth on the cover page of this prospectus and to certain dealers at the same offering price less a concession not to exceed $           per share. The underwriters may allow, and certain dealers may re-allow, a discount not to exceed $           per share to certain other dealers.

      The table below provides information regarding the per share and total underwriting discounts and commissions we and the selling shareholders will pay to the underwriters. These amounts are shown assuming both no exercise and full exercise of the underwriters’ over-allotment option to purchase up to                     additional shares.

	No Exercise of	Full Exercise of
Paid by Us	Over-Allotment Option	Over-Allotment Option
Per Share	$	$
Total	$	$

	No Exercise of		Full Exercise of
Paid by Selling Shareholders	Over-Allotment Option		Over-Allotment Option
Per Share	$	0	$
Total	$	0	$

      In addition to the underwriting discounts and commissions to be paid by us, we have agreed to reimburse FBR for certain of its reasonable expenses incurred in connection with this offering up to $250,000. FBR may provide us with investment banking and financial advisory services in the future, for which it may receive customary compensation. In this regard, for a period of one year from the date of completion of the offering, we have granted FBR a right of first refusal to act as placement agent for any future trust preferred transactions in which we may participate.

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      We estimate that the total expenses of the offering payable by us, excluding underwriting discounts and commissions, will be approximately $           .

      In connection with this offering, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of our common stock. Specifically, the underwriters may over-allot this offering by selling more than the number of shares of common stock offered by this prospectus, creating a syndicate short position. In addition, the underwriters may bid for and purchase common stock in the open market to cover syndicate short positions or to stabilize the price of the common stock. Finally, the underwriters may reclaim selling concessions from dealers if shares of our common stock sold by such dealers are repurchased in syndicate covering transactions, in stabilization transactions or otherwise. Any of these activities may stabilize or maintain the market price of the common stock above independent market levels. These transactions may be effected in the over-the-counter market or otherwise. The underwriters are not required to engage in these activities and may end any of these activities at any time.

      We, our current directors, officers and the selling shareholders have agreed that, without the prior written consent of the representatives, we will not, during the period ending 180 days after the date of this prospectus:

• offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock, or any securities convertible into or exercisable or exchangeable for any shares of our common stock or any right to acquire shares of our common stock; or

• enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common stock, whether any such transaction described above is to be settled by delivery of common stock or such other securities, in cash or otherwise.

      The representatives do not intend to release any portion of the common stock subject to the foregoing lock-up agreements. However, the representatives, in their sole discretion, may release any of the common stock from the lock-up agreements prior to expiration of the 180-day period without notice. In considering a request to release shares from a lock-up agreement, the representatives will consider a number of factors, including the impact that such a release would have on this offering and the market for our common stock and the equitable considerations underlying the request for releases.

      The underwriters have reserved for sale, at the initial offering price,                     shares of common stock for certain of our officers, employees and agencies who have expressed an interest in purchasing common stock in the offering. The number of shares of common stock available to the general public in the offering will be reduced to the extent these persons purchase these reserved shares. Any reserved shares not so purchased will be offered by the underwriters to the general public on the same terms as the other shares.

      The underwriters have informed us that they do not intend to make sales of our common stock offered by this prospectus to accounts over which they exercise discretionary authority.

      Prior to completion of this offering, there has been no public market for the shares. The initial public offering price will be negotiated by us and the representatives. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be our historical performance, estimates of the business potential and our earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses.

      FBR will facilitate Internet distribution for this offering to certain of its Internet subscription customers. FBR intends to allocate a limited number of shares for sale to its online brokerage

101

customers. An electronic prospectus is available on the Internet web site maintained by FBR. Other than the prospectus in electronic format, the information on the FBR web site is not part of this prospectus.

      We intend to apply to have our shares of common stock approved for listing on the Nasdaq National Market under the symbol “AMSF.”

LEGAL MATTERS

      Jones Day in Dallas, Texas will pass upon the validity of the shares of common stock offered by this prospectus and certain other legal matters for us. Lord, Bissell & Brook LLP in Chicago, Illinois will pass upon certain legal matters for the underwriters.

EXPERTS

      The consolidated financial statements and financial statement schedules of AMERISAFE, Inc. and its subsidiaries at December 31, 2004 and 2003, and for each of the three years in the period ended December 31, 2004, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

      We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of our common stock offered by this prospectus. This prospectus does not contain all the information contained in the registration statement. For further information with respect to us and the shares to be sold in this offering, we refer you to the registration statement, including the agreements and other documents filed as exhibits to the registration statement. Statements contained in this prospectus as to the contents of any agreement or other document to which we make reference are not necessarily complete. In each instance, we refer you to the copy of the agreement or other document filed as an exhibit to the registration statement, each statement being qualified in all respects by reference to the agreement or document to which it refers.

      After completion of this offering, we will file annual, quarterly and current reports, proxy statements and other information with the SEC. We intend to make these filings available on our website at www.amerisafe.com. In addition, we will provide copies of our filings free of charge to our shareholders upon request. Our SEC filings, including the registration statement of which this prospectus is a part, will also be available to you on the SEC’s Internet site at http://www.sec.gov. You may read and copy all or any portion of the registration statement or any reports, statements or other information we file at the SEC’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. You can receive copies of these documents upon payment of a duplicating fee by writing to the SEC. We intend to furnish our shareholders with annual reports containing consolidated financial statements audited by an independent registered public accounting firm.

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INDEX TO FINANCIAL STATEMENTS

	Page
Audited Financial Statements as of December 31, 2004 and 2003 and for the three years in the period ended December 31, 2004:
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets		F-3
Consolidated Statements of Income		F-4
Consolidated Statements of Changes in Shareholders’ Deficit		F-5
Consolidated Statements of Cash Flows		F-6
Notes to Consolidated Financial Statements		F-7
Unaudited Interim Financial Statements as of March 31, 2005 and December 31, 2004 and for the three-month periods ended March 31, 2005 and 2004:
Condensed Consolidated Balance Sheets		F-35
Condensed Consolidated Statements of Income		F-36
Condensed Consolidated Statements of Changes in Shareholders’ Deficit		F-37
Condensed Consolidated Statements of Cash Flows		F-38
Notes to Condensed Consolidated Financial Statements		F-39

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors

AMERISAFE, Inc. and Subsidiaries

      We have audited the accompanying consolidated balance sheets of AMERISAFE, Inc., and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of income, changes in shareholders’ deficit, and cash flows for each of the three years in the period ended December 31, 2004. Our audits also included the financial statement schedules listed in the Index at Item 16(b). These financial statements and schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.

      We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for purposes of expressing an opinion on the effectiveness of internal controls over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of AMERISAFE, Inc. and subsidiaries at December 31, 2004 and 2003, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2004, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statements taken as a whole present fairly, in all material respects, the information set forth therein.

/s/ Ernst & Young LLP

New Orleans, Louisiana

May 8, 2005, except as to Note 22, as to

     which the date is July 28, 2005

F-2

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

			December 31,
			2004			2003
			(In thousands, except
			share data)
Assets
Investments:
	Fixed maturity securities— held-to-maturity, at amortized cost (fair value $328,948)		$	329,653		$	—
	Fixed maturity securities— available-for-sale, at fair value (cost $1,729 and $233,111 in 2004 and 2003, respectively)			1,755			243,863
	Equity securities— available-for-sale, at fair value (cost $30,926 and $11,215 in 2004 and 2003, respectively)			33,460			11,496
	Mortgage loan			—			2,370
Total invested assets				364,868			257,729
Cash and cash equivalents				25,421			49,815
Receivable for investments sold				—			1,380
Amounts recoverable from reinsurers				198,977			211,774
Accounts receivable, net				114,141			108,380
Deferred income taxes				15,624			12,713
Federal income tax recoverable				1,292			6,426
Accrued interest receivable				3,123			2,659
Property and equipment, net				7,077			6,000
Deferred policy acquisition costs				12,044			11,820
Deferred charges				3,054			2,987
Other assets				8,566			6,925
			$	754,187		$	678,608
Liabilities, redeemable preferred stock and shareholders’ deficit
Liabilities:
	Reserves for loss and loss adjustment expenses		$	432,880		$	377,559
	Unearned premiums			111,741			103,462
	Reinsurance premiums payable			861			485
	Amounts held for others			1,214			1,376
	Policyholder deposits			33,746			28,609
	Insurance-related assessments			29,876			26,133
	Accounts payable and other liabilities			18,725			18,902
	Note payable			—			6,000
	Subordinated debt securities			36,090			10,310
Total liabilities				665,133			572,836
Redeemable preferred stock:
	Series A nonconvertible— $0.01 par value, $100 per share redemption value:
		Authorized shares— 1,500,000; issued and outstanding shares— 819,161 in 2004 and 764,243 in 2003		81,916			76,424
	Series B nonconvertible— $0.01 par value, $100 per share redemption value:
		Authorized shares— 1,500,000; no shares issued or outstanding in 2004 or 2003		—			—
	Series C convertible— $0.01 par value, $100 per share redemption value:
		Authorized shares— 300,000; issued and outstanding shares— 300,000 in 2004 and 2003		30,000			30,000
	Series D convertible— $0.01 par value, $100 per share redemption value:
		Authorized shares— 200,000; issued and outstanding shares— 200,000 in 2004 and 2003		20,000			20,000
				131,916			126,424
Shareholders’ deficit:
	Preferred stock: Series E nonconvertible— $0.01 par value, $100 per share redemption value:
		Authorized— 500,000; issued and outstanding shares— 17,653 in 2004 and 247,209 in 2003		1,765			24,720
	Common stock:
		Voting— $0.01 par value, authorized shares— 100,000,000; issued and outstanding shares— 21,581,864 in 2004 and 12,967,104 in 2003		216			130
		Convertible nonvoting— $0.01 par value, authorized shares— 5,000,000; no shares issued or outstanding in 2004 or 2003		—			—
Additional paid-in-capital				—			—
Accumulated deficit				(51,896	)		(52,672	)
Accumulated other comprehensive income				7,053			7,170
				(42,862	)		(20,652	)
			$	754,187		$	678,608

See accompanying notes.

F-3

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

		Year Ended December 31,
		2004			2003			2002
		(In thousands, except share and per share data)
Revenues:
	Premiums earned	$	234,733		$	179,847		$	163,257
	Net investment income		12,217			10,106			9,419
	Net realized gains (losses) on investments		1,421			316			(895	)
	Gain on sale of asset		—			—			194
	Fee and other income		589			462			1,888
Total revenues			248,960			190,731			173,863
Expenses:
	Loss and loss adjustment expenses incurred		174,186			129,250			121,062
	Underwriting and certain other operating costs		28,987			23,062			22,377
	Commissions		14,160			11,003			9,189
	Salaries and benefits		15,034			15,037			15,850
	Interest expense		1,799			203			498
	Policyholder dividends		1,108			736			156
	Other expenses		—			—			988
Total expenses			235,274			179,291			170,120
Income before income taxes			13,686			11,440			3,743
Income tax expense (benefit)			3,129			2,846			(1,438	)
Net income			10,557			8,594			5,181
Preferred stock dividends			(9,781	)		(10,133	)		(9,453	)
Net income (loss) available to common shareholders		$	776		$	(1,539	)	$	(4,272	)
Earnings (loss) per share:
	Basic	$	0.03		$	(0.12	)	$	(0.33	)
	Diluted	$	0.03		$	(0.12	)	$	(0.33	)
Shares used in computing earnings (loss) per share:
	Basic		16,226,442			12,967,104			12,967,104
	Diluted		18,380,132			12,967,104			12,967,104

See accompanying notes.

F-4

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT

				Series E																Accumulated
				Preferred Stock						Common Stock				Additional						Other
														Paid-In			Accumulated			Comprehensive
				Shares			Amount			Shares		Amount		Capital			Deficit			Income			Total
				(In thousands, except share data)
Balance at January 1, 2002				$	150,379		$	15,038		$	12,967,104	$	130	$	14,877		$	(61,738	)	$	1,693		$	(30,000	)
	Comprehensive income:
		Net income			—			—			—		—		—			5,181			—			5,181
		Other comprehensive income, net of tax:
			Unrealized gain on securities		—			—			—		—		—			—			4,499			4,499
	Comprehensive income																							9,680
	Series A preferred stock dividends				—			—			—		—		(4,780	)		—			—			(4,780	)
	Series E preferred stock dividends				46,736			4,673			—		—		(4,673	)		—			—			—
Balance at December 31, 2002					197,115			19,711			12,967,104		130		5,424			(56,557	)		6,192			(25,100	)
	Comprehensive income:
		Net income			—			—			—		—		—			8,594			—			8,594
		Other comprehensive income, net of tax:
			Unrealized gain on securities		—			—			—		—		—			—			978			978
	Comprehensive income																							9,572
	Series A preferred stock dividends				—			—			—		—		(5,124	)		—			—			(5,124	)
	Series E preferred stock dividends				50,094			5,009			—		—		(300	)		(4,709	)		—			—
Balance at December 31, 2003					247,209			24,720			12,967,104		130		—			(52,672	)		7,170			(20,652	)
	Comprehensive income:
		Net income			—			—			—		—		—			10,557			—			10,557
		Other comprehensive income, net of tax:
			Unrealized loss on securities		—			—			—		—		—			—			(117	)		(117	)
	Comprehensive income																							10,440
	Conversion of warrants				—			—			8,614,760		86		—			—			—			86
	Series A preferred stock dividends				—			—			—		—		—			(5,492	)		—			(5,492	)
	Series E preferred stock dividends				42,880			4,289			—		—		—			(4,289	)		—			—
	Redemption of Series E preferred stock				(272,436	)		(27,244	)		—		—		—			—			—			(27,244	)
Balance at December 31, 2004				$	17,653		$	1,765		$	21,581,864	$	216	$	—		$	(51,896	)	$	7,053		$	(42,862	)

See accompanying notes.

F-5

AMERISAFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

			Year Ended December 31,
			2004			2003			2002
			(In thousands)
Operating activities
Net income			$	10,557		$	8,594		$	5,181
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation			1,695			2,019			1,966
	Provision for doubtful accounts			1,262			19			(902	)
	Net amortization/accretion of investments			1,673			1,015			234
	Deferred income taxes			(2,849	)		(1,868	)		915
	Net realized (gains) losses on investments			(1,421	)		(316	)		895
	Gain on sale of asset			—			—			(194	)
	Changes in operating assets and liabilities:
		Accounts receivable		(7,023	)		(13,108	)		10,518
		Accrued interest receivable		(464	)		(544	)		(225	)
		Deferred policy acquisition costs and deferred charges		(291	)		(3,305	)		2,164
		Other assets		3,497			(1,549	)		(31	)
		Reserve for loss and loss adjustment expenses		55,321			31,017			(36,490	)
		Unearned premiums		8,279			16,143			(4,727	)
		Reinsurance balances		13,173			1,742			82,157
		Amounts held for others and policyholder deposits		4,975			6,230			(1,839	)
		Accounts payable and other liabilities		3,565			4,360			(5,310	)
Net cash provided by operating activities				91,949			50,449			54,312
Investing activities
Purchases of investments held-to-maturity				(113,461	)		(81,988	)		(73,344	)
Purchases of investments available-for-sale				(31,795	)		(8,675	)		(4,861	)
Proceeds from maturities of investments held-to-maturity				21,789			—			—
Proceeds from sales and maturities of investments available-for-sale				14,908			37,548			26,870
Repayments on mortgage loan				2,370			127			118
Purchases of property and equipment				(2,778	)		(640	)		(2,562	)
Proceeds from sales of property and equipment				2			7			874
Net cash used in investing activities				(108,965	)		(53,621	)		(52,905	)
Financing activities
Proceeds from issuance of subordinated debt securities				25,780			10,310			—
Principal payments on note payable				(6,000	)		(2,000	)		(1,000	)
Warrants exercised				86			—			—
Redemption of outstanding Series E preferred stock				(27,244	)		—			—
Net cash provided by (used in) financing activities				(7,378	)		8,310			(1,000	)
Change in cash and cash equivalents				(24,394	)		5,138			407
Cash and cash equivalents at beginning of year				49,815			44,677			44,270
Cash and cash equivalents at end of year			$	25,421		$	49,815		$	44,677
Supplemental disclosure of cash flow information
Interest paid			$	1,260		$	297		$	335
Income taxes paid			$	8,434		$	8,574		$	4,899
Payment-in-kind dividends			$	9,781		$	10,133		$	9,453

See accompanying notes.

F-6

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2004

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

      AMERISAFE, Inc. (“Amerisafe”), is an insurance holding company incorporated in the state of Texas, which, based on voting common shares, is 67.5% owned by Welsh, Carson, Anderson and Stowe VII L.P. and its affiliate WCAS Healthcare Partners, L.P. (“Welsh Carson”). The accompanying consolidated financial statements include the accounts of Amerisafe and its subsidiaries: American Interstate Insurance Company (“AIIC”) and its insurance subsidiaries, Silver Oak Casualty, Inc. (“SOCI”) and American Interstate Insurance Company of Texas (“AIIC-TX”), and Amerisafe General Agency, Inc. (“AGAI”). AIIC and SOCI are property and casualty insurance companies, domiciled in the state of Louisiana. AIIC-TX is a property and casualty insurance company organized under the laws of the state of Texas, was incorporated on December 20, 2004, and commenced business on January 1, 2005. AGAI, a wholly owned subsidiary of Amerisafe, is a general agent for the Company. AGAI sells insurance, which is underwritten by AIIC, SOCI, and AIIC-TX, as well as by nonaffiliated insurance carriers. The assets and operations of AGAI are not significant to that of the consolidated entity.

      Amerisafe and its subsidiaries are collectively referred to herein as the “Company.”

      The Company provides workers’ compensation and general liability insurance for companies primarily in special trade groups, including construction, trucking, and logging. Assets and revenues of AIIC represent approximately 99% of comparable consolidated amounts of the Company for each of 2004, 2003, and 2002.

      In 1997, the Company entered into a recapitalization agreement with Welsh Carson that resulted in a change to the Company’s capital structure. The Company used the proceeds from this recapitalization to repurchase 80% of the then-outstanding common stock. The repurchase of the common stock resulted in a $164,186,000 charge to retained earnings.

      Early in 2004, the Company engaged in initial discussions with potential underwriters regarding an initial public offering. In May 2005, Amerisafe’s Board of Directors authorized management to proceed with the initial public offering.

Basis of Presentation

      The accompanying consolidated financial statements include the accounts of Amerisafe and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

      Certain prior year amounts have been reclassified to conform with the current year presentation.

Investments

      At acquisition, investments in held-to-maturity fixed maturity securities are recorded at amortized cost. The Company has the ability and positive intent to hold these investments until maturity. Available-for-sale fixed maturity securities and equity securities are recorded at fair value. Temporary

F-7

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

changes in the fair value of the available-for-sale fixed maturity and equity securities are reported in shareholders’ equity as a component of other comprehensive income, net of deferred income taxes.

      During 2004, the Company transferred all fixed maturity securities, other than redeemable preferred stock, from the available-for-sale category to the held-to-maturity category. This transfer between categories was accounted for at fair value as of the transfer date. At the date of transfer, the fair value of all securities transferred was $10,707,000 ($6,960,000 net of income taxes) greater than the securities’ par value. The difference between each security’s par value and fair value at the date of transfer is being amortized as a yield adjustment over the respective security’s life. The fair value at the date of transfer, adjusted for subsequent amortization, is considered to be the security’s amortized cost basis.

      The mortgage loan is carried at the unpaid principal balance. Collateral on the loan balance consists primarily of a first mortgage on the underlying property. The Company received the final payment on the mortgage loan in June 2004.

      Investment income is recognized as it is earned. The discount or premium on fixed maturities is amortized using the scientific “constant yield” method. Anticipated prepayments, where applicable, are considered when determining the amortization of premiums or discounts. Realized investment gains and losses are determined using the specific identification method.

      The Company regularly reviews the fair value of its investments. Impairment of an investment security results in a reduction of the carrying value of the security and the realization of a loss when the fair value of the security declines below the cost or amortized cost, as applicable, for the security and the impairment is deemed to be other-than-temporary. The Company regularly reviews the investment portfolio to evaluate the existence of other-than-temporary declines in the fair value of investments. The Company considers various factors in determining if a decline in the fair value of an individual security is other-than-temporary, including but not limited to the length of time and magnitude of the unrealized loss, the volatility of the security, analysts’ recommendations and price targets, opinions of the Company’s external investment advisor, market liquidity, and the Company’s intent to sell or ability to hold the security.

      If the Company determines that the decline in fair value is other-than-temporary, the Company adjusts the cost basis of the investment and reports an impairment charge in net realized gains (losses) on investments in the consolidated statements of income in the period in which the Company makes this determination.

Cash and Cash Equivalents

      Cash equivalents include commercial paper, short-term municipal securities, pooled short-term money market funds, and certificates of deposit with an original maturity of three months or less.

Accounts Receivable

      Accounts receivable consist primarily of premium-related balances due from policyholders. The Company considers premiums receivable as past due based on the payment terms of the underlying policy. The balance is shown net of the allowance for doubtful accounts. Receivables due from insureds are charged off when a determination has been made that a specific balance will not be collected based upon the collection efforts of Company personnel. An estimate of amounts that are likely to be charged off is established as an allowance for doubtful accounts as of the balance sheet date. The estimate is

F-8

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

primarily comprised of specific balances that are considered probable to be charged off after all collection efforts have ceased, as well as historical trends and an analysis of the aging of the receivables.

Property and Equipment

      The Company’s property and equipment, including certain costs incurred to develop or obtain software for internal use, are stated at cost less accumulated depreciation. Depreciation is calculated primarily by the straight-line method over the estimated useful lives of the respective assets, generally 39 years for the building and three to seven years for all other fixed assets.

Deferred Policy Acquisition Costs

      The direct costs of acquiring and renewing business are capitalized to the extent recoverable and are amortized over the effective period of the related insurance policies in proportion to premium revenue earned. These capitalized costs consist mainly of sales commissions, premium taxes, and other underwriting costs. The Company evaluates deferred policy acquisition costs for recoverability by comparing the unearned premiums to the estimated total expected claim costs and related expenses, offset by anticipated investment income. The Company would reduce the deferred costs if the unearned premiums were less than expected claims and expenses after considering investment income. The Company would report any adjustments in amortization of deferred policy acquisition costs. There were no adjustments necessary in 2004, 2003, or 2002.

Reserves for Loss and Loss Adjustment Expenses

      Reserves for loss and loss adjustment expenses represent the estimated ultimate cost of all reported and unreported losses incurred through December 31. The Company does not discount loss and loss adjustment expense reserves. The Company uses a consulting actuary to assist in the evaluation of the adequacy of the reserves for loss and loss adjustment expenses. The reserves for loss and loss adjustment expenses are estimated using individual case-basis valuations, statistical analyses, and estimates based upon experience for unreported claims and their associated loss and loss adjustment expenses. Such estimates may be more or less than the amounts ultimately paid when the claims are settled. The estimates are subject to the effects of trends in loss severity and frequency. Although considerable variability is inherent in these estimates, management believes that the reserves for loss and loss adjustment expenses are adequate. The estimates are continually reviewed and adjusted as necessary as experience develops or new information becomes known. Any adjustments are included in current operations.

      Subrogation recoverables, as well as deductible recoverables from policyholders, are estimated using individual case-basis valuations and aggregate estimates. Deductibles that are recoverable from policyholders, and other recoverables from state funds, decrease the liability for loss and loss adjustment expenses.

Premium Revenue

      Premiums on workers’ compensation and general liability insurance are based on actual payroll costs or production during the policy term and are normally billed monthly in arrears or annually. However, the Company generally requires a deposit at the inception of a policy.

      Premium revenue is earned on a pro rata basis over periods covered by the policies. The reserve for unearned premiums on these policies is computed on a daily pro rata basis.

F-9

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

Reinsurance

      Reinsurance premiums, losses, and allocated loss adjustment expenses are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts.

      Amounts recoverable from reinsurers include balances currently owed to the Company for losses and allocated loss adjustment expenses that have been paid to policyholders, as well as amounts that are currently reserved for and will be recoverable once the related expense has been paid.

      Upon management’s determination that an amount due from a reinsurer is uncollectible due to the reinsurer’s insolvency, or other matters, the amount is written off.

      Ceding commissions are earned from certain reinsurance companies and are intended to reimburse the Company for costs related to acquiring policies. Ceding commission income is recognized over the effective period of the related insurance policies in proportion to premium revenue earned and is reflected as a reduction in underwriting and other operating costs.

      Contingent commissions are earned from certain reinsurance companies based on the financial results of the applicable risks underwritten by the Company. Contingent commission revenue on reinsurance contracts is recognized during the related reinsurance treaty period and is based on the same assumptions used for recording loss and allocated loss adjustment expenses. These commissions are reflected as a reduction in underwriting and other operating costs and are adjusted as necessary as experience develops or new information becomes known. Any such adjustments are included in current operations. Contingent commissions recognized reduced underwriting and other operating costs by $200,000 in 2004 and $10,000 in 2003 and increased costs by $553,000 in 2002.

Fee and Other Income

      The Company recognizes income related to commissions earned by AGAI as the related services are performed.

Advertising

      All advertising expenditures incurred by the Company are charged to expense in the period to which they relate and are included in underwriting and other operating costs in the consolidated statements of income. Total advertising expenses incurred were $412,000, $506,000, and $389,000 during 2004, 2003, and 2002, respectively.

Income Taxes

      The Company accounts for income taxes using the liability method. The provision for income taxes has two components, amounts currently payable or receivable and deferred amounts. Deferred income tax assets and liabilities are recognized for the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

      The Company considers deferred tax assets to be recoverable if it is probable that the related tax losses can be offset by future taxable income. The Company includes future operating income, reversal

F-10

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

of existing temporary differences, and tax planning strategies available in this assessment. To the extent the deferred tax assets exceed the amount expected to be recovered in future years, the Company records a valuation allowance for the amount determined unrecoverable. The Company has not recorded a valuation allowance, since the recorded deferred tax asset is expected to be fully realized.

Insurance-Related Assessments

      Insurance-related assessments are accrued in the period in which they have been incurred. The Company is subject to a variety of assessments related to insurance commerce, including those by state guaranty funds and workers’ compensation second-injury funds. State guaranty fund assessments are used by state insurance oversight agencies to cover losses of policyholders of insolvent or rehabilitated insurance companies and for the operating expenses of such agencies. These mandatory assessments may be partially recovered through a reduction in future premium taxes in certain states. Assessments related to premiums are generally paid one year after the calendar year in which the premium is written, while assessments related to losses are generally paid within one year of when the loss is paid.

Policyholder Dividends

      The Company writes certain policies for which the policyholder may participate in favorable claims experience through a dividend. An estimated provision for workers’ compensation policyholders’ dividends is accrued as the related premiums are earned. Dividends do not become a fixed liability unless and until declared by the respective Boards of Directors of Amerisafe’s insurance subsidiaries. The dividend to which a policyholder may be entitled is set forth in the policy and is related to the amount of losses sustained under the policy. Dividends are calculated after the policy expiration. The Company is able to estimate the policyholder dividend liability because the Company has information regarding the underlying loss experience of the policies written with dividend provisions and can estimate future dividend payments from the policy terms.

Variable Interest Entities

      In December 2003, Amerisafe formed Amerisafe Capital Trust I (“ACT I”) for the sole purpose of issuing $10,000,000 in trust preferred securities. ACT I used the proceeds from the sale of these securities and Amerisafe’s initial capital contribution to purchase $10,310,000 of subordinated debt securities from Amerisafe. The debt securities are the sole assets of ACT I, and the payments under the debt securities are the sole revenues of ACT I.

      In April 2004, Amerisafe formed Amerisafe Capital Trust II (“ACT II”) for the sole purpose of issuing $25,000,000 in trust preferred securities. ACT II used the proceeds from the sale of these securities and Amerisafe’s initial capital contribution to purchase $25,780,000 of subordinated debt securities from Amerisafe. The debt securities are the sole assets of ACT II, and the payments under the debt securities are the sole revenues of ACT II.

      Amerisafe concluded that the equity investments in ACT I and ACT II (collectively, the “Trusts”) are not at risk since the subordinated debt securities issued by Amerisafe are the Trusts’ sole assets. Accordingly, the Trusts are considered variable interest entities. Amerisafe is not considered to be the primary beneficiary of the Trusts and has not consolidated these entities.

Earnings Per Share

      The Company applies the two-class method to compute basic earnings per share (“EPS”). This method calculates earnings per share for each class of common stock and participating security. Income

F-11

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

available to common shareholders is allocated to common shares and participating securities to the extent that each security shares in earnings as if all earnings for the period had been distributed. The amount of earnings allocated to common shares is divided by the weighted-average number of common shares outstanding for the period. Participating securities that are convertible into common stock are included in the computation of basic EPS if the effect is dilutive.

      Diluted EPS include potential common shares assumed issued under the treasury stock method, which reflects the potential dilution that would occur if any outstanding options or warrants were exercised and includes the “if converted” method for participating securities if the effect is dilutive. The two-class method of calculating diluted EPS is used in the event the “if converted” method is anti-dilutive.

Stock-Based Compensation

      The Company accounts for its stock-based compensation using the intrinsic value method and, as such, generally recognizes no compensation cost for employee stock options.

2. Investments

      The gross unrealized gains and losses on, and the cost and fair value of, those investments classified as held-to-maturity at December 31, 2004 are summarized as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(In thousands)
U.S. Treasury securities and obligations of U.S. Government agencies	$	39,255	$	37	$	(80	)	$	39,212
States and political subdivisions		173,103		—		(553	)		172,550
Mortgage-backed and asset-backed securities		91,836		165		(284	)		91,717
Long-term certificates of deposit		100		—		—			100
Corporate bonds		25,359		30		(20	)		25,369
Totals	$	329,653	$	232	$	(937	)	$	328,948

      The gross unrealized gains and losses on, and the cost and fair value of, those investments classified as available-for-sale at December 31, 2004 are summarized as follows:

	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In thousands)
Common stocks	$	24,879	$	2,907	$	(269	)	$	27,517
Preferred stocks		7,776		149		(227	)		7,698
Totals	$	32,655	$	3,056	$	(496	)	$	35,215

F-12

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

      The gross unrealized gains and losses on, and the cost and fair value of, those investments classified as available-for-sale at December 31, 2003 are summarized as follows:

	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(In thousands)
U.S. Treasury securities and obligations of U.S. Government agencies	$	28,507	$	1,066	$	(22	)	$	29,551
States and political subdivisions		147,798		5,946		(80	)		153,664
Mortgage-backed and asset-backed securities		31,246		1,118		(4	)		32,360
Long-term certificates of deposit		100		—		—			100
Corporate bonds		23,478		2,684		—			26,162
		231,129		10,814		(106	)		241,837
Common stocks		6,066		442		(124	)		6,384
Preferred stocks		7,131		177		(170	)		7,138
		13,197		619		(294	)		13,522
Totals	$	244,326	$	11,433	$	(400	)	$	255,359

      A summary of the cost or amortized cost and fair value of investments in fixed maturity securities at December 31, 2004, by contractual maturity, is as follows:

		Cost or
		Amortized
		Cost		Fair Value
		(In thousands)
Maturity:
	Due in 2005	$	11,851	$	11,809
	In 2006 through 2009		117,701		117,328
	In 2010 through 2014		90,405		90,279
	After 2014		19,589		19,570
Mortgage-backed and asset-backed securities			91,836		91,717
Totals		$	331,382	$	330,703

      The actual maturities of the fixed maturity securities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

      At December 31, 2004, there were $25,000 of cash equivalents and $18,028,000 of held-to-maturity investments on deposit as required by regulatory agencies of states in which the Company does business.

F-13

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

A summary of the Company’s realized gains and losses on sales, calls or redemptions of investments for 2004, 2003, and 2002 is as follows:

	Fixed
	Maturity
	Securities
	Available			Equity
	for Sale			Securities			Other		Total
	(In thousands)
Year ended December 31, 2004
Proceeds from sales	$	—		$	13,529		$	—	$	13,529
Gross realized investment gains	$	—		$	1,784		$	—	$	1,784
Gross realized investment losses		—			(537	)		—		(537	)
Net realized investment gain		—			1,247			—		1,247
Impairments		—			—			—		—
Other, including gains on calls and redemptions		—			—			174		174
Net realized investment gains	$	—		$	1,247		$	174	$	1,421
Year ended December 31, 2003
Proceeds from sales	$	27,469		$	4,923		$	—	$	32,392
Gross realized investment gains	$	2		$	357		$	—	$	359
Gross realized investment losses		(5	)		(56	)		—		(61	)
Net realized investment gain		(3	)		301			—		298
Impairments		—			—			—		—
Other, including gains on calls and redemptions		18			—			—		18
Net realized investment gains	$	15		$	301		$	—	$	316
Year ended December 31, 2002
Proceeds from sales	$	18,447		$	4,503		$	—	$	22,950
Gross realized investment gains	$	22		$	—		$	—	$	22
Gross realized investment losses		(63	)		(857	)		—		(920	)
Net realized investment loss		(41	)		(857	)		—		(898	)
Impairments		—			—			—		—
Other, including gains on calls and redemptions		3			—			—		3
Net realized investment losses	$	(38	)	$	(857	)	$	—	$	(895	)

F-14

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

      Major categories of the Company’s net investment income are summarized as follows:

		Year Ended December 31,
		2004			2003			2002
		(In thousands)
Gross investment income:
	Fixed maturity securities	$	11,294		$	9,358		$	8,430
	Equity securities		811			611			428
	Cash and cash equivalents		693			742			1,159
Total gross investment income			12,798			10,711			10,017
Investment expenses			(581	)		(605	)		(598	)
Net investment income		$	12,217		$	10,106		$	9,419

      The following table summarizes the gross unrealized losses on securities:

	Less Than				Twelve Months
	Twelve Months				or Longer
	Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses
	(In thousands)
December 31, 2004	$	94,003	$	963	$	16,284	$	470
December 31, 2003	$	17,362	$	330	$	589	$	70

      The Company reviewed all securities with unrealized losses in accordance with the impairment policy described in Note 1. The Company determined that the unrealized losses in the fixed maturity portfolio relate primarily to changes in market interest rates since the date of purchase or the transfer of the investments from the available-for-sale classification to the held-to-maturity classification. The Company expects to recover the amortized cost of these securities since management expects to hold the securities until they mature. The Company determined the unrealized losses in the equity portfolio were due to general market conditions. Management believes that these conditions will improve such that these unrealized losses will be recovered.

3. Accounts Receivable

      Accounts receivable consist primarily of premium-related balances due from policyholders. The balance is shown net of the allowance for doubtful accounts. The components of accounts receivable are shown below:

	December 31,
	2004			2003
	(In thousands)
Accounts receivable	$	117,057		$	111,609
Allowance for doubtful accounts		(2,916	)		(3,229	)
Accounts receivable, net	$	114,141		$	108,380

F-15

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

      The following summarizes the activity in the allowance for doubtful accounts:

	December 31,
	2004			2003			2002
	(In thousands)
Balance, beginning of year	$	3,229		$	4,339		$	5,714
Provision for bad debts		1,262			19			(902	)
Write-offs		(1,575	)		(1,129	)		(473	)
Balance, end of year	$	2,916		$	3,229		$	4,339

4. Deferred Policy Acquisition Costs

      The Company incurs certain costs related to acquiring policies. These costs are deferred and expensed over the life of the related policies. Major categories of the Company’s deferred policy acquisition costs are summarized as follows:

	December 31,
	2004		2003
	(In thousands)
Agents’ commissions	$	7,737	$	6,876
Premium taxes		2,957		2,695
Deferred underwriting expenses		1,350		2,249
Total deferred policy acquisition costs	$	12,044	$	11,820

      The following summarizes the activity in the deferred policy acquisition costs:

	Year Ended December 31,
	2004			2003			2002
	(In thousands)
Balance, beginning of year	$	11,820		$	9,505		$	11,077
Policy acquisition costs deferred		26,193			22,391			18,893
Amortization expense during the year		(25,969	)		(20,076	)		(20,465	)
Balance, end of year	$	12,044		$	11,820		$	9,505

F-16

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

5. Property and Equipment

      Property and equipment consist of the following:

	December 31,
	2004			2003
	(In thousands)
Land and office building	$	4,334		$	4,313
Furniture and equipment		6,914			6,719
Software		6,022			3,630
Automobiles		110			110
		17,380			14,772
Accumulated depreciation		(10,303	)		(8,772	)
Real estate, furniture, and equipment, net	$	7,077		$	6,000

      At December 31, 2004, furniture and equipment included property under capital leases of $20,000 and software included property under capital leases of $1,110,000. There is no accumulated depreciation related to these properties at December 31, 2004. At December 31, 2003, furniture and equipment included property under capital leases of $619,000 and software included property under capital leases of $497,000. Accumulated depreciation includes $465,000 at December 31, 2003 that was related to these properties. The capital lease obligations related to this property are included in accounts payable and other liabilities.

      Future minimum lease payments related to the capital lease obligations are detailed below (In thousands):

2005	$	510
2006		510
2007		510
Total minimum lease payments		1,530
Less amount representing interest		(69	)
Present value of net minimum lease payments	$	1,461

6. Reinsurance

      The Company cedes certain premiums and losses to various reinsurers under quota share and excess-of-loss treaties. These reinsurance arrangements provide for greater diversification of business, allow management to control exposure to potential losses arising from large risks, and provide additional capacity for growth. Ceded reinsurance contracts do not relieve the Company from its obligations to policyholders. The Company remains liable to its policyholders for the portion reinsured to the extent that any reinsurer does not meet the obligations assumed under the reinsurance agreements. To minimize its exposure to significant losses from reinsurer insolvencies, the Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar

F-17

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

geographic regions, activities, or economic characteristics of the reinsurers. The effect of reinsurance on premiums written and earned in 2004, 2003, and 2002 was as follows:

	2004 Premiums						2003 Premiums						2002 Premiums
	Written			Earned			Written			Earned			Written			Earned
	(In thousands)
Direct	$	264,962		$	256,684		$	223,590		$	207,447		$	185,093		$	189,820
Ceded		(21,951	)		(21,951	)		(27,600	)		(27,600	)		(26,563	)		(26,563	)
Net premiums	$	243,011		$	234,733		$	195,990		$	179,847		$	158,530		$	163,257

      The amounts recoverable from reinsurers consist of the following:

		December 31,
		2004		2003
		(In thousands)
Unpaid losses recoverable:
	Case basis	$	164,942	$	181,870
	Incurred but not reported		24,682		12,688
Paid losses recoverable			9,353		17,216
Total		$	198,977	$	211,774

      The Company received reinsurance recoveries of approximately $54,144,000 in 2004, $60,960,000 in 2003, and $104,745,000 in 2002.

      At December 31, 2004, unsecured reinsurance recoverables from reinsurers that exceeded 3% of statutory surplus of the Company’s insurance subsidiary are shown below (in thousands). The A.M. Best Company rating for the reinsurer is shown parenthetically.

Converium Reinsurance North America (B-)	$	83,403
American Re-Insurance Company (A+)		38,616
Odyssey America Reinsurance Corporation(A)		21,064
St. Paul Fire & Marine Insurance Company(A)		12,592
Clearwater Insurance Company(A)		10,571
Scor Reinsurance Company (B++)		7,962
Other reinsurers		24,769
Total	$	198,977

      During 2004, the Company’s largest reinsurer, Converium Reinsurance North America (“CRNA”), was downgraded by A.M. Best Company, from A- to B-, as a result of the emergence of significant and previously unrecorded losses. While this downgrade had no immediate impact on the Company’s consolidated financial statements, it caused a decrease in the Company’s A.M. Best Company’s Capital Adequacy Ratio (“BCAR”) due to the increase in the capital charge sustained against the CRNA recoverable. CRNA continues to reimburse the Company for its portion of reinsured paid losses, and no amounts are past due. See Note 22— Subsequent Events.

F-18

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

7. Income Taxes

      The Company’s deferred income tax assets and liabilities are as follows:

		December 31,
		2004			2003
		(In thousands)
Deferred income tax assets:
	Discounting of net unpaid loss and loss adjustment expenses	$	8,836		$	6,819
	Unearned premiums		9,510			8,340
	Accrued expenses and other		1,702			1,601
	Accrued policyholder dividends		445			448
	Accrued insurance-related assessments		5,578			5,071
Total deferred tax assets			26,071			22,279
Deferred income tax liabilities:
	Deferred policy acquisition costs		(5,386	)		(4,603	)
	Deferred charges		(877	)		(828	)
	Unrealized gain on securities available-for-sale		(3,799	)		(3,861	)
	Property and equipment, primarily a result of differences in depreciation		(376	)		(273	)
	Other		(9	)		(1	)
Total deferred tax liabilities			(10,447	)		(9,566	)
Net deferred income tax asset		$	15,624		$	12,713

      The components of consolidated income tax expense (benefit) are as follows:

		Year Ended December 31,
		2004			2003			2002
		(In thousands)
Current:
	Federal	$	5,444		$	4,299		$	(2,678	)
	State		534			415			325
			5,978			4,714			(2,353	)
Deferred:
	Federal		(2,849	)		(1,868	)		915
Total		$	3,129		$	2,846		$	(1,438	)

F-19

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

      Income tax expense (benefit) from operations is different from the amount computed by applying the U.S. federal income tax statutory rate of 35% to income before income taxes as follows:

	Year Ended December 31,
	2004			2003			2002
	(In thousands)
Income tax computed at federal statutory tax rate	$	4,790		$	4,004		$	1,310
Tax-exempt interest, net		(1,737	)		(1,392	)		(1,055	)
State income tax		534			415			325
Dividends received deduction		(135	)		(127	)		(90	)
Tax method changes for prior year		—			—			(1,125	)
Other		(323	)		(54	)		(803	)
	$	3,129		$	2,846		$	(1,438	)

8. Note Payable

      At December 31, 2003, the Company had a note payable with an outstanding balance of $6,000,000, bearing interest at the Federal Funds Rate plus 0.75% (1.91%). The note matured on April 1, 2004, and the Company made a final payment of $6,000,000, plus accrued interest.

9. Subordinated Debt Securities

      On December 16, 2003, Amerisafe entered into a trust preferred securities transaction pursuant to which it issued $10,310,000 aggregate principal amount of subordinated debt securities due in 2034. To effect the transaction, Amerisafe formed a Delaware statutory trust, Amerisafe Capital Trust I (“ACT I”). ACT I issued $10,000,000 of preferred securities to investors and $310,000 of common securities to Amerisafe. ACT I used the proceeds from these issuances to purchase the subordinated debt securities. Amerisafe pays interest on its ACT I subordinated debt securities quarterly at a rate equal to LIBOR plus 4.10% per annum. ACT I pays interest on its preferred securities at the same rate. The Amerisafe subordinated debt securities and ACT I preferred securities are repayable on or after January 8, 2009. Payments of principal, interest, and premium, if any, on the ACT I preferred securities are guaranteed by Amerisafe.

      On April 29, 2004, Amerisafe entered into a second trust preferred securities transaction pursuant to which it issued $25,780,000 aggregate principal amount of subordinated debt securities due in 2034. To effect the transaction, Amerisafe formed a Delaware statutory trust, Amerisafe Capital Trust II (“ACT II”). ACT II issued $25,000,000 of preferred securities to investors and $780,000 of common securities to Amerisafe. ACT II used the proceeds from these issuances to purchase the subordinated debt securities. Amerisafe pays interest on its ACT II subordinated debt securities quarterly at a rate equal to LIBOR plus 3.80% per annum. ACT II pays interest on its preferred securities at the same rate. The Amerisafe subordinated debt securities and ACT II preferred securities are repayable on or after April 29, 2009. Payments of principal, interest, and premium, if any, on the ACT II preferred securities are guaranteed by Amerisafe.

F-20

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

10. Loss and Loss Adjustment Expenses

      The following table provides a reconciliation of the beginning and ending reserve balances, net of related amounts recoverable from reinsurers, for 2004, 2003, and 2002:

			Year Ended December 31,
			2004			2003			2002
			(In thousands)
Reserves for loss and loss adjustment expenses (“LAE”), net of related amounts recoverable from reinsurers, at beginning of year			$	183,001		$	152,908		$	119,020
Add:
	Provision for loss and LAE for claims occurring in the current year, net of reinsurance			160,773			126,977			117,212
	Change in estimated loss and LAE for claims occurring in prior years, net of reinsurance			13,139			973			1,850
				173,912			127,950			119,062
	Uncollectible reinsurance adjustment, for loss and LAE occurring in prior years			274			1,300			2,000
Incurred losses during the current year, net of reinsurance				174,186			129,250			121,062
Deduct loss and LAE payments for claims, net of reinsurance, occurring during:
		Current year		(40,312	)		(32,649	)		(36,060	)
		Prior years		(73,619	)		(66,508	)		(51,114	)
				(113,931	)		(99,157	)		(87,174	)
Reserves for loss and LAE, net of related amounts recoverable from reinsurers, at end of year				243,256			183,001			152,908
Amounts recoverable from reinsurers on unpaid loss and LAE				189,624			194,558			193,634
Reserves for loss and LAE			$	432,880		$	377,559		$	346,542

      The Company’s reserves for loss and loss adjustment expenses, net of amounts recoverable from reinsurers, at December 31, 2003, 2002, and 2001, were increased during the subsequent year by $13,139,000, $973,000, and $1,850,000, respectively. Most of the 2004 prior year development occurred in the 2002 accident year, where the Company’s ultimate loss estimate increased by approximately $9,400,000. The unfavorable development in the 2002 accident year was the result of settlements above the established case reserves or upward revisions to the estimated settlements on an individual case-by-case basis. The revisions to the Company’s case reserves reflect new information gained by claims adjusters in the normal course of adjusting claims and then reflected in the financial statements when the information becomes available. It is typical for more serious claims to take several years to settle and the Company continually revises estimates as more information about claimants’ medical conditions and potential disability becomes known and the claims get closer to being settled. As the 2002 accident year has developed, the Company has found it necessary to increase reserves on reported claims for both indemnity and medical losses.

      Reliance Insurance Company (“Reliance”), one of the Company’s reinsurers, was placed into liquidation in October 2001. As a result of adverse development in the policy years covered by the

F-21

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

Reliance reinsurance, the Company incurred an additional $260,000, $1,300,000, and $2,000,000 of loss and allocated loss adjustment expense related to additional impaired amounts recoverable from Reliance during 2004, 2003, and 2002, respectively.

      The anticipated effect of inflation is implicitly considered when estimating liabilities for loss and loss adjustment expenses. Average severities are projected based on historical trends adjusted for implemented changes in underwriting standards, policy provisions, and general economic trends. These anticipated trends are monitored based on actual development and are modified if necessary.

11. Statutory Accounting and Regulatory Requirements

      Amerisafe’s insurance subsidiaries file financial statements prepared in accordance with statutory accounting principles prescribed or permitted by the insurance regulatory authorities of the state in which they are domiciled. Statutory-basis shareholder’s capital and surplus at December 31, 2004, 2003, and 2002 of the directly owned insurance subsidiary, American Interstate Insurance Company, and the combined statutory-basis net income for all Amerisafe’s insurance subsidiaries for the three years in the period ended December 31, 2004, were as follows (in thousands):

	2004		2003		2002
Capital and surplus	$	112,334	$	96,905	$	86,378
Net income		7,828		2,598		4,976

      Property and casualty insurance companies are subject to certain risk-based capital (“RBC”) requirements specified by the National Association of Insurance Commissioners. Under these requirements, a target minimum amount of capital and surplus maintained by a property/casualty insurance company is determined based on the various risk factors related to it. At December 31, 2004, the capital and surplus of AIIC and its subsidiaries exceeded the minimum RBC requirement.

      Pursuant to regulatory requirements, AIIC cannot pay dividends to Amerisafe in excess of the lesser of 10% of statutory surplus, or statutory net income, excluding realized investment gains, for the preceding 12-month period, without the prior approval of the Louisiana Commissioner of Insurance. However, for purposes of this dividend calculation, net income from the previous two calendar years may be carried forward to the extent that it has not already been paid out as dividends. No such dividends were paid to Amerisafe in 2004, 2003, or 2002. Based upon the above described calculation, AIIC could pay to Amerisafe dividends up to $11,233,000 in 2005 without seeking regulatory approval.

F-22

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

12. Preferred Stock

Series A Preferred Stock

      The following table summarizes the activity in the Series A preferred stock for the three years in the period ended December 31, 2004 (dollars in thousands):

				Redemption
		Shares		Amount
Balance at January 1, 2002			665,206	$	66,520
	Series A preferred stock dividends		47,801		4,780
Balance at December 31, 2002			713,007		71,300
	Series A preferred stock dividends		51,236		5,124
Balance at December 31, 2003			764,243		76,424
	Series A preferred stock dividends		54,918		5,492
Balance at December 31, 2004			819,161	$	81,916

      Holders of Series A Preferred Stock are entitled to cumulative dividends at the rate of $7 per year payable quarterly in shares of Series A Preferred Stock.

      The Series A Preferred Stock is redeemable, in whole or in part, by Amerisafe at any time. The redemption price for the Series A Preferred Stock is $100 plus accrued and unpaid dividends per share (the “Redemption Price”). Upon consummation of a public offering of its equity securities, Amerisafe is required to use 50% of its net proceeds from the offering to redeem outstanding shares of Series A Preferred Stock, subject to the terms of the Series E Preferred Stock.

      The Series A Preferred Stock is exchangeable, in whole or in part, into shares of common stock following consummation of a public offering of shares of common stock with gross proceeds of at least $40,000,000 to Amerisafe (a “Qualified Public Offering”), upon the written request of holders of at least 66²/3% of the then-outstanding shares of Series A Preferred Stock. The exchange rate for each share of Series A Preferred Stock is $100 divided by the price per share to the public in the public offering.

      Holders of the Series A Preferred Stock may require Amerisafe to redeem all or a portion of their outstanding shares of the Series A Preferred Stock at the Redemption Price upon the disposition of substantially all of the assets of the Company or if a change of control of more than 50% of the voting power of all outstanding shares of voting stock occurs, other than through a public offering of equity securities (collectively, a “Change of Control”).

      Welsh Carson owns a majority of the outstanding Series A Preferred Stock, as well as a majority of the voting Common Stock of the Company. Additionally, under the terms of a stockholders’ agreement, Welsh Carson has the right to designate a majority of the members on the Amerisafe Board of Directors. The Series A Preferred Stock is mandatorily redeemable upon the occurrence of certain events that are deemed to be outside the control of the Company and therefore is classified outside of permanent equity.

F-23

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

Series B Preferred Stock

      The terms of the Series B Preferred Stock are similar to the terms of the Series A Preferred Stock described above. There were no shares of Series B Preferred Stock outstanding at December 31, 2004 and 2003 or issued during the three year period ended December 31, 2004.

Series C and Series D Convertible Preferred Stock

      There has been no change in the number of shares or carrying value of the Series C and Series D Convertible Preferred Stock (“Convertible Preferred Stock”) during the three-year period ended December 31, 2004.

      Holders of the Convertible Preferred Stock are entitled to cumulative dividends at the rate of $7 per year payable quarterly in shares of Series E Preferred Stock.

      The Convertible Preferred Stock is convertible at the option of the holder into shares of common stock at a rate of $100 per share divided by the then-applicable conversion price. As of December 31, 2004, the conversion price was $7.24308 per share and the outstanding shares of Convertible Preferred Stock were convertible into approximately 6.9 million shares of common stock. Holders of the Convertible Preferred Stock also have the right to participate in any common dividend paid by the Company on an as-converted basis. Prior to a public offering, the conversion price is adjusted in the event of issuances of common stock (or other securities convertible into or exchangeable for common stock) without consideration or for a consideration per share less than the then-current conversion price. On or after a public offering, the conversion price is adjusted in the event of issuances of common stock (or other securities convertible into or exchangeable for common stock) at a price per share less than the market price in effect immediately prior to such issuance.

      The Convertible Preferred Stock is automatically convertible into shares of common stock upon consummation of a Qualified Public Offering at a price to the public of at least $9.05 per share (subject to adjustment to reflect stock splits, combinations, and stock dividends). In addition, the Convertible Preferred Stock is convertible at Amerisafe’s option upon consummation of a public offering of its equity securities if the closing price of the common stock for the 20 trading days prior to consummation results in, or concurrently with a Change of Control if the proceeds from the transaction results in, a value for the outstanding common stock of at least $9.05 per share.

      Holders of the Convertible Preferred Stock may require Amerisafe to redeem all or a portion of their outstanding shares of the Convertible Preferred Stock at the Redemption Price upon the disposition of substantially all of the assets of the Company or if a change of control of more than 50% of the voting power of all outstanding shares of voting stock occurs, other than through a public offering of equity securities (collectively, a “Change of Control”).

      At any time after March 18, 2003, Amerisafe may redeem all, but not less than all, of the outstanding shares of Convertible Preferred Stock at a price per share of $103.50 plus accrued and unpaid dividends. The Convertible Preferred Stock is mandatorily redeemable at the Redemption Price upon a Change of Control.

      The Convertible Preferred Stock is classified outside of permanent equity because the shares are mandatorily redeemable upon the occurrence of certain events that are deemed to be outside the control of the Company.

F-24

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

Series E Preferred Stock

      Holders of Series E Preferred Stock are entitled to cumulative dividends at the rate of $7 per year payable quarterly in shares of Series E Preferred Stock. The Company made cash redemptions of Series E Preferred Stock on May 28, June 8, and June 30, 2004. As a result of these redemptions, there were no outstanding shares of Series E Preferred Stock as of June 30, 2004. Subsequently, in 2004, an additional 17,653 shares were issued to the holders of the Convertible Preferred Stock.

      Amerisafe may redeem all, but not less than all, of the outstanding shares of Series E Preferred Stock at the Redemption Price at any time. The Series E Preferred Stock is subject to mandatory redemption at the Redemption Price upon a Change of Control, subject to certain limitations. Upon the consummation of a public offering of equity securities, Amerisafe is required to use the proceeds from the offering to redeem at the Redemption Price all outstanding shares of the Series E Preferred Stock, subject to the terms of the Series A Preferred Stock.

Redemption and Liquidation Provisions

      In the event Amerisafe consummates a Qualified Public Offering and the Series A Preferred Stock is concurrently redeemed or exchanged, the rate at which dividends are paid to holders of Convertible Preferred Stock and Series E Preferred Stock will be reduced by multiplying the dividend rate by the percentage of shares of Series A Preferred Stock outstanding after the redemption or exchange as compared to the number of shares of Series A Preferred Stock outstanding on March 18, 1998. Subsequent redemptions or exchanges will further reduce the dividend rate proportionately with the percentage decrease in the number of outstanding shares of Series A Preferred Stock. After all shares of Series A Preferred Stock have been redeemed or exchanged, the dividend rate on the Convertible Preferred Stock and Series E Preferred Stock will be zero.

      In the event of any liquidation or dissolution of Amerisafe, the holders of Convertible Preferred Stock and Series E Preferred Stock will receive $100 plus accrued and unpaid dividends for each outstanding share before any distributions are made to holders of Series A Preferred Stock or Common Stock. Any remaining net assets will be distributed first to holders of Series A Preferred Stock and then to holders of Common Stock.

13.     Stock Options

      The Company had one stock option plan as of December 31, 2004, the Amerisafe 1998 Amended and Restated Stock Option and Restricted Stock Purchase Plan (the “Plan”). The Plan is administered by Amerisafe’s Board of Directors and provides for grants of incentive stock options, nonqualified stock options, or restricted stock to selected employees, officers, and directors. Each option granted under the Plan is exercisable for one share of common stock. Options may be granted for a number of shares not to exceed, in the aggregate, 2,500,000 shares of common stock. Exercise prices for the incentive stock options may be no less than 100% of the fair value of a share of common stock on the date the option is granted. If the option is granted to any owner of 10% or more of the total combined voting power of the Company, the exercise price is to be at least 110% of the fair value of a share of common stock on the date the option is granted. Exercise prices for the nonqualified stock options may be no less than 100% of the fair value of a share of common stock on the date the option is granted. Each option vests ratably over a period of five years and may be exercised during a period not to exceed ten years from the date such option is granted. Exercise prices for nonemployee director stock options may be no less than 100% of the fair value of a share of common stock on the date the option is granted. The nonemployee director stock options granted when a director becomes a board member, may be

F-25

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

exercised in increments of one-third of the total grant on each anniversary of the grant date and become fully exercisable three years after the grant date. The nonemployee director options awarded at the re-election of the director become fully exercisable at the award date. A summary of the Company’s stock option plan as of December 31, 2004, 2003, and 2002, and changes during each of the years then ended is as follows:

	2004					2003					2002
				Weighted-					Weighted-					Weighted-
				Average					Average					Average
				Exercise					Exercise					Exercise
	Shares			Price		Shares			Price		Shares			Price
Outstanding at the beginning of the year		1,450,049		$	3.01		1,511,049		$	3.02		1,533,530		$	3.00
Granted		12,000			3.64		27,000			4.15		20,000			3.27
Exercised		—			—		—			—		—			—
Canceled, forfeited, or expired		(15,000	)		5.00		(88,000	)		3.49		(42,481	)		2.46
Outstanding at the end of the year		1,447,049			3.00		1,450,049			3.01		1,511,049			3.02
Exercisable at the end of the year		1,447,049			3.00		1,435,049			2.99		1,161,138			2.87

      The following table summarizes information about stock options outstanding and exercisable at December 31, 2004:

		Weighted-
		Average
		Remaining		Weighted-
Number		Contractual Life		Average Exercise
Outstanding		(In Years)		Price
	1,007,549		2.73	$	2.12
	439,500		4.19	$	5.00

      The reported net income, basic earnings per share, and diluted earnings per share would not be impacted had the Company accounted for the outstanding stock options based on their fair value. Accordingly, no additional disclosure of the pro forma effects of this accounting method is considered necessary.

      On December 16, 2004, the Financial Accounting Standards Board (“FASB”) issued FASB Statement No. 123(R) (revised 2004), Share-Based Payment, which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. Statement No. 123(R) supersedes Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement No. 95, Statement of Cash Flows. Generally, the approach in Statement No. 123(R) is similar to the approach described in Statement No. 123. However, Statement No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative.

      Statement No. 123(R) permits public companies to adopt its requirements using one of two methods. One method is a “modified prospective” method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of Statement No. 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of Statement 123

F-26

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

for all awards granted to employees prior to the effective date of Statement No. 123(R) that remain unvested on the effective date. The other method is a “modified retrospective” method, which includes the requirements of the modified prospective method described above, but also permits entities to restate based on the amounts previously recognized under Statement No. 123 for purposes of pro forma disclosures for either (a) all prior periods presented or (b) prior interim periods of the year of adoption. Statement No. 123(R) must be adopted no later than January 1, 2006. Early adoption will be permitted in periods in which financial statements have not yet been issued.

      In anticipation of the initial public offering of the Company’s common stock, the Company adopted the provisions of Statement No. 123(R) using the modified prospective method effective January 1, 2005. As all share-based payments previously issued by the Company were fully vested, there is no effect on the Company’s consolidated financial position or results of operations as of the date of adoption.

      As permitted by Statement No. 123, the Company currently accounts for share-based payments to employees using APB Opinion No. 25’s intrinsic value method and, as such, generally recognizes no compensation cost for employee stock options. Accordingly, to the extent additional share-based payments are issued, the adoption of Statement No. 123(R)’s fair value method could have a significant impact on the Company’s results of operations, although it will have no impact on the Company’s overall consolidated financial position. See Note 22—Subsequent Events.

14. Warrants

      In 2004, warrants for 8,614,760 shares of common stock were exercised at a price of $0.01 per share. The warrants were issued in 1997 and 1998. The following table depicts warrant activity for the last three years in the period ended December 31, 2004:

				Exercise		Shares
		Number		Price		Purchased
Warrants outstanding at December 31, 2001			8,629,197	$	0.01		—
	Issued		—		—		—
	Exercised		—		—		—
	Expired		—		—		—
Warrants outstanding at December 31, 2002			8,629,197	$	0.01		—
	Issued		—		—		—
	Exercised		—		—		—
	Expired		—		—		—
Warrants outstanding at December 31, 2003			8,629,197		0.01
	Issued		—		—		—
	Exercised		8,614,760		0.01		8,614,760
	Expired		14,437		0.01		—
Warrants outstanding at December 31, 2004			—		—

F-27

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

15. Earnings Per Share

      The calculation of basic and diluted EPS for the years ended December 31, 2004, 2003, and 2002 are presented below.

			For the Year Ended December 31,
			2004			2003			2002
			(In thousands, except
			per share amounts)
Basic EPS:
	Net income		$	10,557		$	8,594		$	5,181
	Preferred stock dividends			(9,781	)		(10,133	)		(9,453	)
	Income (loss) available to common shareholders		$	776		$	(1,539	)	$	(4,272	)
	Amount allocable to common shareholders(1)			70%			100%			100%
	Income (loss) allocable to common shareholders		$	545		$	(1,539	)	$	(4,272	)
	Weighted-average common shares outstanding			16,226			12,967			12,967
	Basic earnings (loss) per share		$	0.03		$	(0.12	)	$	(0.33	)
Diluted EPS:
	Income (loss) allocable to common shareholders		$	545		$	(1,539	)	$	(4,272	)
	Dividends on participating securities			—	(2)		—	(2)		—	(2)
	Income (loss) allocable to common shareholders after assumed conversions		$	545		$	(1,539	)	$	(4,272	)
	Weighted average common shares outstanding			16,226			12,967			12,967
	Diluted effect:
		Stock options		—	(2)		—	(2)		—	(2)
		Warrants		2,154			—	(2)		—	(2)
		Conversion of participating securities		—	(2)		—	(2)		—	(2)
	Weighted average diluted shares outstanding			18,380			12,967			12,967
	Diluted earnings (loss) per share		$	0.03		$	(0.12	)	$	(0.33	)

(1) Computed under the two-class method by dividing the weighted-average common shares outstanding (16,226 at December 31, 2004) by the sum of the weighted-average common shares outstanding and shares issuable upon conversion of all convertible participating securities, calculated on the if-converted method (such additional shares totaled 6,903 at December 31, 2004). In computing basic EPS using the two-class method, the Company has not allocated the loss to common shareholders for the years ended December 31, 2003 and 2002 between common shareholders and participating security holders as the participating holders do not have a contractual obligation to share in the loss.

(2)  Not applicable as impact is antidilutive.

F-28

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

16. Other Comprehensive Income

		Pre Tax						Net-of-Tax
		Amount			Tax Expense			Amount
		(In thousands)
December 31, 2004
Unrealized gain on securities:
	Unrealized gain on available-for-sale securities	$	1,993		$	698		$	1,295
	Less amortization of differences between fair value and amortized cost for fixed maturity security transfer		(2,413	)		(845	)		(1,568	)
	Less reclassification adjustment for losses realized in net income		242			86			156
Net unrealized loss			(178	)		(61	)		(117	)
Other comprehensive income		$	(178	)	$	(61	)	$	(117	)
December 31, 2003
Unrealized gain on securities:
	Unrealized gain on available-for-sale securities	$	1,484		$	519		$	965
	Less reclassification adjustment for losses realized in net income		20			7			13
Net unrealized gain			1,504			526			978
Other comprehensive income		$	1,504		$	526		$	978
December 31, 2002
Unrealized gain on securities:
	Unrealized gain on available-for-sale securities	$	6,455		$	2,260		$	4,195
	Less reclassification adjustment for losses realized in net income		467			163			304
Net unrealized gain			6,922			2,423			4,499
Other comprehensive income		$	6,922		$	2,423		$	4,499

17. Employee Benefit Plan

      The Company’s 401(k) benefit program is available to all employees. The Company matches up to 2% of employee compensation for participating employees, subject to certain limitations. Employees are vested 100% in employer contributions to the Plan after five years. Contributions to the Plan were $276,000, $270,000, and $284,000 in 2004, 2003, and 2002, respectively.

18. Commitments and Contingencies

      The Company is a party to various legal actions arising principally from claims made under insurance policies and contracts. Those actions are considered by the Company in estimating loss and loss adjustment expense reserves. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

F-29

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

      The Company provides workers’ compensation insurance in several states that maintain second-injury funds. Incurred losses on qualifying claims that exceed certain amounts may be recovered from these state funds. There is no assurance that the applicable states will continue to provide funding under these programs.

      The Company manages risk on certain long-duration claims by settling these claims through the purchase of annuities from unaffiliated carriers. In the event these carriers are unable to meet their obligations under these contracts, the Company remains primarily liable to the claimants. The following table summarizes (in thousands) the fair value of the annuities at December 31, 2004, that the Company has purchased to satisfy its obligations under certain settled claims where the payment pattern and ultimate cost are fixed and determinable on an individual claim basis. The A.M. Best Company rating is shown parenthetically.

American General Life Insurance Company (A++u)	$	18,220
First Colony Life Insurance Company (A+)		3,658
Monumental Life Insurance Company (A+)		3,632
John Hancock Life Insurance Company (A++)		3,312
Transamerica Life Companies (A+)		2,726
New York Life Insurance Company (A++)		2,548
Liberty Life Assurance Company of Boston (A-)		2,417
GE Capital Assurance Company (A+)		1,718
Pacific Life and Annuity Company (A++)		1,375
Other		7,794
	$	47,400

      Each of the life insurance companies from which the Company purchases annuities, or the entity guaranteeing the life insurance company, has an A.M. Best Company rating “A-” (Excellent) or better.

      The Company leases equipment and office space under noncancelable operating leases. At December 31, 2004, future minimum lease payments are as follows (in thousands):

2005	$	479
2006		303
2007		185
2008		88
2009		58
2010		50
	$	1,163

      Rental expense was approximately $956,000, $1,074,000, and $1,144,000 in 2004, 2003, and 2002, respectively.

F-30

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

19. Concentration of Operations

      The Company derives its revenues primarily from its operations in the workers’ compensation insurance line of business. Total net premiums earned for the different lines of business is shown below:

	2004				2003				2002
	Dollars		Percent		Dollars		Percent		Dollars		Percent
	(Dollars in thousands)
Workers’ compensation	$	232,291		99.0%	$	177,565		98.7%	$	161,060		98.7%
General liability		2,442		1.0%		2,282		1.3%		2,197		1.3%
Total net premiums earned	$	234,733		100.0%	$	179,847		100.0%	$	163,257		100.0%

      Net premiums earned for the top ten states and all others is shown below:

	2004					2003					2002
	Dollars		Percent			Dollars		Percent			Dollars		Percent
	(Dollars in thousands)
Louisiana	$	26,422		11.3	%	$	20,809		11.6	%	$	20,421		12.5	%
Georgia		22,313		9.5			17,233		9.6			15,731		9.6
Texas		17,150		7.3			14,407		8.0			13,826		8.5
North Carolina		14,705		6.3			10,812		6.0			8,647		5.3
Illinois		14,186		6.0			8,423		4.7			5,046		3.1
Virginia		12,395		5.3			9,984		5.6			12,165		7.5
Arkansas		11,327		4.8			9,708		5.4			9,690		5.9
Florida		10,959		4.7			7,726		4.3			4,764		2.9
South Carolina		10,067		4.3			6,301		3.5			5,313		3.3
Pennsylvania		9,812		4.2			7,338		4.1			6,413		3.9
		149,336		63.6			112,741		62.7			102,016		62.5
All others		85,397		36.4			67,105		37.3			61,241		37.5
Total net premiums earned	$	234,733		100.0	%	$	179,847		100.0	%	$	163,257		100.0	%

20. Fair Values of Financial Instruments

      The Company determines fair value amounts for financial instruments using available third-party market information. When such information is not available, the Company determines the fair value amounts using appropriate valuation methodologies. Nonfinancial instruments such as real estate, property and equipment, deferred policy acquisition costs, deferred income taxes, and loss and loss adjustment expense reserves are excluded from the fair value disclosure.

      Cash and Cash Equivalents—The carrying amounts reported in the accompanying consolidated balance sheets for these financial instruments approximate their fair values.

      Investments—The fair values for fixed maturity and equity securities are based on prices obtained from a third-party investment manager.

      Mortgage Loan—The carrying amount reported in the accompanying consolidated balance sheet for the mortgage loan is the unpaid principal balance of the loan. This amount approximates fair value due

F-31

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

to the interest rate and term of the loan being comparable with what the borrower presently could obtain from other outside sources.

      Note Payable and Subordinated Debt Securities—The carrying values of the Company’s note payable and subordinated debt securities approximate the estimated fair values of the obligations as the interest rates on all the debt are comparable to rates that the Company believes it presently would incur on comparable borrowings.

      The following table summarizes the carrying or reported values and corresponding fair values for financial instruments:

			December 31,
			2004				2003
			Carrying		Fair		Carrying		Fair
			Amount		Value		Amount		Value
			(In thousands)
Assets:
	Fixed maturity securities		$	331,408	$	330,703	$	243,863	$	243,863
	Equity securities			33,460		33,460		11,496		11,496
	Mortgage loan			—		—		2,370		2,370
	Cash and cash equivalents			25,421		25,421		49,815		49,815
Liabilities:
	Note payable			—		—		6,000		6,000
	Subordinated debt securities:
		ACT I		10,310		10,310		10,310		10,310
		ACT II		25,780		25,780		—		—

F-32

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

21. Quarterly Financial Data (Unaudited)

      The following table represents unaudited quarterly financial data for the years ended December 31, 2004 and 2003.

		Three Months Ended
		March 31		June 30			September 30			December 31
		(In thousands, except per share amounts)
2004
Premiums earned		$	52,312	$	60,767		$	59,338		$	62,316
Net investment income			2,641		2,765			3,253			3,558
Net realized gain (losses) on investments			310		308			(75	)		878
Total revenues			55,406		63,961			62,643			66,950
Income before income taxes			3,888		582			4,040			5,176
Net income			2,891		708			3,147			3,811
Net income (loss) allocable to common shareholder			246		(1,868	)		685			1,714
Earnings (loss) per share:
	Basic		0.01		(0.14	)		0.03			0.06
	Diluted		0.01		(0.14	)		0.03			0.06
Comprehensive income			2,664		121			2,769			4,886
2003
Premiums earned		$	42,987	$	43,652		$	44,827		$	48,381
Net investment income			2,555		2,538			2,460			2,553
Net realized gain (losses) on investments			2		2			(46	)		358
Total revenues			45,681		46,287			47,380			51,383
Income (loss) before income taxes			4,535		5,163			3,836			(2,094	)
Net income (loss)			3,183		3,648			2,805			(1,042	)
Net income (loss) allocable to common shareholders			715		1,137			251			(3,642	)
Earnings (loss) per share:
	Basic		0.04		0.06			0.01			(0.28	)
	Diluted		0.02		0.03			0.01			(0.28	)
Comprehensive income (loss)		$	3,288	$	5,691		$	1,828		$	(1,236	)

F-33

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2004

22. Subsequent Events.

      Effective June 30, 2005, the Company entered into a commutation agreement with Converium Reinsurance (North America) Inc. (“Converium”) pursuant to which the Company is to receive cash payments totaling $61,297,000 in exchange for a full termination and release of three of the five reinsurance agreements between Converium and the Company. The commutation agreement provides that all liabilities of the Company reinsured with Converium under these three reinsurance agreements revert back to the Company in exchange for the cash payments. These three reinsurance agreements have been terminated, and Converium and the Company have fully released each other from all liabilities under or relating to these three reinsurance agreements. As a result of the termination of the three reinsurance agreements the Company recognized a pretax loss of $6,653,000 in 2005. Converium remains obligated to the Company under the remaining two reinsurance agreements. As of June 30, 2005, the amount recoverable from Converium under these two agreements was $6,860,000.

      On June 20, 2005, the Company entered into agreements with the holders of all its outstanding options to purchase shares of the Company’s common stock pursuant to which all outstanding options of the Company were cancelled in exchange for $0.001 for each share of common stock issuable upon exercise of the options. Options to acquire a total of 1,459,049 shares of the Company’s common stock were cancelled in exchange for aggregate cash payments of $1,459. Additionally, the Company’s Stock Option and Restricted Stock Purchase Plan, under which these options were authorized, was terminated.

F-34

AMERISAFE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

			March 31,			December 31,
			2005			2004
			(Unaudited)
			(In thousands, except
			share data)
Assets
Investments:
	Fixed maturity securities — held-to-maturity, at amortized cost (fair value $325,501 and $328,948 in 2005 and 2004, respectively)		$	330,973		$	329,653
	Fixed maturity securities — available-for-sale, at fair value (cost $1,729 in 2005 and 2004)			1,720			1,755
	Equity securities — available-for-sale, at fair value (cost $45,979 and $30,926 in 2005 and 2004, respectively)			48,619			33,460
Total invested assets				381,312			364,868
Cash and cash equivalents				26,356			25,421
Receivable for investments sold				104			—
Amounts recoverable from reinsurers				189,698			198,977
Accounts receivable, net				124,115			114,141
Deferred income taxes				16,634			15,624
Federal income tax recoverable				—			1,292
Accrued interest receivable				3,967			3,123
Property and equipment, net				6,911			7,077
Deferred policy acquisition costs				16,533			12,044
Deferred charges				3,182			3,054
Other assets				9,741			8,566
			$	778,553		$	754,187
Liabilities, redeemable preferred stock and shareholders’ deficit
Liabilities:
	Reserves for loss and loss adjustment expenses		$	442,554		$	432,880
	Unearned premiums			116,564			111,741
	Reinsurance premiums payable			—			861
	Amounts held for others			1,107			1,214
	Policyholder deposits			33,971			33,746
	Insurance-related assessments			32,544			29,876
	Accounts payable and other liabilities			20,576			18,725
	Federal income tax payable			501			—
	Payable for investments purchased			2,700			—
	Subordinated debt securities			36,090			36,090
Total liabilities				686,607			665,133
Redeemable preferred stock:
	Series A nonconvertible — $0.01 par value, $100 per share redemption value:
		Authorized shares — 1,500,000; issued and outstanding shares — 833,496 in 2005 and 819,161 in 2004		83,350			81,916
	Series B nonconvertible — $0.01 par value, $100 per share redemption value:
		Authorized shares — 1,500,000; no shares issued or outstanding in 2005 or 2004		—			—
	Series C convertible — $0.01 par value, $100 per share redemption value:
		Authorized shares — 300,000; issued and outstanding shares — 300,000 in 2005 and 2004		30,000			30,000
	Series D convertible — $0.01 par value, $100 per share redemption value:
		Authorized shares — 200,000; issued and outstanding shares — 200,000 in 2005 and 2004		20,000			20,000
				133,350			131,916
Shareholders’ deficit:
	Preferred stock: Series E nonconvertible — $0.01 par value, $100 per share redemption value:
		Authorized — 500,000; issued and outstanding shares — 26,712 in 2005 and 17,653 in 2004		2,671			1,765
	Common stock:
		Voting — $0.01 par value, authorized shares — 100,000,000; issued and outstanding shares — 21,581,864 in 2005 and 2004		216			216
		Convertible nonvoting — $0.01 par value, authorized shares  — 5,000,000; no shares issued or outstanding in 2005 or 2004		—			—
	Additional paid-in-capital			—			—
	Accumulated deficit			(51,001	)		(51,896	)
	Accumulated other comprehensive income			6,710			7,053
				(41,404	)		(42,862	)
			$	778,553		$	754,187

See accompanying notes.

F-35

AMERISAFE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

		Three Months Ended
		March 31,
		2005			2004
		(Unaudited)
		(In thousands, except
		share and per share data)
Revenues:
	Premiums earned	$	61,917		$	52,312
	Net investment income		3,718			2,641
	Net realized gains on investments		227			310
	Fee and other income		162			143
Total revenues			66,024			55,406
Expenses:
	Loss and loss adjustment expenses incurred		45,918			37,475
	Underwriting and certain other operating costs		8,344			6,585
	Commissions		3,806			3,168
	Salaries and benefits		2,800			3,810
	Interest expense		640			142
	Policyholder dividends		171			338
Total expenses			61,679			51,518
Income before income taxes			4,345			3,888
Income tax expense			1,108			997
Net income			3,237			2,891
Preferred stock dividends			(2,340	)		(2,645	)
Net income available to common shareholders		$	897		$	246
Earnings per share:
	Basic	$	0.03		$	0.01
	Diluted	$	0.03		$	0.01
Shares used in computing earnings per share:
	Basic		21,581,874			12,967,104
	Diluted		21,581,874			21,581,864

See accompanying notes.

F-36

AMERISAFE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF

CHANGES IN SHAREHOLDERS’ DEFICIT

				Series E Preferred															Accumulated
				Stock						Common Stock				Additional					Other
														Paid-In		Accumulated			Comprehensive
				Shares			Amount			Shares		Amount		Capital		Deficit			Income			Total
				(In thousands)
Balance at January 1, 2003					247,209		$	24,720			12,967,104	$	130	$	—	$	(52,672	)	$	7,170		$	(20,652	)
	Comprehensive income:
		Net income			—			—			—		—		—		10,557			—			10,557
		Other comprehensive income, net of tax:
			Unrealized loss on securities		—			—			—		—		—		—			(117	)		(117	)
	Comprehensive income																						10,440
	Conversion of warrants				—			—			8,614,760		86		—		—			—			86
	Series A preferred stock dividends				—			—			—		—		—		(5,492	)		—			(5,492	)
	Series E preferred stock dividends				42,880			4,289			—		—		—		(4,289	)		—			—
	Redemption of Series E preferred stock				(272,436	)		(27,244	)		—		—		—		—			—			(27,244	)
Balance at December 31, 2004					17,653		$	1,765			21,581,864	$	216	$	—	$	(51,896	)	$	7,053		$	(42,862	)
	Comprehensive income:
		Net income (unaudited)			—			—			—		—		—		3,237			—			3,237
		Other comprehensive income, net of tax:
			Unrealized loss on securities (unaudited)		—			—			—		—		—		—			(343	)		(343	)
	Comprehensive income (unaudited)																						2,894
	Series A preferred stock dividends (unaudited)				—			—			—		—		—		(1,436	)		—			(1,436	)
	Series E preferred stock dividends (unaudited)				9,059			906			—		—		—		(906	)		—			—
Balance at March 31, 2005 (unaudited)					26,712		$	2,671			21,581,864	$	216	$	—	$	(51,001	)	$	6,710		$	(41,404	)

See accompanying notes.

F-37

AMERISAFE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended
	March 31,
	2005			2004
	(Unaudited)
	(In thousands)
Operating activities
Net cash provided by operating activities	$	15,991		$	18,805
Investing activities
Purchases of investments held-to-maturity		(5,596	)		(10,850	)
Purchases of investments available-for-sale		(20,315	)		(11,341	)
Proceeds from maturities of investments held-to-maturity		5,832			6,818
Proceeds from sales and maturities of investments available-for-sale		5,435			1,708
Repayments on mortgage loan		—			32
Purchases of property and equipment		(412	)		(79	)
Proceeds from sales of property and equipment		—			1
Net cash used in investing activities		(15,056	)		(13,711	)
Change in cash and cash equivalents		935			5,094
Cash and cash equivalents at beginning of period		25,421			49,815
Cash and cash equivalents at end of period	$	26,356		$	54,909

See accompanying notes.

F-38

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2005

1. Summary of Significant Accounting Policies

Organization

      AMERISAFE, Inc. (“Amerisafe”), is an insurance holding company incorporated in the state of Texas, which, based on voting common shares, is 67.5% owned by Welsh, Carson, Anderson and Stowe VII L.P. and its affiliate WCAS Healthcare Partners, L.P. (“Welsh Carson”). The accompanying consolidated financial statements include the accounts of Amerisafe and its subsidiaries: American Interstate Insurance Company (“AIIC”) and its insurance subsidiaries, Silver Oak Casualty, Inc. (“SOCI”) and American Interstate Insurance Company of Texas (“AIIC-TX”), and Amerisafe General Agency, Inc. (“AGAI”). AIIC and SOCI are property and casualty insurance companies, domiciled in the state of Louisiana. AIIC-TX is a property and casualty insurance company organized under the laws of the state of Texas, was incorporated on December 20, 2004, and commenced business on January 1, 2005. AGAI, a wholly owned subsidiary of Amerisafe, is a general agent for the Company. AGAI sells insurance, which is underwritten by AIIC, SOCI, and AIIC-TX, as well as by nonaffiliated insurance carriers. The assets and operations of AGAI are not significant to that of the consolidated entity.

      Amerisafe and its subsidiaries are collectively referred to herein as the “Company.”

      Early in 2004, the Company engaged in initial discussions with potential underwriters regarding an initial public offering. In May 2005, Amerisafe’s Board of Directors authorized management to proceed with the initial public offering.

Basis of Presentation

      The accompanying condensed consolidated financial statements include the accounts of Amerisafe and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

Interim Financial Statements

      In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation in accordance with accounting principles generally accepted in the United States have been included. Operating results for the three months ended March 31, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.

Earnings Per Share

      The Company applies the two-class method to compute basic earnings per share (“EPS”). This method calculates earnings per share for each class of common stock and participating security. Income available to common shareholders is allocated to common shares and participating securities to the extent that each security shares in earnings as if all earnings for the period had been distributed. The amount of earnings allocated to common shares is divided by the weighted-average number of common shares outstanding for the period. Participating securities that are convertible into common stock are included in the computation of basic EPS if the effect is dilutive.

F-39

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

      Diluted EPS include potential common shares assumed issued under the treasury stock method, which reflects the potential dilution that would occur if any outstanding options or warrants were exercised and includes the “if converted” method for participating securities if the effect is dilutive. The two-class method of calculating diluted EPS is used in the event the “if converted” method is anti-dilutive.

Share-Based Payments

      On December 16, 2004, the Financial Accounting Standards Board (“FASB”) issued FASB Statement No. 123(R) (revised 2004), Share-Based Payment, which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. Statement No. 123(R) supersedes Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement No. 95, Statement of Cash Flows. Generally, the approach in Statement No. 123(R) is similar to the approach described in Statement No. 123. However, Statement No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. The Company adopted the provisions of Statement No. 123(R) using the modified prospective method effective January 1, 2005. As all share-based payments previously issued by the Company were fully vested, there is no effect on the Company’s consolidated financial position or results of operations as of the date of adoption.

      As permitted by Statement No. 123, the Company previously accounted for share-based payments to employees using APB Opinion No. 25’s intrinsic value method. Accordingly, to the extent additional share-based payments are issued, the adoption of Statement No. 123(R)’s fair value method could have a significant impact on the Company’s results of operations.

Reserves for Loss and Loss Adjustment Expenses

      Reserves for loss and loss adjustment expenses represent the estimated ultimate cost of all reported and unreported losses incurred through the end of the reporting period. The Company does not discount loss and loss adjustment expense reserves. The Company uses a consulting actuary to assist in the evaluation of the adequacy of the reserves for loss and loss adjustment expenses. The reserves for loss and loss adjustment expenses are estimated using individual case-basis valuations, statistical analyses, and estimates based upon experience for unreported claims and their associated loss and loss adjustment expenses. Such estimates may be more or less than the amounts ultimately paid when the claims are settled. The estimates are subject to the effects of trends in loss severity and frequency. Although considerable variability is inherent in these estimates, management believes that the reserves for loss and loss adjustment expenses are adequate. The estimates are continually reviewed and adjusted as necessary as experience develops or new information becomes known. Any adjustments are included in current operations.

      Subrogation recoverables, as well as deductible recoverables from policyholders, are estimated using individual case-basis valuations and aggregate estimates. Deductibles that are recoverable from policyholders, and other recoverables from state funds, decrease the liability for loss and loss adjustment expenses.

Reinsurance

      Reinsurance premiums, losses, and allocated loss adjustment expenses are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts.

F-40

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

      Amounts recoverable from reinsurers include balances currently owed to the Company for losses and allocated loss adjustment expenses that have been paid to policyholders, as well as amounts that are currently reserved for and will be recoverable once the related expense has been paid.

      Upon management’s determination that an amount due from a reinsurer is uncollectible due to the reinsurer’s insolvency, or other matters, the amount is written off.

      Ceding commissions are earned from certain reinsurance companies and are intended to reimburse the Company for costs related to acquiring policies. Ceding commission income is recognized over the effective period of the related insurance policies in proportion to premium revenue earned and is reflected as a reduction in underwriting and other operating costs.

      Contingent commissions are earned from certain reinsurance companies based on the financial results of the applicable risks underwritten by the Company. Contingent commission revenue on reinsurance contracts is recognized during the related reinsurance treaty period and is based on the same assumptions used for recording loss and allocated loss adjustment expenses. These commissions are reflected as a reduction in underwriting and other operating costs and are adjusted as necessary as experience develops or new information becomes known. Any such adjustments are included in current operations.

Income Taxes

      The Company accounts for income taxes using the liability method. The provision for income taxes has two components, amounts currently payable or receivable and deferred amounts. Deferred income tax assets and liabilities are recognized for the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

      The Company considers deferred tax assets to be recoverable if it is probable that the related tax losses can be offset by future taxable income. The Company includes future operating income, reversal of existing temporary differences, and tax planning strategies available in this assessment. To the extent the deferred tax assets exceed the amount expected to be recovered in future years, the Company records a valuation allowance for the amount determined unrecoverable. The Company has not recorded a valuation allowance, since the recorded deferred tax asset is expected to be fully realized.

2. Reinsurance

      The Company cedes certain premiums and losses to various reinsurers under quota share and excess-of-loss treaties. These reinsurance arrangements provide for greater diversification of business, allow management to control exposure to potential losses arising from large risks, and provide additional capacity for growth. Ceded reinsurance contracts do not relieve the Company from its obligations to policyholders. The Company remains liable to its policyholders for the portion reinsured to the extent that any reinsurer does not meet the obligations assumed under the reinsurance agreements. To minimize its exposure to significant losses from reinsurer insolvencies, the Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar

F-41

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

geographic regions, activities, or economic characteristics of the reinsurers. The effect of reinsurance on premiums written and earned in the three months ended March 31, 2005 and 2004 was as follows:

	Three Months Ended						Three Months Ended
	March 31, 2005						March 31, 2004
	Written			Earned			Written			Earned
				(In thousands)
Direct	$	71,575		$	66,752		$	68,992		$	57,205
Ceded		(4,835	)		(4,835	)		(4,893	)		(4,893	)
Net premiums	$	66,740		$	61,917		$	64,099		$	52,312

      The amounts recoverable from reinsurers consist of the following:

		March 31,		December 31,
		2005		2004
		(In thousands)
Unpaid losses recoverable:
	Case basis	$	165,340	$	164,942
	Incurred but not reported		17,919		24,682
Paid losses recoverable			6,439		9,353
Total		$	189,698	$	198,977

      The Company received reinsurance recoveries of approximately $6,583,000 and $9,499,000 for the three months ended March 31, 2005 and 2004, respectively.

      At March 31, 2005, unsecured reinsurance recoverables from reinsurers that exceeded 3% of statutory surplus of the Company’s insurance subsidiaries are shown below (in thousands). The A.M. Best Company rating for the reinsurer is shown parenthetically.

Converium Reinsurance North America (B-)	$	79,964
American Re-Insurance Company(A)		28,007
Odyssey America Reinsurance Corporation(A)		21,447
St. Paul Fire & Marine Insurance Company(A)		12,667
Clearwater Insurance Company(A)		10,981
Scor Reinsurance Company (B++)		8,198
Hannover Re (NR)		3,845
Other reinsurers		24,589
Total	$	189,698

      During 2004, the Company’s largest reinsurer, Converium Reinsurance North America (“CRNA”), was downgraded by A.M Best Company, from A- to B-, as a result of the emergence of significant and previously unrecorded losses. While this downgrade had no immediate impact on the Company’s consolidated financial statements, it caused a decrease in the Company’s A.M. Best Company’s Capital Adequacy Ratio (“BCAR”) due to the increase in the capital charge sustained against the CRNA recoverable. CRNA continues to reimburse the Company for its portion of reinsured paid losses, and no amounts are past due.

      Effective June 30, 2005, the Company entered into a commutation agreement with Converium Reinsurance (North America) Inc. (“Converium”) pursuant to which the Company will receive cash

F-42

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

payments totaling $61,297,000 million in exchange for a full termination and release of three of the five reinsurance agreements between Converium and the Company. The commutation agreement provides that all liabilities of the Company reinsured with Converium under these three reinsurance agreements revert back to the Company in exchange for these cash payments. These three reinsurance agreements have been terminated, and Converium and the Company have fully released each other from all liabilities under or relating to these three reinsurance agreements. As a result of the termination of the three reinsurance agreements the Company recognized a pretax loss of $6,653,000 million in June 2005. Converium remains obligated to the Company under the remaining two reinsurance agreements. As of June 30, 2005, the amount recoverable from Converium under these two agreements was $6,860,000 million.

3. Income Taxes

      Income tax expense from operations is different from the amount computed by applying the U.S. federal income tax statutory rate of 35% to income before income taxes as follows:

	Three Months
	Ended March 31,
	2005			2004
	(In thousands)
Income tax computed at federal statutory tax rate	$	1,521		$	1,361
Tax-exempt interest, net		(472	)		(434	)
State income tax		138			80
Dividends received deduction		(53	)		(27	)
Other		(26	)		17
	$	1,108		$	997

F-43

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

4. Loss and Loss Adjustment Expenses

      The following table provides a reconciliation of the beginning and ending reserve balances, net of related amounts recoverable from reinsurers, for the three months ended March 31, 2005 and 2004:

		Three Months Ended
		March 31,
		2005			2004
		(In thousands)
Reserves for loss and loss adjustment expenses (“LAE”), net of related amounts recoverable from reinsurers, at beginning of year		$	243,256		$	183,001
Add:
	Provision for loss and LAE for claims occurring in the current year, net of reinsurance		43,189			35,078
	Change in estimated loss and LAE for claims occurring in prior years, net of reinsurance		2,729			2,397
			45,918			37,475
Deduct loss and LAE payments for claims, net of reinsurance, occurring during:
Current year			(2,062	)		(1,904	)
Prior years			(27,817	)		(24,760	)
			(29,879	)		(26,664	)
Reserves for loss and LAE, net of related amounts recoverable from reinsurers, at end of year			259,295			193,812
Amounts recoverable from reinsurers on unpaid loss and LAE			183,259			184,635
Reserves for loss and LAE		$	442,554		$	378,447

5. Stock Options

      A summary of the Company’s stock option plan as of March 31, 2005 and December 31, 2004, and changes during each of the periods then ended is as follows:

	Three Months Ended				Year Ended December 31,
	March 31, 2005				2004
			Weighted-					Weighted-
			Average					Average
			Exercise					Exercise
	Shares		Price		Shares			Price
Outstanding at the beginning of the period		1,447,049	$	3.01		1,450,049		$	3.01
Granted		—		3.64		12,000			3.64
Exercised		—		—		—			—
Canceled, forfeited, or expired		—		—		(15,000	)		5.00
Outstanding at the end of the year		1,447,049		3.00		1,447,049			3.00
Exercisable at the end of the period		1,447,049		3.00		1,447,049			3.00

      The reported net income, basic earnings per share, and diluted earnings per share would not be impacted had the Company accounted for the outstanding stock options based on their fair value.

      On June 20, 2005, the Company entered into agreements with the holders of all its outstanding options to purchase shares of the Company’s common stock pursuant to which all outstanding options

F-44

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

of the Company were cancelled in exchange for $0.001 for each share of common stock issuable upon exercise of the options. Options to acquire a total of 1,459,049 shares of the Company’s common stock were cancelled in exchange for aggregate cash payments of $1,459. Additionally, the Company’s Stock Option and Restricted Stock Purchase Plan, under which these options were authorized, was terminated.

6. Earnings Per Share

      The calculation of basic and diluted EPS for the three months ended March 31, 2005 and 2004 are presented below.

			Three Months Ended
			March 31,
			2005			2004
			(In thousands, except
			per share amounts)
Basic EPS:
	Net income		$	3,237		$	2,891
	Preferred stock dividends			(2,340	)		(2,645	)
	Income (loss) available to common shareholders		$	897		$	246
	Amount allocable to common shareholders(1)			75.8%			65.5%
	Income (loss) allocable to common shareholders		$	680		$	$161
	Weighted-average common shares outstanding			21,582			12,967
	Basic earnings (loss) per share		$	0.03		$	0.01
Diluted EPS:
	Income (loss) allocable to common shareholders		$	680		$	161
	Dividends on participating securities			—	(2)		—	(2)
	Income (loss) allocable to common shareholders after assumed conversions		$	680		$	161
	Weighted average common shares outstanding			21,582			12,967
	Diluted effect:
		Stock options		—	(2)		—	(2)
		Warrants		—			8,615
		Conversion of participating securities		—	(2)		—	(2)
	Weighted average diluted shares outstanding			21,582			21,582
	Diluted earnings (loss) per share		$	0.03		$	0.01

(1)

Computed under the two-class method by dividing weighted-average common shares outstanding (12,967,104 and 21,581,874 at March 31, 2004 and March 31, 2005, respectively) by the sum of weighted-average common shares outstanding and shares issuable upon conversion of all convertible participating securities, calculated on the if-converted method (such additional shares totaled 6,903,141 at March 31, 2004 and March 31, 2005).

(2)

Not applicable as impact is antidilutive.

F-45

AMERISAFE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

7. Other Comprehensive Income

		Pre Tax						Net-of-Tax
		Amount			Tax Expense			Amount
		(In thousands)
March 31, 2005
Unrealized gain on securities:
	Unrealized gain on available-for-sale securities	$	504		$	177		$	327
	Less amortization of differences between fair value and amortized cost for fixed maturity security transfer		(601	)		(211	)		(390	)
	Less reclassification adjustment for gains realized in net income		(431	)		(151	)		(280	)
Net unrealized loss			(528	)		(185	)		(343	)
Other comprehensive income		$	(528	)	$	(185	)	$	(343	)
March 31, 2004
Unrealized gain on securities:
	Unrealized gain on available-for-sale securities	$	764		$	267		$	497
	Less amortization of differences between fair value and amortized cost for fixed maturity security transfer		(347	)		(121	)		(226	)
	Less reclassification adjustment for gains realized in net income		(764	)		(267	)		(497	)
Net unrealized loss			(347	)		(121	)		(226	)
Other comprehensive income		$	(347	)	$	(121	)	$	(226	)

F-46

Shares

AMERISAFE, Inc.

Common Stock

PROSPECTUS

       Until                     , 2005, which is the 25th day after the date of this prospectus, all dealers that effect transactions in our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

Friedman Billings Ramsey

Keefe, Bruyette & Woods

William Blair & Company

The date of this prospectus is                     , 2005.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

      The table below sets forth the costs and expenses in connection with the distribution of the securities being registered. All amounts are estimated except the SEC registration fee. All costs and expenses are payable by AMERISAFE.

SEC Registration Fee		$	10,829
NASD Filing Fees			9,700
Nasdaq Listing Fee			*
Legal Fees and Expenses			*
Accounting Fees and Expenses			*
Transfer Agent and Registrar Fees			*
Printing and Engraving Expenses			*
Blue Sky Fees and Expenses			*
Miscellaneous Expenses			*
	Total	$	*

* To be provided by amendment.

Item 14. Indemnification of Directors and Officers.

      Our articles of incorporation provide that no director or officer of ours will be personally liable to us or our shareholders for or with respect to any acts or omissions in the performance of such person’s duties as a director or officer to the fullest extent permitted by the Texas Business Corporation Act (the “TBCA”) or any other applicable law.

      Under Article 2.02-1 of the TBCA, subject to the procedures and limitations stated therein, we may indemnify any person who was, is or is threatened to be made a named defendant or respondent in a proceeding because the person is or was a director, officer, employee or agent of ours against judgments, penalties (including excise and similar taxes), fines, settlements, and reasonable expenses (including court costs and attorneys’ fees) actually incurred by the person in connection with the proceeding if it is determined that the person seeking indemnification:

• acted in good faith;

• reasonably believed that his or her conduct was in or at least not opposed to our best interests; and

• in the case of a criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful.

      We are required by Article 2.02-1 of the TBCA to indemnify a director or officer against reasonable expenses (including court costs and attorneys’ fees) incurred by the director or officer in connection with a proceeding in which the director or officer is a named defendant or respondent because the director or officer is or was in that position if the director or officer has been wholly successful, on the merits or otherwise, in the defense of the proceeding. The TBCA prohibits us from indemnifying a director or officer in respect of a proceeding in which the person is found liable to us or on the basis that a personal benefit was improperly received by him or her, other than for reasonable expenses (including court costs and attorneys’ fees) actually incurred by him or her in connection with the proceeding; provided, that the TBCA further prohibits us from indemnifying a director or officer in

II-1

respect of any such proceeding in which the person is found liable for willful or intentional misconduct in the performance of his or her duties.

      Under Article 2.02-1(J) of the TBCA, a court of competent jurisdiction may order us to indemnify a director or officer if the court determines that the director or officer is fairly and reasonably entitled to indemnification in view of all the relevant circumstances; however, if the director or officer is found liable to us or is found liable on the basis that a personal benefit was improperly received by him or her, the indemnification will be limited to reasonable expenses (including court costs and attorneys’ fees) actually incurred by him or her in connection with the proceeding.

      Article 2.02-1 of the TBCA states that rights of indemnification to which a director may be entitled under any provision contained in the articles of incorporation, the bylaws, a resolution of shareholders or directors, an agreement, or otherwise are valid only to the extent they are consistent with Article 2.02-1 of the TBCA as limited by our articles of incorporation, if such a limitation exists.

      Article 2.02-1 of the TBCA permits us to purchase and maintain insurance or to make other arrangements on behalf of any person who is or was a director, officer, employee or agent of ours against any liability asserted against and incurred by that person in any such capacity, or arising out of that person’s status as such a person, whether or not we would otherwise have the power to indemnify the person against that liability under Article 2.02-1 of the TBCA.

      Article 2.41 of the TBCA provides, among other things, that a director who votes for or assents to an unlawful distribution will be liable to us for such actions. A director who dissented at the time may avoid liability by causing his or her dissent to such actions to be entered in the minutes of the meeting of our board of directors or by filing his or her written dissent to such actions with the person acting as the secretary of the meeting before adjournment or immediately afterwards by registered mail.

      Our articles of incorporation and bylaws provide that we must indemnify our directors and officers to the fullest extent permitted by the TBCA, the Texas Miscellaneous Corporation Act or any other applicable law. Our bylaws further provide that we must pay or reimburse reasonable expenses incurred by one of our directors or officers who was, is or is threatened to be made a named defendant or respondent in a proceeding to the maximum extent permitted under the TBCA. We believe that these provisions are necessary to attract and retain qualified persons as officers and directors.

      We have entered into indemnification agreements with our directors and officers that provide for indemnification to the fullest extent permitted by applicable law.

      The indemnification provisions contained in our articles of incorporation and bylaws will not be exclusive of any other right that a person may have or acquire under any statute, bylaw, resolution of shareholders or directors or otherwise. In addition, we will maintain insurance on behalf of our directors and officers insuring them against any liability asserted against them in their capacities as directors or officers or arising out of such status.

Item 15. Recent Sales of Unregistered Securities.

      Between August 13, 2004 and September 2, 2004, we issued 8,614,760 shares of our common stock (after giving effect to the           -for-          reverse stock split effected in                     2005) for an aggregate purchase price of $86,148 in connection with the exercise of warrants issued in 1997 and 1998 to certain of our common shareholders. The issuance of these securities was exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof as transactions by an issuer not involving any public offering. The recipients of the securities represented their intention to acquire the securities for investment only and not with a view towards the resale or other distribution thereof and appropriate legends were affixed to the share certificates issued in such transactions.

II-2

Item 16. Exhibits and Financial Statement Schedules.

(a)     Exhibits.

Exhibit
No.			Description of Exhibit
	1	.1	Form of Underwriting Agreement*
	3	.1	Form of Restated Articles of Incorporation of the Registrant*
	3	.2	Form of Restated Bylaws of the Registrant
	4	.1	Amended and Restated Registration Rights Agreement, dated March 18, 1998, by and among AMERISAFE and the shareholders of AMERISAFE named therein
	5	.1	Form of opinion of Jones Day
	10	.1	Executive Agreement, dated January 1, 2004, by and between the Registrant and Mark R. Anderson
	10	.2	Employment Agreement, dated January 1, 2004, by and between the Registrant and C. Allen Bradley, Jr., as amended by Amendment No. 1 to Employment Agreement, dated June 17, 2005
	10	.3	Employment Agreement, dated January 1, 2004, by and between the Registrant and Geoffrey R. Banta, as amended by Amendment No. 1 to Employment Agreement, dated June 17, 2005
	10	.4	Employment Agreement, dated January 1, 2004, by and between the Registrant and Arthur L. Hunt, as amended by Amendment No. 1 to Employment Agreement, dated June 17, 2005
	10	.5	Employment Agreement, dated January 1, 2004, by and between the Registrant and Craig P. Leach, as amended by Amendment No. 1 to Employment Agreement, dated June 17, 2005
	10	.6	Form of AMERISAFE, Inc. 2005 Equity Incentive Plan
	10	.7	Form of Incentive Stock Option Award Agreement for the AMERISAFE, Inc. 2005 Equity Incentive Plan
	10	.8	Form of Non-Qualified Stock Option Award Agreement for the AMERISAFE, Inc. 2005 Equity Incentive Plan
	10	.9	Form of AMERISAFE, Inc. 2005 Non-Employee Director Restricted Stock Plan
	10	.10	Form of Restricted Stock Award Agreement for the AMERISAFE, Inc. 2005 Non-Employee Director Restricted Stock Plan
	10	.11	Form of Director and Officer Indemnification Agreement
	10	.12	First Casualty Excess of Loss Reinsurance Contract, effective as of January 1, 2005, issued to the Registrant by the reinsurers named therein
	10	.13	Second Casualty Excess of Loss Reinsurance Contract, effective as of January 1, 2005, issued to the Registrant by the reinsurers named therein
	10	.14	Workers’ Compensation Catastrophe Excess of Loss Reinsurance Contract, effective as of January 1, 2005, issued to the Registrant by the reinsurers named therein
	10	.15	Commutation and Release Agreement, effective as of June 30, 2005, between AMERISAFE, Inc. and Converium Reinsurance (North America) Inc.
	21	.1	Subsidiaries of the Registrant
	23	.1	Consent of Jones Day (included as part of its opinion filed as Exhibit 5.1 hereto)
	23	.2	Consent of Ernst & Young LLP
	24	.1	Power of Attorney
	99	.1	Consent of Jared A. Morris to be named as a director
	99	.2	Consent of           to be named as a director*
	99	.3	Consent of           to be named as a director*

* To be filed by amendment

II-3

Registrant has not filed certain long-term debt instruments not being registered with the SEC where the total amount of indebtedness authorized under any such instrument does not exceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis. Registrant agrees and undertakes to furnish a copy of any such instruments to the SEC upon its request.

(b)     Financial Statement Schedules.

The following financial statement schedules are included as pages S-1 to S-3 to this registration statement:

Schedule II. Condensed Financial Information of Registrant

Schedule VI. Supplemental Information Concerning Property-Casualty Insurance Operations

      Pursuant to Rule 7-05 of Regulation S-X, other financial statement schedules have been omitted because the information to be set forth therein is included in the notes to the audited financial statements included in the prospectus forming a part of this registration statement.

Item 17. Undertakings.

      The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

      Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Securities Act”) may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

      The undersigned registrant hereby undertakes that:

      (1)     For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

      (2)     For purposes of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-4

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of DeRidder, State of Louisiana, on August 3, 2005.

AMERISAFE, Inc.

By:  /s/ C. Allen Bradley, Jr.

C. Allen Bradley, Jr.

President and Chief Executive Officer

      Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on August 3, 2005.

Signature		Title
/s/ Mark R. Anderson Mark R. Anderson		Chairman and Director
/s/ C. Allen Bradley, Jr. C. Allen Bradley, Jr.		President, Chief Executive Officer and Director (Principal Executive Officer)
/s/ Geoffrey R. Banta Geoffrey R. Banta		Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
* Sean M. Traynor		Director
* Paul B. Queally		Director
Arthur L. Hunt, by signing his name hereto, does hereby sign and execute this registration statement on behalf of the above-named directors and officers of AMERISAFE, Inc. on this 3rd day of August, 2005, pursuant to powers of attorney executed on behalf of such director and/or officer, and contemporaneously filed with the Securities and Exchange Commission.
*By:	/s/ Arthur L. Hunt Arthur L. Hunt, Attorney-in-Fact

II-5

Schedule II.     Condensed Financial Information of Registrant

AMERISAFE, INC.

CONDENSED BALANCE SHEETS

			December 31,
			2004			2003
			(In thousands, except
			share data)
Assets
Investments:
	Equity securities — available-for-sale, at fair value		$	1,090		$	310
	Investment in subsidiaries			128,014			114,925
Total invested assets				129,104			115,235
Cash and cash equivalents				4,066			10,172
Deferred income taxes				359			63
Property and equipment, net				3,275			15
Other assets				1,216			2,555
			$	138,020		$	128,040
Liabilities, redeemable preferred stock and shareholders’ deficit
Liabilities:
	Accounts payable and other liabilities		$	1,946		$	278
	Note payable to subsidiaries			10,930			5,680
	Subordinated debt securities and note payable			36,090			16,310
Total liabilities				48,966			22,268
Redeemable preferred stock:
	Series A nonconvertible — $0.01 par value, $100 per share redemption value:
		Authorized shares — 1,500,000; issued and outstanding shares — 819,161 in 2004 and 764,243 in 2003		81,916			76,424
	Series C convertible — $0.01 par value, $100 per share redemption value:
		Authorized shares — 300,000; issued and outstanding shares — 300,000 in 2004 and 2003		30,000			30,000
	Series D convertible — $0.01 par value, $100 per share redemption value:
		Authorized shares — 200,000; issued and outstanding shares — 200,000 in 2004 and 2003		20,000			20,000
				131,916			126,424
Shareholders’ deficit:				(42,862	)		(20,652	)
			$	138,020		$	128,040

S-1

Schedule II.     Condensed Financial Information of Registrant—(continued)

AMERISAFE, INC.

CONDENSED STATEMENTS OF INCOME

		Year Ended December 31,
		2004		2003		2002
		(In thousands)
Revenues:
	Net investment income	$	281	$	4	$	721
	Loss on sale of asset		—		—		(80	)
	Fee income from affiliates and subsidiaries		3,661		1,791		2,746
Total revenues			3,942		1,795		3,387
Expenses:
	Underwriting and other operating costs		1,831		1,276		2,035
	Interest expense		1,757		264		377
Total expenses			3,588		1,540		2,412
Income before income taxes and equity in earnings of subsidiaries			354		255		975
Income tax expense			293		246		285
Income before equity in net income of subsidiaries			61		9		690
Equity in net income of subsidiaries			10,496		8,585		4,491
Net income		$	10,557	$	8,594	$	5,181

AMERISAFE, INC.

CONDENSED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2004			2003			2002
	(In thousands)
Operating Activities
Net cash provided by operating activities	$	8,351		$	1,066		$	454
Investing Activities
Purchases of investments		(780	)		(310	)		—
Purchases of property and equipment		(3,589	)		—			—
Capital contribution to subsidiary		(2,710	)		—			—
Net cash used in investing activities		(7,079	)		(310	)		—
Financing Activities
Proceeds from issuance of subordinated debt securities		25,780			10,310			—
Principal payments on note payable		(6,000	)		(2,000	)		(1,000	)
Warrants exercised		86			—			—
Redemption of outstanding Series E preferred stock		(27,244	)		—			—
Net cash used in financing activities		(7,378	)		8,310			(1,000	)
Change in cash and cash equivalents		(6,106	)		9,066			(546	)
Cash and cash equivalents at beginning of year		10,172			1,106			1,652
Cash and cash equivalents at end of year	$	4,066		$	10,172		$	1,106

S-2

Schedule VI.     Supplemental Information Concerning Property-Casualty Insurance Operation

AMERISAFE, INC. AND SUBSIDIARIES

			Reserves for										Loss
			Unpaid								Loss and		and		Amortization
	Deferred		Loss and								LAE		LAE		of Deferred			Paid Claims
	Policy		Loss						Net		related to		related		Policy			and Claim		Net
	Acquisition		Adjustment		Unearned		Earned		Investment		Current		to Prior		Acquisition			Adjustment		Premiums
	Costs		Expenses		Premiums		Premiums		Income		Period		Periods		Costs			Expenses		Written
	(In thousands)
2004	$	12,044	$	432,880	$	111,741	$	234,733	$	12,217	$	160,773	$	13,413	$	(25,969	)	$	113,931	$	243,011
2003		11,820		377,559		103,462		179,847		10,106		126,977		2,273		(20,076	)		99,157		195,990
2002		9,505		346,542		87,319		163,257		9,419		117,212		3,850		(20,465	)		87,174		158,530

S-3 EX-3.2 2 d27260exv3w2.txt FORM OF RESTATED BYLAWS Exhibit 3.2 ================================================================================ BYLAWS OF AMERISAFE, INC. AS AMENDED AND RESTATED ON ___________ ___, 2005 ================================================================================ TABLE OF CONTENTS

PAGE ARTICLE I OFFICES Section 1.1 Offices........................................................... 1 ARTICLE II MEETINGS OF SHAREHOLDERS Section 2.1 Time and Place of Meetings........................................ 1 Section 2.2 Annual Meetings................................................... 1 Section 2.3 Special Meetings.................................................. 1 Section 2.4 Notice of Meetings................................................ 1 Section 2.5 Record Date....................................................... 2 Section 2.6 Shareholder List.................................................. 2 Section 2.7 Quorum............................................................ 2 Section 2.8 Voting............................................................ 3 Section 2.9 Method of Voting.................................................. 3 Section 2.10 Inspectors of Election............................................ 3 Section 2.11 Procedure......................................................... 3 ARTICLE III DIRECTORS Section 3.1 Responsibilities.................................................. 5 Section 3.2 Number; Election; Qualification; Term............................. 5 Section 3.3 Vacancies; Increases.............................................. 5 Section 3.4 Removal........................................................... 6 Section 3.5 Place of Meetings................................................. 6 Section 3.6 Regular Meetings.................................................. 6 Section 3.7 Special Meetings.................................................. 6 Section 3.8 Purpose of Meetings............................................... 6 Section 3.9 Quorum; Majority Vote............................................. 6 Section 3.10 Procedure......................................................... 6 Section 3.11 Presumption of Assent............................................. 6 Section 3.12 Compensation...................................................... 7 Section 3.13 Committees........................................................ 7 Section 3.14 Committee Procedures.............................................. 7

-i- TABLE OF CONTENTS Continued)

PAGE Section 3.15 Action Without Meeting............................................ 7 ARTICLE IV NOTICES Section 4.1 Method............................................................ 7 Section 4.2 Waiver............................................................ 8 ARTICLE V OFFICERS Section 5.1 Number............................................................ 8 Section 5.2 Term; Vacancies................................................... 8 Section 5.3 Removal........................................................... 8 Section 5.4 Compensation...................................................... 9 Section 5.5 Duties............................................................ 9 ARTICLE VI INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 6.1 Indemnification................................................... 9 ARTICLE VII CERTIFICATES REPRESENTING SHARES Section 7.1 Certificates...................................................... 9 Section 7.2 Lost, Stolen or Destroyed Certificates............................ 10 Section 7.3 Transfer of Shares................................................ 10 Section 7.4 Registered Shareholders........................................... 10 Section 7.5 Regulations....................................................... 10 Section 7.6 Legends........................................................... 10 ARTICLE VIII GENERAL PROVISIONS Section 8.1 Distributions and Share Dividends................................. 11 Section 8.2 Checks............................................................ 11 Section 8.3 Fiscal Year....................................................... 11 Section 8.4 Seal.............................................................. 11 Section 8.5 Resignation....................................................... 11 Section 8.6 Telephone and Similar Meetings.................................... 11 Section 8.7 Amendment of Bylaws............................................... 11

-ii- BYLAWS OF AMERISAFE, INC. ARTICLE I OFFICES Section 1.1 Offices: The Corporation may have offices at such places, within or without the State of Texas, as the Board of Directors may from time to time determine, or as the business of the Corporation may require. ARTICLE II MEETINGS OF SHAREHOLDERS Section 2.1 Time and Place of Meetings: All meetings of the shareholders shall be held at such time and place, within or without the State of Texas, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2.2 Annual Meetings: Annual meetings of shareholders shall be held on such date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. At the annual meeting, the shareholders entitled to vote thereat shall elect a Board of Directors and transact such other business as may properly be brought before the meeting. Section 2.3 Special Meetings: Special meetings of the shareholders may be called by the Chairman of the Board or the President and shall be called by the Secretary upon written request, stating the purpose or purposes therefor, by a majority of the whole Board of Directors or by the holders of at least 25% of the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors of the Corporation (the "Voting Shares"). Business conducted at any special meeting shall be confined to the purpose or purposes described in the notice thereof. Section 2.4 Notice of Meetings: Written or printed notice stating the place, day and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than 10 calendar days (20 calendar days in the case of a meeting to approve a plan of merger or exchange) nor more than 60 calendar days before the date of the meeting, by personal delivery, by mail or, with consent of the shareholder, by electronic transmission, by or at the direction of the officer or person calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at his, her or its address as it appears on the share transfer records of the Corporation, with postage thereon prepaid. If electronically transmitted, such notice shall be deemed given when transmitted to a facsimile number or electronic mail address provided by the shareholder for the purpose of receiving notice. 1 Section 2.5 Record Date: For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive a distribution by the Corporation (other than a distribution involving a purchase or redemption by the Corporation of any of its own shares) or a share dividend or in order to make a determination of shareholders for any other purpose, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than 60 calendar days, and, in the case of a meeting of shareholders, not less than 10 calendar days, prior to the date on which the particular action requiring such determination of shareholders is to be taken. If no record date is fixed for the determination of shareholders entitled to notice of or vote at a meeting of shareholders, or shareholders entitled to receive a distribution by the Corporation (other than a distribution involving a purchase or redemption by the Corporation of any of its own shares) or a share dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such distribution or share dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section 2.5, such determination shall apply to any adjournment thereof. Section 2.6 Shareholder List: The officer or agent having charge of the share transfer records for shares of the Corporation shall make, at least 10 calendar days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period of 10 calendar days prior to such meeting, shall be kept on file at the registered office or principal place of business of the Corporation and shall be subject to inspection by any shareholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. The original share transfer records shall be prima facie evidence as to who are the shareholders entitled to examine such list or transfer records or to vote at any meeting of shareholders. Section 2.7 Quorum: A quorum shall be present at a meeting of shareholders if the holder or holders of a majority of the combined voting power of the shares entitled to vote at the meeting are present in person, represented by a duly authorized representative in the case of a corporation or other legal entity or represented by proxy, unless otherwise provided in the Articles of Incorporation. Unless otherwise provided in the Articles of Incorporation, once a quorum is present at a duly constituted meeting of shareholders, the shareholders present or represented at the meeting may conduct such business as may be properly brought before the meeting until it is adjourned, and the subsequent withdrawal from the meeting of any shareholder present or represented shall not affect the presence of a quorum at the meeting. Unless otherwise provided in the Articles of Incorporation, the shareholders entitled to vote and present or represented at a meeting of shareholders at which a quorum is not present may adjourn the meeting until such time and to such place as may be determined by a vote of the holders of a majority of the shares represented at that meeting. At such adjourned meeting at which a quorum shall be present or represented, any business may be conducted which might have been conducted at the meeting as originally notified. 2 Section 2.8 Voting: With respect to any matter, other than the election of directors or a matter for which the affirmative vote of the holders of a specified portion of the shares is required by the Articles of Incorporation or applicable law, the affirmative vote of the holders of a majority of the combined voting power of the shares entitled to vote on that matter and represented at a meeting of shareholders at which a quorum is present shall be the act of the shareholders. Unless otherwise provided in the Articles of Incorporation, directors shall be elected by a plurality of the votes cast by the holders of shares entitled to vote in the election of directors at a meeting of shareholders at which a quorum is present. Section 2.9 Method of Voting: Each outstanding share shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders, unless the Articles of Incorporation provide for more or less than one vote per share or limit or deny voting rights to the holders of the shares of any class or series or as otherwise provided by applicable law. A shareholder may vote in person, by duly authorized representative in the case of a corporation or other legal entity or by proxy executed in writing by the shareholder or by his, her or its duly authorized attorney-in-fact. No proxy shall be valid after 11 months from the date of its execution unless otherwise provided in the proxy. Each proxy shall be revocable unless the proxy form conspicuously states that the proxy is irrevocable and the proxy is coupled with an interest. Each proxy shall be filed with the Secretary of the Corporation prior to the time of the meeting. Section 2.10 Inspectors of Election: The chairman of each meeting of shareholders shall appoint one or more persons to act as inspectors of election. The inspectors of election shall report to the meeting the number of shares of each class and series of stock, and of all classes, represented either in person or by proxy. The inspectors of elections shall oversee the vote of the shareholders for the election of directors and for any other matters that are put to a vote of shareholders at the meeting; receive a ballot evidencing votes cast by the proxy committee of the Board of Directors; judge the qualifications of shareholders voting; collect, count, and report the results of ballots cast by any shareholders voting in person; and perform such other duties as may be required by the chairman of the meeting or the shareholders. Section 2.11 Procedure: (a) The Chairman of the Board of Directors, or such other officer of the Corporation designated by the Board of Directors, will call meetings of the shareholders to order and will act as presiding officer at the meetings. Unless otherwise determined by the Board of Directors prior to the meeting, the presiding officer of the meeting of the shareholders will also determine the order of business and have the authority in his or her sole discretion to regulate the conduct of any such meeting, including without limitation by imposing restrictions on the persons (other than shareholders of the Corporation or their duly appointed proxies) who may attend such shareholders' meeting, by ascertaining whether any shareholder or his, her or its proxy may be excluded from any meeting of the shareholders based upon any determination by the presiding officer, in his or her sole discretion, that any such person has unduly disrupted or is likely to disrupt the proceedings , and by determining the circumstances in which any person may make a statement or ask questions at any meeting of the shareholders. (b) At an annual meeting of the shareholders, only such business will be conducted or considered as is properly brought before the meeting. To be properly brought before an annual 3 meeting, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors in accordance with Section 2.4, (ii) otherwise properly brought before the meeting by the presiding officer or by or at the direction of a majority of the Board of Directors, or (iii) otherwise properly requested to be brought before the meeting by a shareholder in accordance with Section 2.11(c). (c) For business, including nominations of directors, to be properly requested by a shareholder for consideration at an annual meeting, the shareholder must (i) be a shareholder of record of the Corporation at the time of the giving of the notice for such annual meeting provided for in these Bylaws, (ii) be entitled to vote at such meeting, and (iii) have given timely notice in writing to the Secretary. To be timely, a shareholder's notice (except for a shareholder's notice recommending a director candidate) must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 60 nor more than 90 calendar days prior to the annual meeting; provided, however, that in the event public announcement of the date of the annual meeting is not made at least 75 calendar days prior to the date of the annual meeting, notice by the shareholder to be timely must be so received not later than the close of business on the 10th calendar day following the day on which public announcement is first made of the date of the annual meeting. A shareholder's notice recommending a director candidate will be timely if it is received not less than 60 nor more than 90 calendar days before the anniversary of the date on which the Corporation first mailed its proxy materials for the prior year's annual meeting of shareholders. A shareholder's notice to the Secretary must set forth as to each matter the shareholder proposes to bring before the annual meeting (i) a description in reasonable detail of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the Corporation's books, of the shareholder proposing such business and the beneficial owner, if any, on whose behalf the proposal is made, (iii) the class and number of shares of the Corporation that are owned beneficially and of record by the shareholder proposing such business and by the beneficial owner, if any, on whose behalf the proposal is made, (iv) any material interest of such shareholder proposing such business and the beneficial owner, if any, on whose behalf the proposal is made in such business, and (v) if recommending a director candidate, all information relating to such person that is required to be disclosed in solicitations for proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), including such person's written consent to being named in the proxy statement as a nominee and to serving as a director, if elected. Notwithstanding the foregoing provisions of this Section 2.11(c), a shareholder must also comply with all applicable requirements of the Exchange Act, and the rules and regulations thereunder with respect to the matters set forth in this Section 2.11(c). For purposes of this Section 2.11(c), "PUBLIC ANNOUNCEMENT" means disclosure in a press release reported by a national news service or in a document filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act or furnished to shareholders. Nothing in this Section 2.11(c) will be deemed to affect any rights of shareholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act. (d) At a special meeting of shareholders, only such business may be conducted or considered as is properly brought before the meeting. To be properly brought before a special 4 meeting, business must be specified in the notice of the meeting (or any supplement thereto) given in accordance with Section 2.4. (e) The determination of whether any business sought to be brought before any annual or special meeting of the shareholders is properly brought before such meeting in accordance with this Section 2.11 will be made by the presiding officer of such meeting. If the presiding officer determines that any business is not properly brought before such meeting, he or she will so declare to the meeting and any such business will not be conducted or considered. ARTICLE III DIRECTORS Section 3.1 Responsibilities: The powers of the Corporation shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, its Board of Directors. Section 3.2 Number; Election; Qualification; Term: The number of directors shall be fixed from time to time by the Board of Directors; provided, however, that no decrease in the number of directors shall have the effect of shortening the term of any incumbent director. The directors shall be elected at the annual meeting of the shareholders, as provided in this Section 3.2, except as otherwise provided in Section 3.3. The directors shall be classified, with respect to the time for which they severally hold office, into three classes, each class to be as nearly equal in number as possible, as determined by the Board of Directors, one class to hold office initially for a term expiring at the annual meeting of shareholders to be held in 2006, another class to hold office initially for a term expiring at the annual meeting of shareholders to be held in 2007, and another class to hold office initially for a term expiring at the annual meeting of shareholders to be held in 2008, with members of each class to hold office until their successors are elected and qualified. At each annual meeting of the shareholders of the Corporation, the successors to the class of directors whose term expires at that meeting shall be elected by the holders of shares entitled to vote in the election of directors to hold office for a term expiring at the annual meeting of shareholders held in the third year following the year of their election. Unless removed in accordance with the Articles of Incorporation or Section 3.4, each director elected shall hold office for the term for which he or she is elected and until his or her successor shall have been elected and qualified or until his or her earlier death, retirement, resignation or removal for cause in accordance with the provisions of these Bylaws. Directors need not be residents of the State of Texas or shareholders of the Corporation, but they must have been nominated in accordance with the procedures set forth in these Bylaws in order to be eligible for election as directors. Section 3.3 Vacancies; Increases: Any vacancy occurring in the Board of Directors (by death, retirement, resignation, removal or otherwise) may be filled by election at an annual or special meeting of shareholders called for that purpose, or by the affirmative vote of a majority of the remaining directors then in office, though less than a quorum. Each director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office. Any directorship to be filled by reason of an increase in the number of directors may be filled by election at an annual or special meeting of shareholders called for that purpose or by the Board of Directors for a term of office continuing only until the next election of one or more directors 5 by the shareholders; provided, however, that the Board of Directors may not fill more than two such directorships during the period between any two successive annual meetings of shareholders. Section 3.4 Removal: At any meeting of shareholders called expressly for that purpose, any director may be removed, but only for cause, by the affirmative vote of the holder or holders of two-thirds of the combined voting power of the Voting Shares. Section 3.5 Place of Meetings: Meetings of the Board of Directors, regular or special, may be held either within or without the State of Texas. Section 3.6 Regular Meetings: Regular meetings of the Board of Directors may be held at such time and at such place as shall from time to time be determined by the Board of Directors. Regular meetings of the Board of Directors may be held without notice. Section 3.7 Special Meetings: Special meetings of the Board of Directors may be called by the Chairman of the Board or by the President of the Corporation and shall be called by the Secretary on the written request of not less than a majority of the directors then in office. Notice specifying the time and place of special meetings shall be given to each director at least one day before the date of the meeting, either personally or by telephone, mail, telegram or, with consent of the director, electronic transmission. Section 3.8 Purpose of Meetings: Neither the purpose of, nor the business to be transacted at, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. Section 3.9 Quorum; Majority Vote: At all meetings of the Board of Directors, a majority of the number of the directors fixed in the manner provided in these Bylaws shall constitute a quorum for the transaction of business unless a different number is specifically required by the Articles of Incorporation, these Bylaws or applicable law. The act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless the act of a greater number is required by the Articles of Incorporation, these Bylaws or applicable law. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 3.10 Procedure: At meetings of the Board of Directors, business shall be transacted in such order as the Board of Directors may determine from time to time. The Chairman of the Board, if such office has been filled, and, if not or if the Chairman of the Board is absent or otherwise unable to act, a chairman chosen by the Board of Directors from among the directors present, will preside over the meetings of the Board. The Secretary of the Corporation shall act as the secretary of the meetings of the Board of Directors unless the Board of Directors appoints another person to act as secretary of the meeting. The Board of Directors shall keep regular minutes of its proceedings which shall be placed in the minute book of the Corporation. Section 3.11 Presumption of Assent: A director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be 6 presumed to have assented to the action unless his or her dissent shall be entered in the minutes of the meeting or unless he or she shall file a written dissent to such action with the person acting as secretary of the meeting before the adjournment thereof or shall forward any dissent by certified or registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. Section 3.12 Compensation: The Board of Directors shall have authority to fix the compensation, including fees and reimbursement of expenses, paid to directors for attendance at regular or special meetings of the Board of Directors, any committee thereof or for any other services to the Corporation; provided, however, that nothing contained in these Bylaws shall be construed to preclude any director from serving the Corporation in any other capacity or receiving compensation therefor. Section 3.13 Committees: The Board of Directors, by resolution adopted by a majority of the full Board of Directors, may designate from among its members one or more committees, each of which shall be comprised of one or more members, and may designate one or more of its members as alternate members of any committee, who may, subject to any limitations imposed by the Board of Directors, replace absent or disqualified members at any meeting of that committee. Any such committee, to the extent provided in such resolution or in the Articles of Incorporation or these Bylaws, shall have and may exercise all of the authority of the Board of Directors, except as otherwise provided by applicable law. The designation of such committee and the delegation thereto of authority shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility imposed by applicable law. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. Section 3.14 Committee Procedures: Except as may be otherwise provided in a resolution or resolutions adopted by the Board of Directors, a majority of the members of a committee shall constitute a quorum and a majority vote of the members at a meeting at which a quorum is present shall be the act of the committee. A committee shall keep minutes of its proceedings, and shall report its proceedings to the Board of Directors when required or when requested by a director to do so. Section 3.15 Action Without Meeting: Unless otherwise restricted by the Articles of Incorporation or these Bylaws, any action required or permitted to be taken at a meeting of the Board of Directors or any committee may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the members of the Board of Directors or committee, as the case may be. Such consent shall have the same force and effect as a unanimous vote at a meeting. ARTICLE IV NOTICES Section 4.1 Method: Whenever by the Articles of Incorporation, these Bylaws, applicable law or otherwise, notice is required to be given to a director or shareholder, and no 7 provision is made as to how the notice shall be given, it shall not be construed to be personal notice, but any such notice may be given: (a) in writing, (i) by mail, postage prepaid, addressed to the director or shareholder at the last address known by the Corporation for such director or shareholder at the address appearing on the share transfer records of the Corporation, (ii) with consent of the director or shareholder, by electronic transmission or (iii) by telegram, (b) by telephone, or (c) by any other method permitted by law. Any notice required or permitted to be given by mail shall be deemed given at the time when the same is deposited in the United States mail. If electronically transmitted, such notice shall be deemed given when transmitted to a facsimile number or electronic mail address provided by the director or shareholder for the purpose of receiving notice. Section 4.2 Waiver: Whenever by the Articles of Incorporation, these Bylaws or applicable law, any notice is required to be given to a director or shareholder, a waiver thereof in writing, signed by the person or persons entitled to such notice, or in the case of a corporation or other legal entity by its duly authorized representative, whether before or after the time stated therein, shall be equivalent to the giving of such notice. Attendance of a director, committee member or shareholder at a meeting shall constitute a waiver of notice of such meeting, except where such person attends for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the basis that the meeting is not lawfully called or convened. ARTICLE V OFFICERS Section 5.1 Number: The officers of the Corporation shall consist of a President and a Secretary, each of whom shall be elected by the Board of Directors. The Board of Directors may also elect a Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, a Treasurer, a General Counsel, a Controller and one or more Vice Presidents and such other officers as it deems necessary or appropriate. The Board of Directors may appoint, and may empower the Chief Executive Officer to appoint, such Assistant Secretaries, Assistant Treasurers, Assistant Controllers and other officers and agents as the Board of Directors or the Chief Executive Officer shall deem necessary or appropriate in the conduct of the affairs of the Corporation with such designations, titles, seniority, duties and responsibilities as the Board of Directors or the Chief Executive Officer shall deem advisable. Any two or more offices may be held by the same person. Section 5.2 Term; Vacancies: An officer of the Corporation shall hold office until his or her successor is elected and qualified, until his or her death or until he or she shall resign or shall have been removed in accordance with these Bylaws. Any officer elected by the Board of Directors may be removed at any time by the Board of Directors. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors. Section 5.3 Removal: Any officer elected by the Board of Directors may be removed by the Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby. No elected officer shall have any contractual rights against the Corporation for compensation by virtue of such election beyond the date of the election of his or her successor, 8 his or her death, his or her resignation or his or her removal, whichever event shall first occur, except as otherwise provided in an employment contract or under an employee benefit plan. Section 5.4 Compensation: The compensation of all officers and agents of the Corporation who are also directors of the Corporation shall be fixed by the Board of Directors or a committee thereof. The compensation of the Chief Executive Officer shall be fixed by the Board of Directors or a committee thereof. The compensation of all other officers and agents of the Corporation shall be fixed by the Board of Directors or a committee thereof, or the Board of Directors may delegate the power to fix the compensation of any such other officers and agents of the Corporation to an officer of the Corporation. Section 5.5 Duties: The officers of the Corporation shall have such authority and shall perform such duties as are customarily incident to their respective offices, or as may be specified from time to time by resolution of the Board of Directors regardless of whether such authority and duties are customarily incident to such office. ARTICLE VI INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 6.1 Indemnification: Each person who is or was a director or officer of the Corporation, or while a director or officer of the Corporation is or was serving at the request of the Corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another corporation, employee benefit plan, other enterprise or other entity shall be indemnified by the Corporation to the fullest extent that a corporation is required or permitted to grant indemnification to such person under the Texas Business Corporation Act and the Texas Miscellaneous Corporation Laws Act, as the same exist or may hereafter be amended. Reasonable expenses incurred by a director or officer of the Corporation who was, is or is threatened to be made a named defendant or respondent in a proceeding shall be paid or reimbursed by the Corporation, in advance of the final disposition of the proceeding, to the maximum extent permitted under the Texas Business Corporation Act, as the same exists or may hereafter be amended. The right to indemnification under this Article VI shall be a contract right. In the event of the death of any person having a right of indemnification under this Article VI, such right will inure to the benefit of his or her heirs, executors, administrators and personal representatives. The rights under this Article VI will not be exclusive of any other right which any person may have or hereinafter acquire under any bylaw, resolution of shareholders or directors, agreement, applicable law or otherwise. ARTICLE VII CERTIFICATES REPRESENTING SHARES Section 7.1 Certificates: Certificates for shares of stock of the Corporation shall be in such form as shall be approved by the Board of Directors. The certificates shall be signed by the Chairman of the Board, the Chief Executive Officer, the President or a Vice President and also by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer. Any and all signatures on the certificate may be a facsimile and each such certificate may be sealed with 9 the seal of the Corporation or a facsimile thereof. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue. The certificates shall be consecutively numbered and shall be entered in the books of the Corporation as they are issued and shall exhibit the holder's name and the number of shares. Section 7.2 Lost, Stolen or Destroyed Certificates: The Board of Directors may direct a new certificate or certificates representing shares of stock be issued in place of a certificate or certificates representing shares of stock theretofore issued by the Corporation and alleged to have been lost or destroyed upon the making of an affidavit of that fact by the person claiming the certificate or certificates representing shares of stock that was or were lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his or her legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond with a surety or sureties satisfactory to the Corporation in such sum as it may direct as indemnity against any claim or expense resulting from a claim that may be made against the Corporation with respect to the certificate or certificates alleged to have been lost or destroyed. Section 7.3 Transfer of Shares: Shares of stock of the Corporation shall be transferable only on the books of the Corporation by the holders thereof in person or by their duly authorized attorneys or legal representatives. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate representing shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, the Corporation or its transfer agent shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Section 7.4 Registered Shareholders: The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by applicable law. Section 7.5 Regulations: The Board of Directors shall have the power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer and registration or the replacement of certificates for shares of stock of the Corporation. Section 7.6 Legends: The Board of Directors shall have the power and authority to provide that the certificates representing shares of stock of the Corporation bear such legends as the Board of Directors deems appropriate to assure that the Corporation does not become liable for violations of federal or state securities laws or other applicable law. 10 ARTICLE VIII GENERAL PROVISIONS Section 8.1 Distributions and Share Dividends: Subject to any provision of the Articles of Incorporation or applicable law, distributions (in the form of cash or property) or share dividends may be declared by the Board of Directors at any regular or special meeting. Section 8.2 Checks: All checks, demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 8.3 Fiscal Year: The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors; provided, however, that if such fiscal year is not fixed by the Board of Directors and the Board of Directors does not defer determination of the fiscal year, the fiscal year shall be the calendar year. Section 8.4 Seal: The Board of Directors may adopt a corporate seal and use the same by causing it or a facsimile thereof to be impressed, affixed, reproduced or otherwise. Section 8.5 Resignation: Any director, committee member or officer may resign by so stating at any meeting of the Board of Directors or by giving written notice to the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the President or the Secretary. Such resignation shall take effect at the time specified therein, or immediately if no time is specified therein. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 8.6 Telephone and Similar Meetings: Unless otherwise restricted by the Articles of Incorporation, members of the Board of Directors or members of any committee of the Board of Directors may participate in and hold a meeting of the Board of Directors or committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in such a meeting shall constitute presence in person at the meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the basis that the meeting is not lawfully called or convened. Section 8.7 Amendment of Bylaws: The Board of Directors may amend or repeal these Bylaws, or adopt new bylaws, unless (a) such power shall be reserved exclusively to the shareholders in whole or part by the Articles of Incorporation or by applicable law or, (b) the shareholders in amending repealing or adopting a particular bylaw shall have expressly provided that the Board of Directors may not amend or repeal that bylaw. Unless the Articles of Incorporation or a bylaw adopted by the shareholders shall provide otherwise as to all or some portion of the Corporation's bylaws, the shareholders may amend, repeal or adopt (but only by the affirmative vote of the holders of not less than two-thirds of the combined voting power of the Voting Shares) the Corporation's bylaws even though the bylaws may also be amended, repealed or adopted by the Board of Directors. 11 EX-4.1 3 d27260exv4w1.txt AMENDED/RESTATED REGISTRATION RIGHTS Exhibit 4.1 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT March 18, 1998 To the several persons named at the foot hereof Dear Sirs: This will confirm that in consideration of: (a) the purchase by the persons and entities listed in Schedule I to the Recapitalization Agreement, dated as of August 11, 1997 (the "Recapitalization Agreement") among AMERISAFE, Inc., a Texas corporation (the "Company"), and the other parties listed in Schedules I and II thereto (such persons and entities being hereinafter collectively called the "Cash Investors"), on the date hereof, of (i) an aggregate 15,027,566 shares (the "Common Shares") of Common Stock, $.01 par value ("Common Stock") , of the Company, (ii) an aggregate 950,000 shares of Series A Preferred Stock, $.01 par value, of the Company, (iii) stock purchase warrants to purchase up to an aggregate 7,057,144 shares of Common Stock (the "Series A Warrants") and (iv) stock purchase warrants to purchase up to an aggregate 1,556,725 shares of Common Stock (the "Series B Warrants"), and as an inducement to the Cash Investors to consummate the transactions contemplated by the Recapitalization Agreement; (b) the entry by the several persons listed in Schedule II to the Recapitalization Agreement (such persons being hereinafter collectively called the "Original Stockholders") into (x) the Recapitalization Agreement, pursuant to which they will retain an aggregate 4,172,018 shares of Common Stock, and (y) the Stockholders Agreement, dated as of the date hereof (the "Stockholders Agreement"), among the Company, the Cash Investors and the Original Stockholders, and as an inducement to them to consummate the transactions contemplated by the Recapitalization Agreement and the Stockholders Agreement; and (c) the purchase by the entities listed in Schedule I to the Preferred Stock Subscription Agreement, dated as of February 11, 1998 (the "Subscription Agreement") among the Company and the several purchasers listed in Schedule I thereto (such purchasers being hereinafter collectively called the "Preferred Stockholders") of an aggregate 500,000 shares (the "Convertible Preferred Shares") of Series C Convertible Deferred Pay Preferred Stock, $.01 par value, and Series D Non-Voting Convertible Deferred Pay Preferred Stock, $.01 par value (collectively, the "Convertible Preferred Stock"), of the Company pursuant to (i) the Subscription Agreement and (ii) the Preferred Stock Transfer Agreement, dated as of February 11, 1998, among the Preferred Stockholders and the Cash Investors, and as an inducement to the Preferred Stockholders to consummate the transactions contemplated by the Subscription Agreement; the Company hereby covenants and agrees with each of you, with each subsequent holder of Restricted Stock (as such term is defined herein), and with each holder of Original Stockholders Stock and Series E Preferred Stock (as such terms are defined herein), as follows: 1. Certain Definitions. As used herein, the following terms shall have the following respective meanings: "Commission" means the Securities and Exchange Commission, or any other federal agency at the time administering the Securities Act. "Common Stock" means shares of the Common Stock of the Company, as constituted as of the date of this Agreement, subject to adjustment pursuant to the provisions of Section 12 hereof. "Conversion Shares" means the shares of Common Stock and Non-Voting Common Stock issued upon conversion of the Convertible Preferred Stock and the shares of Common Stock issued upon conversion of the Non-Voting Common Stock. "Exchange Act" means the Securities Exchange Act of 1934 or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "Non-Voting Common Stock" means shares of the Convertible Non-Voting Common Stock, $.01 par value, of the Company, as constituted as of the date of this Agreement, subject to adjustment pursuant to the provisions of Section 12 hereof. "Original Stockholders Stock" means the shares of Common Stock owned by the Original Stockholders on September 2, 1997. "Registration Expenses" means the expenses so described in Section 10 hereof. "Restricted Stock" means any securities of the Company, the certificates for which are required to bear the legend set forth in Section 2 hereof, except that such term shall not include Original Stockholders Stock, Series B Warrants, Series B Warrant Shares, the Convertible Preferred Shares, Conversion Shares and shares of Series E Preferred Stock. "Securities Act" means the Securities Act of 1933 or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "Selling Expenses" means the expenses so described in Section 10 hereof. "Series A Warrant Shares" means shares of Common Stock issued upon exercise of the Series A Warrants. "Series B Warrant Shares" means shares of Common Stock issued upon exercise of the Series B Warrants. 2 "Series E Preferred Stock" means the Series E Preferred Stock, $.01 par value, of the Company. "Warrants" means both the Series A Warrants and the Series B Warrants. "Warrant Shares" means both the Series A Warrant Shares and the Series B Warrant Shares. 2. Restrictive Legend. Each certificate representing (i) the Common Shares, the Series A Warrants, the Series B Warrants, the Convertible Preferred Shares and the Original Stockholders Stock, (ii) the Series A Warrant Shares and Series B Warrant Shares issuable upon exercise of the Series A Warrants and the Series B Warrants, respectively, (iii) the Conversion Shares issuable upon conversion of the Convertible Preferred Stock and the Non-Voting Common Stock, as the case may be, and (iv) the shares of Series E Preferred Stock issuable from time to time as dividends upon the Convertible Preferred Stock and other shares of Series E Preferred Stock, as the case may be, and each certificate issued upon exchange or transfer of any of the foregoing (other than in a public sale or as otherwise permitted by the last paragraph of paragraph 3 hereof) shall be stamped or otherwise imprinted with a legend substantially in the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NEITHER THE SECURITIES EVIDENCED HEREBY, NOR ANY INTEREST THEREIN, MAY BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS EITHER (i) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND LAWS RELATING THERETO OR (ii) THE CORPORATION HAS RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO THE CORPORATION, STATING THAT SUCH REGISTRATION IS NOT REQUIRED." 3. Notice of Proposed Transfer. Prior to any proposed transfer of any Restricted Stock, Series B Warrants, Series B Warrant Shares, Original Stockholders Stock, Convertible Preferred Shares, Conversion Shares or Series E Preferred Stock, as the case may be, (other than under the circumstances described in Section 4, 5, 6, 7 or 8 hereof), the holder thereof shall give written notice to the Company of its intention to effect such transfer. Each such notice shall describe the manner of the proposed transfer and, if requested by the Company, shall be accompanied by an opinion of counsel reasonably satisfactory to the Company (it being agreed that Reboul, MacMurray, Hewitt, Maynard & Kristol and Testa, Hurwitz & Thibeault, LLP shall be satisfactory) to the effect that the proposed transfer of the Restricted Stock, Series B Warrants, Series B Warrant Shares, Original Stockholders Stock, Convertible Preferred Shares, Conversion Shares or Series E Preferred Stock, as the case may be, may be effected without registration under the Securities Act, whereupon such holder shall be entitled to transfer such securities in accordance with the terms of its notice; provided, however, that no such opinion or other documentation shall be required if such notice shall cover a distribution by any Cash Investor that is a partnership to its partners; and provided, further, however, that no such opinion 3 shall be required if such notice shall cover a transfer to a "Qualified Institutional Buyer," as defined in Rule 144A under the Securities Act, and the Company shall have received a written representation (in form reasonably satisfactory to the Company) from the proposed transferee to such effect. Each certificate for Restricted Stock, Series B Warrants, Series B Warrant Shares, Original Stockholders Stock, Convertible Preferred Shares, Conversion Shares or Series E Preferred Stock, as the case may be, transferred as above provided shall bear the legend set forth in Section 2, unless (i) such transfer is in accordance with the provisions of Rule 144 (or any other rule permitting public sale without registration under the Securities Act) or (ii) the opinion of counsel referred to above is to the further effect that the transferee and any subsequent transferee (other than an affiliate of the Company) would be entitled to transfer such securities in a public sale without registration under the Securities Act. The foregoing restrictions on transferability of Restricted Stock, Series B Warrants, Series B Warrant Shares, Original Stockholders Stock, Convertible Preferred Shares, Conversion Shares and Series E Preferred Stock shall terminate as to any such securities when the same shall have been effectively registered under the Securities Act and sold or otherwise disposed of in accordance with the intended method of disposition by the seller or sellers thereof set forth in the registration statement concerning such shares. Whenever a holder of Restricted Stock, Series B Warrant Shares, Original Stockholders Stock, Convertible Preferred Shares, Conversion Shares or Series E Preferred Stock is able to demonstrate to the reasonable satisfaction of the Company (and its counsel) that the provisions of Rule 144 (k) of the Securities Act (or any successor rule) are available to such holder without limitation, such holder shall be entitled to receive from the Company, without expense, a new certificate representing such securities that does not bear the restrictive legend set forth in Section 2. 4. Restricted Stock Required Registration. (a) At any time the holders of Restricted Stock constituting at least a majority of the total Restricted Stock outstanding at such time (treating for such purpose the holders of Series A Warrants as the holders of the Series A Warrant Shares issuable upon exercise thereof) may request the Company to register under the Securities Act all or any portion of the Restricted Stock held by such requesting holder or holders for sale in the manner specified in such notice; provided, however, that with respect to the Series A Warrants the only securities which the Company shall be required to register pursuant hereto shall be Series A Warrant Shares. (b) Promptly following receipt of any notice under this Section 4, the Company shall promptly notify any holders of Restricted Stock from whom notice has not been received and any holders of Series B Warrant Shares (treating for such purpose the holders of Series B Warrants as the holders of the Series B Warrant Shares issuable upon exercise thereof), Conversion Shares (treating for such purpose the holders of Convertible Preferred Shares as the holders of the Conversion Shares issuable upon conversion thereof) and Original Stockholders Stock, and shall use its reasonable best efforts to register under the Securities Act, for public sale in accordance with the method of disposition specified in such notice from the requesting holders, the number of shares of Restricted Stock specified in such notice (and, as applicable, in any notices received from other holders and holders of Series B Warrant Shares, Conversion 4 Shares or Original Stockholders Stock within 20 days after their receipt of such notice from the Company; it being understood that with respect to the Series B Warrants and the Conversion Shares the only securities which the Company shall be required to register pursuant hereto shall be Series B Warrant Shares and shares of Common Stock, respectively); provided, however, that if the proposed method of disposition specified by the requesting holders shall be an underwritten public offering, the number of shares of Restricted Stock, Series B Warrant Shares, Conversion Shares or Original Stockholders Stock, as the case may be, to be included in such an offering may be reduced (pro rata among the requesting holders of Conversion Shares, Restricted Stock, Series B Warrant Shares and Original Stockholders Stock (except that two shares of either Restricted Stock, Series B Warrant Shares or shares of Original Stockholders Stock proposed to be registered shall be "cut back" for every Conversion Share so cut back) based upon the number of Conversion Shares, shares of Restricted Stock, Series B Warrant Shares and shares of Original Stockholders Stock so requested to be registered) if and to the extent that the managing underwriter shall be of the opinion that such inclusion would adversely affect the marketing of the Restricted Stock, Series B Warrant Shares, Conversion Shares and Original Stockholders Stock, as the case may be, to be sold. If such method of disposition shall be an underwritten public offering, the Company may designate the managing underwriter of such offering, subject to the approval of the selling holders of a majority of the Restricted Stock (treating for such purpose the holders of Series A Warrants as the holders of the Series A Warrant Shares issuable upon exercise thereof) included in the offering, which approval shall not be unreasonably withheld. The Company shall be obligated to register Restricted Stock, Series B Warrant Shares, Conversion Shares and Original Stockholders Stock pursuant to this Section 4 on two occasions only. Notwithstanding anything to the contrary contained herein, the obligation of the Company under this Section 4 shall be deemed satisfied only when a registration statement covering all shares of Restricted Stock specified in notices received as aforesaid (or such reduced number of shares as contemplated above), for sale in accordance with the method of disposition specified by the requesting holder, shall have become effective and, if such method of disposition is a firm commitment underwritten public offering, all such shares shall have been sold pursuant thereto. (c) The Company shall be entitled to include in any registration statement referred to in this Section 4, for sale in accordance with the method of disposition specified by the requesting holders, shares of Common Stock to be sold by the Company for its own account, except as and to the extent that, in the opinion of the managing underwriter (if such method of disposition shall be an underwritten public offering), such inclusion would adversely affect the marketing of the Restricted Stock, Series B Warrant Shares, Conversion Shares and Original Stockholders Stock to be sold. Except as provided in this paragraph (c), the Company will not effect any other registration of its Common Stock, whether for its own account or that of other holders, from the date of receipt of a notice from requesting holders pursuant to this Section 4 until the completion of the period of distribution of the registration contemplated thereby (not to exceed 180 days), other than registrations of Common Stock on Form S-8 (or other applicable forms) issuable pursuant to employee benefit plans of the Company, or registrations pursuant to which notice was previously received pursuant to Section 7 hereof. (d) Notwithstanding anything to the contrary contained in this Agreement, the Company will be entitled, once in any one year period, to postpone the filing period (or suspend the effectiveness) of any registration of the Restricted Stock, Series B Warrant Shares, Conversion Shares or Original Stockholders Stock, as the case may be, pursuant to this Section 4 for a reasonable period of time not in excess of 90 calendar days, if the Board of Directors of the Company (the "Board") determines, in its reasonable business judgment, that such registration 5 and offering could materially interfere with bona fide financing plans of the Company (other than a planned public offering of securities by the Company for cash) or would require disclosure of information, the premature disclosure of which would, in the Board's reasonable business judgment, materially and adversely affect the Company. If the Company postpones the filing of a registration statement pursuant to this Section 4, it will promptly notify, in writing, the holders of Restricted Stock, Series B Warrant Shares, Conversion Shares and Original Stockholders Stock that requested such registration when the events or circumstances permitting such postponement have ended. 5. Conversion Shares Required Registration. (a) At any time after the 180th day following the consummation of a firm commitment underwritten public offering of the Company's equity securities registered pursuant to the Securities Act, the holders of Conversion Shares constituting at least a majority of the total Conversion Shares outstanding at such time (treating for such purpose the holders of Convertible Preferred Shares as the holders of the Conversion Shares issuable upon the conversion thereof) may request the Company to register under the Securities Act all or any portion of the Conversion Shares held by such requesting holder or holders for sale in the manner specified in such notice; provided, however, that with respect to the Conversion Shares the only securities that the Company shall be required to register shall be shares of Common Stock. (b) Promptly following receipt of any notice under this Section 5, the Company shall promptly notify any holders of Conversion Shares or Convertible Preferred Stock from whom notice has not been received and any holders of Restricted Stock, Series B Warrant Shares (treating for such purpose the holders of Series B Warrants as the holders of the Series B Warrant Shares issuable upon exercise thereof) and Original Stockholders Stock, and shall use its reasonable best efforts to register under the Securities Act, for public sale in accordance with the method of disposition specified in such notice from the requesting holders, the number of Conversion Shares specified in such notice (and, as applicable, in any notices received from other holders of Conversion Shares and holders of Restricted Stock, Series B Warrant Shares or Original Stockholders Stock within 20 days after their receipt of such notice from the Company; it being understood that the only securities which the Company shall be required to register pursuant hereto shall be shares of Common Stock; provided, however, that if the proposed method of disposition specified by the requesting holders shall be an underwritten public offering, the number of Conversion Shares, shares of Restricted Stock, Series B Warrant Shares or Original Stockholders Stock, as the case may be, to be included in such an offering may be reduced (pro rata among the requesting holders of Conversion Shares, Restricted Stock, Series B Warrant Shares and Original Stockholders Stock (except that two shares of either Restricted Stock, Series B Warrant Shares or shares of Original Stockholders Stock proposed to be registered shall be "cut back" for every Conversion Share so cut back) based upon the number of Conversion Shares, shares of Restricted Stock, Series B Warrant Shares and shares of Original Stockholders Stock so requested to be registered) if and to the extent that the managing underwriter shall be of the opinion that such inclusion would adversely affect the marketing of the Conversion Shares, Restricted Stock, Series B Warrant Shares and Original Stockholders Stock, as the case may be, to be sold. If such method of disposition shall be an underwritten public offering, the Company may designate the managing underwriter of such offering, subject to the approval of the selling holders of a majority of the Conversion Shares (treating for such 6 purpose the holders of Convertible Preferred Stock as the holders of the Conversion Shares issuable upon conversion thereof) included in the offering, which approval shall not be unreasonably withheld. The Company shall be obligated to register Conversion Shares, Restricted Stock, Series B Warrant Shares and Original Stockholders Stock pursuant to this Section 5 on one occasion only. Notwithstanding anything to the contrary contained herein, the obligation of the Company under this Section 5 shall be deemed satisfied only when a registration statement covering all Conversion Shares specified in notices received as aforesaid (or such reduced number of shares as contemplated above), for sale in accordance with the method of disposition specified by the requesting holder, shall have become effective and, if such method of disposition is a firm commitment underwritten public offering, all such shares shall have been sold pursuant thereto. (c) The Company shall be entitled to include in any registration statement referred to in this Section 5, for sale in accordance with the method of disposition specified by the requesting holders, shares of Common Stock to be sold by the Company for its own account, except as and to the extent that, in the opinion of the managing underwriter (if such method of disposition shall be an underwritten public offering), such inclusion would adversely affect the marketing of the Conversion Shares, Restricted Stock, Series B Warrant Shares and Original Stockholders Stock to be sold. Except as provided in this paragraph (c), the Company will not effect any other registration of its Common Stock or Non-Voting Common Stock, whether for its own account or that of other holders, from the date of receipt of a notice from requesting holders pursuant to this Section 5 until the completion of the period of distribution of the registration contemplated thereby (not to exceed 180 days), other than registrations of Common Stock on Form S-8 (or other applicable forms) issuable pursuant to employee benefit plans of the Company, or registrations pursuant to which notice was previously received pursuant to Section 7 hereof. (d) Notwithstanding anything to the contrary contained in this Agreement, the Company will be entitled, once in any one year period, to postpone the filing period (or suspend the effectiveness) of any registration of the Restricted Stock, Series B Warrant Shares or Original Stockholders Stock, as the case may be, pursuant to this Section 5 for a reasonable period of time not in excess of 90 calendar days, if the Board determines, in its reasonable business judgment, that such registration and offering could materially interfere with bona fide financing plans of the Company (other than a planned public offering of securities by the Company for cash) or would require disclosure of information, the premature disclosure of which would, in the Board's reasonable business judgment, materially and adversely affect the Company. If the Company postpones the filing of a registration statement pursuant to this Section 5, it will promptly notify, in writing, the holders of Restricted Stock, Series B Warrant Shares and Original Stockholders Stock that requested such registration when the events or circumstances permitting such postponement have ended. 6. Series B Warrant Shares Required Registration. (a) At any time after the fifth anniversary from the date hereof, the holders of Series B Warrant Shares constituting at least 33% of the total Series B Warrant Shares outstanding at such time (treating for such purpose the holders of Series B Warrants as the holders of the Series B Warrant Shares issuable upon exercise thereof) may request the Company 7 to register under the Securities Act all or any portion of the Series B Warrant Shares held by such requesting holder or holders for sale in the manner specified in such notice; provided, however, that with respect to the Series B Warrants the only securities which the Company shall be required to register pursuant hereto shall be Series B Warrant Shares. (b) Promptly following receipt of any notice under this Section 6, the Company shall promptly notify any holders of Restricted Stock, Original Stockholders Stock, Series B Warrant Shares and conversion-shares (treating for such purpose the holders of Convertible Preferred Shares and Series B Warrants as the holders of the Conversion Shares or Series B Warrant Shares issuable upon conversion or exercise thereof, as the case may be) from whom notice has not been received, and shall use its reasonable best efforts to register under the Securities Act, for public sale in accordance with the method of disposition specified in such notice from requesting holders, the number of Series B Warrant Shares, shares of Restricted Stock, shares of Original Stockholders Stock and Conversion Shares specified in such notice (and, as applicable, in any notices received from other holders of Series B Warrant Shares, Restricted Stock, Original Stockholders Stock and Conversion Shares within 20 days after their receipt of such notice from the Company, it being understood that with respect to the Series B Warrants and the Conversion Shares the only securities which the Company shall be required to register pursuant hereto shall be Series B Warrant Shares and shares of Common Stock, respectively); provided, however, that if the proposed method of disposition specified by the requesting holders shall be an underwritten public offering, the number of Series B Warrant Shares, shares of Restricted Stock, shares of Original Stockholders Stock and Conversion Shares to be included in such an offering may be reduced (pro rata among the requesting holders of Conversion Shares, Restricted Stock, Series B Warrant Shares and Original Stockholders Stock (except that two shares of either Restricted Stock, Series B Warrant Shares or shares of Original Stockholders Stock proposed to be registered shall be "cut back" for every Conversion Share so cut back) if and to the extent that the managing underwriter shall be of the opinion that such inclusion would adversely affect the marketing of the Series B Warrant Shares, Restricted Stock, Original Stockholders Stock and Conversion Shares to be sold. If such method of disposition shall be an underwritten public offering, the Company may designate the managing underwriter of such offering, subject to the approval of the selling holders of 33% of the Series B Warrant Shares (treating for such purpose the holders of Series B Warrants as the holders of the Series B Warrant Shares issuable upon exercise thereof) included in the offering, which approval shall not be unreasonably withheld. The Company shall be obligated to register Series B Warrant Shares pursuant to this Section 6 on one occasion only. Notwithstanding anything to the contrary contained herein, the obligation of the Company under this Section 6 shall be deemed satisfied only when a registration statement covering all Series B Warrant Shares specified in notices received as aforesaid (or such reduced number of shares as contemplated above), for sale in accordance with the method of disposition specified by the requesting holder, shall have become effective and, if such method of disposition is a firm commitment underwritten public offering, all such shares shall have been sold pursuant thereto. (c) The Company shall be entitled to include in any registration statement referred to in this Section 6, for sale in accordance with the method of disposition specified by the requesting holders, shares of Common Stock to be sold by the Company for its own account, except as and to the extent that, in the opinion of the managing underwriter (if such method of disposition shall be an underwritten public offering), such inclusion would adversely affect the 8 marketing of the Series B Warrant Shares, Restricted Stock, Original Stockholders Stock and Conversion Shares to be sold. Except as provided in this paragraph (c), the Company will not effect any other registration of its Common Stock or Non-Voting Common Stock, whether for its own account or that of other holders, from the date of receipt of a notice from requesting holders pursuant to this Section 6 until the completion of the period of distribution of the registration contemplated thereby (not to exceed 180 days), other than registrations of Common Stock on Form S-8 (or other applicable forms) issuable pursuant to employee benefit plans of the Company, or registrations pursuant to which notice was previously received pursuant to Section 7 hereof. (d) Notwithstanding anything to the contrary contained in this Agreement, the Company, at its option, may once in any one year period delay the filing (or suspend the effectiveness) of a registration statement required pursuant to this Section 6 for a reasonable period of time not in excess of 90 calendar days, if the Board determines, in its reasonable business judgment, that such registration and offering could materially interfere with bona fide financing plans of the Company (other than a planned public offering of securities by the Company for cash) or would require disclosure of information, the premature disclosure of which would, in the Board's reasonable business judgment, materially and adversely affect the Company. If the Company postpones the filing of a registration statement pursuant to this Section 6, it will promptly notify, in writing, the holders of Series B Warrant Shares, Restricted Stock, Original Stockholders Stock and Conversion Shares that requested such registration when the events or circumstances permitting such postponement have ended. 7. Form S-3 Registration. (a) If the Company shall receive from any holder or holders of Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares a written request or requests that the Company effect a registration on Form S-3 and any related qualification or compliance with respect to Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, owned by such holder or holders in a public sale not involving an underwritten public offering, the reasonably anticipated aggregate price to the public of which would exceed $1,000,000, the Company will: (i) promptly give written notice of the proposed registration, and any related qualification or compliance, to all other holders of Restricted Stock, Series B Warrant Shares, Original Stockholders Stock and Conversion Shares; and (ii) as soon as practicable, effect such registration (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualifications under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other government requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such holder's or holders' Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, as are specified in such request, together with all or such portion of the Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares of any holder or holders joining in such request as are specified in a 9 written request given within thirty (30) days after receipt of such written notice from the Company; provided that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 7 (a) more than once in any 180-day period, or (B) if the Company is not entitled to use Form S-3; and provided, further, the only securities which the Company shall be required to register pursuant hereto shall be shares of Common Stock. Subject to the foregoing, the Company shall file a registration statement covering the Restricted Stock, Series B Warrant Shares, Original Stockholders Stock and Conversion Shares so requested to be registered as soon as practicable after receipt of the request or requests of the holders of the Restricted Stock, Series B Warrants, Series B Warrant Shares, Original Stockholders Stock and Conversion Shares, as the case may be. (b) Registrations effected pursuant to this Section 7 shall not be counted as requests for registration effected pursuant to Section 4, 5 or 6, as the case may be. (c) Notwithstanding anything to the contrary contained in this Agreement, the Company will be entitled to postpone the filing period (or suspend the effectiveness or use) of any registration statement relating to the Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, pursuant to this Section 7 for a reasonable period of time not in excess of 90 calendar days, if the Board determines, in its reasonable business judgment, that such registration and offering could materially interfere with bona fide financing plans of the Company or would require disclosure of information, the premature disclosure of which could, in the Board's reasonable business judgment, materially and adversely affect the Company. If the Company postpones the filing (or suspends the effectiveness or use) of a registration statement pursuant to this Section 7, it will promptly notify, in writing, the holders of Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, that requested such registration when the events or circumstances permitting such postponement have ended. 8. Incidental Registration. If the Company at any time (other than pursuant to Section 4, 5, 6 or 7 hereof) proposes to register any of its Common Stock under the Securities Act for sale to the public, whether for its own account or for the account of other securityholders or both (except with respect to registration statements on Form S-4 or S-8 or another form not available for registering the Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares for sale to the public), it will give written notice at such time to all holders of Restricted Stock, Original Stockholders Stock, Series B Warrant Shares and Conversion Shares (treating for such purpose the holders of Series B Warrants and Convertible Preferred Stock as the holders of the Series B Warrant Shares or Conversion Shares issuable upon exercise or conversion thereof, as applicable) of its intention to do so. Upon the written request of any such holder, given within 30 days after receipt of any such notice by the Company, to register any of its Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, the Company will use its reasonable best efforts to cause the Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares as to which registration shall have been so requested, to be included in the securities to be covered by the registration statement proposed to be filed by the Company, all to the extent requisite to permit the sale or other disposition by the holder of such Restricted Stock, Series B Warrant 10 Shares, Original Stockholders Stock or Conversion Shares, as the case may be, so registered; provided that nothing herein shall prevent the Company from abandoning or delaying such registration at any time; provided, further, that the only securities which the Company shall be required to register pursuant hereto shall be shares of Common Stock. The number of shares of Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, to be included in such an underwriting may be reduced (pro rata among the requesting holders of Conversion Shares, Restricted Stock, Series B Warrant Shares and Original Stockholders Stock (except that two shares of either Restricted Stock, Series B Warrant Shares or shares of Original Stockholders Stock proposed to be registered shall be "cut back" for every Conversion Share so cut back) based upon the number of Conversion Shares, shares of Restricted Stock, Series B Warrant Shares and shares of Original Stockholders Stock so requested to be registered) if and to the extent that the managing underwriter shall be of the opinion that such inclusion would adversely affect the marketing of the securities to be sold by the Company therein; provided, however, that such number of shares of Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, shall not be reduced if any shares are to be included in such underwriting for the account of any person other than the Company and persons requesting registration under this Agreement. Notwithstanding anything to the contrary contained in this Section 8, in the event that there is a firm commitment underwritten public offering of securities of the Company pursuant to a registration covering Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, and a holder of Restricted Stock, Original Stockholders Stock, Series B Warrant Shares or Conversion Shares (treating for such purpose the holders of Series B Warrants and Convertible Preferred Stock as the holders of the Series B Warrant Shares or Conversion Shares issuable upon the exercise or conversion thereof, as applicable) does not sell its Restricted Stock or Conversion Shares, as the case may be, to the underwriters of the Company's securities in connection with such offering, such holder, at the written request of such underwriter, shall refrain from selling any securities of the Company during the period of distribution of the Company's securities by such underwriters (not to exceed 180 days) and such period (not to exceed 90 days) in which the underwriting syndicate participates in the after market. 9. Registration Procedures and Expenses. If and whenever the Company is required by the provisions of Section 4, 5, 6, 7 or 8 hereof to effect or to use its reasonable best efforts to effect the registration of any of the Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, under the Securities Act, the Company will, as promptly as possible: (a) prepare (and afford one counsel for the selling holders (as designated by a majority in interest of the selling holders) reasonable opportunity to review and comment thereon) and file with the Commission a registration statement (which, in the case of an underwritten public offering pursuant to Section 4, 5 or 6 hereof, shall be on Form S-1 or another form of general applicability satisfactory to the managing underwriter selected as therein provided) with respect to such securities and use its best efforts to cause such registration statement to become and remain effective for the period of the distribution contemplated thereby (determined as hereinafter provided); 11 (b) prepare (and afford the selected counsel for the selling holders reasonable opportunity to review and comment thereon) and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for the period specified in paragraph (a) above and as comply with the provisions of the Securities Act with respect to the disposition of all Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, covered by such registration statement in accordance with the sellers' intended method of disposition set forth in such registration statement for such period; (c) furnish to each seller and to each underwriter such number of copies of the registration statement and the prospectus included therein (including each preliminary prospectus) as such persons may reasonably request in order to facilitate the public sale or other disposition of the Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, covered by such registration statement; (d) register or qualify the Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, covered by such registration statement under the securities or blue sky laws of such jurisdictions as the sellers of Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, or, in the case of an underwritten public offering, the managing underwriter, shall reasonably request (provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (d), (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any jurisdiction); (e) promptly notify each seller under such registration statement and each underwriter, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus contained in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; (f) if the offering is underwritten, to furnish, at the request of any seller, on the date that Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, is delivered to the underwriters for sale pursuant to such registration: (i) an opinion dated such date of counsel representing the Company for the purposes of such registration, addressed to the underwriters and to such seller, stating that such registration statement has become effective under the Securities Act and that (A) to the best knowledge of such counsel, no stop order suspending the effectiveness thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Securities Act, (B) the registration statement, the related prospectus, and each amendment or supplement thereof, comply as to form in all material respects with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder (except that such counsel 12 need express no opinion as to financial statements, the notes thereto, and the financial schedules and other financial and statistical data contained therein) and (C) to such other effects as may reasonably be requested by counsel for the underwriters or by such seller or its counsel, and (ii) a letter dated such date from the independent public accountants retained by the Company, addressed to the underwriters, stating that they are independent public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements of the Company included in the registration statement or the prospectus, or any amendment or supplement thereof, comply as to form in all material respects with the applicable accounting requirements of the Securities Act, and such letter shall additionally cover such other financial matters (including information as to the period ending no more than five business days prior to the date of such letter) with respect to the registration in respect of which such letter is being given as such underwriters or seller may reasonably request; and (g) make available for inspection by each seller, any underwriter participating in any distribution pursuant to such registration statement, and any attorney, accountant or other agent retained by such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors and employees to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement and permit such seller, attorney, accountant or agent to participate in the preparation of such registration statement. For purposes of paragraphs (a) and (b) above and of Sections 4 (c) , 5 (c) and 6 (c) hereof, the period of distribution of Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, in a firm commitment underwritten public offering shall be deemed to extend until each underwriter has completed the distribution of all securities purchased by it, and the period of distribution of Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, in any other registration shall be deemed to extend until the earlier of the sale of all Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, covered thereby or six months after the effective date thereof. In connection with each registration hereunder, the selling holders of Restricted Stock, Series B Warrant Shares, Original Stockholders Stock and Conversion Shares, if applicable, will furnish to the Company in writing such information with respect to themselves and the proposed distribution by them as shall be reasonably necessary in order to assure compliance with federal and applicable state securities laws. In connection with each registration pursuant to Sections 4, 5, 6, 7 and 8 hereof covering an underwritten public offering, the Company and any selling holder of Restricted Stock, Series B Warrant Shares, Original Stockholders stock or Conversion Shares, as the case may be, agree to enter into a written agreement with the managing underwriter selected in the manner herein provided in such form and containing such provisions as are customary in the securities business for such an arrangement between major underwriters and companies of the Company's size and investment stature, provided, however, that (1) the selling holders and their counsel shall have an opportunity to review and comment on such agreement, (2) such 13 agreement shall not contain any such provision applicable to the Company or such selling holders which is inconsistent with the provisions hereof and (3) the time and place of the closing under said agreement shall be as mutually agreed upon among the Company, such managing underwriter and the selling holders of Restricted Stock, Series B Warrants, Series B Warrant Shares, Original Stockholders Stock and Conversion Shares, if applicable. 10. Expenses. All expenses incurred by the Company in complying with Sections 4, 5, 6, 7 and 8 hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, fees of the National Association of Securities Dealers, Inc., transfer taxes, fees of transfer agents and registrars and fees and expenses of one counsel for the sellers of Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, but excluding any Selling Expenses, are herein called "Registration Expenses". All underwriting discounts and selling commissions applicable to the sale of Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, are herein called "Selling Expenses". The Company will pay all Registration Expenses in connection with each registration statement filed pursuant to Section 4, 5, 6, 7 or 8 hereof. All Selling Expenses in connection with any registration statement filed pursuant to Section 4, 5, 6, 7 or 8 hereof shall be borne by the participating sellers in proportion to the number of shares sold by each, or by such persons other than the Company (except to the extent the Company shall be a seller) as they may agree. 11. Indemnification. In the event of a registration of any of the Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, under the Securities Act pursuant to Section 4, 5, 6, 7 or 8 hereof, the Company will indemnify and hold harmless each seller of such Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, thereunder and each underwriter of Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, thereunder and each other person, if any, who controls such seller or underwriter within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such seller or underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Restricted Stock, Series B Warrant Shares, original Stockholders Stock or Conversion Shares, as the case may be, was registered under the Securities Act pursuant to Section 4, 5, 6, 7 or 8, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each such seller, each such underwriter and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with 14 information furnished by such seller, such underwriter or such controlling person in writing specifically for use in such registration statement or prospectus. In the event of a registration of any of the Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, under the Securities Act pursuant to Section 4, 5, 6, 7 or 8 hereof, each seller of such Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, thereunder, severally and not jointly, will indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of the Securities Act, each officer of the Company who signs the registration statement, each director of the Company, each underwriter and each person who controls any underwriter within the meaning of the Securities Act, against all losses, claims, damages or liabilities, joint or several, to which the Company or such officer or director or underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement under which such Restricted Stock, Series B Warrant Shares, Original Stockholder Stock or Conversion Shares, as the case may be, was registered under the Securities Act pursuant to Section 4, 5, 6, 7 or 8, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and each such officer, director, underwriter and controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that such seller will be liable hereunder in any such case only if and only to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with information pertaining to such seller, as such, furnished in writing to the Company by such seller specifically for use in such registration statement or prospectus; provided, further, however, that the liability of each seller hereunder shall be limited to the proportion of any such loss, claim, damage, liability or expense which is equal to the proportion that the public offering price of shares sold by such seller under such registration statement bears to the total public offering price of all securities sold thereunder, but not to exceed the proceeds (net of underwriting discounts and commissions) received by such seller from the sale of Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, covered by such registration statement. Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party other than under this Section 11. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel satisfactory to such indemnified party (provided that such indemnifying party shall not, without the consent of the indemnified party, agree to a settlement involving a plea of nolo contendere or an admission 15 of liability on the part of such indemnified party) and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 11 for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; provided, however, that, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be reasonable defenses available to it which are different from or additional to those available to the indemnifying party, or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, the indemnified party shall have the right to select a separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with the expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the indemnifying party as incurred. Notwithstanding the foregoing, any indemnified party shall have the right to retain its own counsel in any such action, but the fees and disbursements of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party shall have failed to retain counsel for the indemnified person as aforesaid or (ii) the indemnifying party and such indemnified party shall have mutually agreed to the retention of such counsel. It is understood that the indemnifying party shall not, in connection with any action or related actions in the same jurisdiction, be liable for the fees and disbursements of more than one separate firm qualified in such jurisdiction to act as counsel for the indemnified party. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. If the indemnification provided for in the first two paragraphs of this Section 11 is unavailable or insufficient to hold harmless an indemnified party under such paragraphs in respect of any losses, claims, damages or liabilities or actions in respect thereof referred to therein, then each indemnifying party shall in lieu of indemnifying such indemnified party contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or actions in such proportion as appropriate to reflect the relative fault of the Company, on the one hand, and the underwriters and the sellers of such Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, on the other, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or actions as well as any other relevant equitable considerations, including the failure to give any notice under the third paragraph of this Section 11. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact relates to information supplied by the Company, on the one hand, or the underwriters and the sellers of such Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, on the other, and to the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and each selling holder of Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, agree that it would not be just and equitable if contributions pursuant to this 16 paragraph were determined by pro rata allocation (even if all of the sellers of such Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, were treated as one entity for such purpose) or by any other method of allocation which did not take account of the equitable considerations referred to above in this paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or action in respect thereof, referred to above in this paragraph, shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this paragraph, the sellers of such Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case may be, shall not be required to contribute any amount in excess of the amount, if any, by which the total price at which the Common Stock sold by each of them was offered to the public exceeds the amount of any damages which they would have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission. No person guilty of fraudulent misrepresentations (within the meaning of Section 11(f) of the Securities Act), shall be entitled to contribution from any person who is not guilty of such fraudulent misrepresentation. The indemnification of underwriters provided for in this Section 11 shall be on such other terms and conditions as are at the time customary and reasonably required by such underwriters. In that event the indemnification of the sellers of Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion Shares or any of the above, as the case may be, in such underwriting shall at the sellers' request be modified to conform to such terms and conditions. 12. Changes in Common Stock and Non-Voting Common Stock. If, and as often as, there are any changes in the Common Stock or the Non-Voting Common Stock by way of stock split, stock dividend, combination or reclassification, or through merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions hereof, as may be required, so that the rights and privileges granted hereby shall continue with respect to the Common Stock or the Non-Voting Stock (as the case may be) as so changed. 13. Representations and Warranties of the Company. The Company represents and warrants to you as follows: (a) The execution, delivery and performance of this Agreement by the Company have been duly authorized by all requisite corporate action and will not violate any provision of law, any order of any court or other agency of government, the Amended and Restated Articles of Incorporation or Bylaws of the Company, or any provision of any indenture, agreement or other instrument to which it or any of its properties or assets is bound, or conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any such indenture, agreement or other instrument, or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the Company. (b) This Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable in 17 accordance with its terms, subject to considerations of public policy in the case of the indemnification provisions hereof. 14. Rule 144 Reporting. The Company agrees with you as follows: (a) The Company shall use its reasonable best efforts to make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times from and after the date it is first required to do so. (b) The Company shall use its reasonable best efforts to file with the Commission in a timely manner all reports and other documents as the Commission may prescribe under Section 13 (a) or 15 (d) of the Exchange Act at any time after the Company has become subject to such reporting requirements of the Exchange Act. (c) The Company shall furnish to such holder of Restricted Stock, Series B Warrants or Series B Warrant Shares forthwith upon request (i) a written statement by the Company as to whether it is in compliance with the reporting requirements of Rule 144 (at any time from and after the date it first becomes subject to such reporting requirements, and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), (ii) a copy of the most recent annual or quarterly report of the Company filed with the Commission, and (iii) such other reports and documents so filed as a holder may reasonably request to avail itself of any rule or regulation of the Commission allowing a holder of Restricted Stock, Series B Warrants, Series B Warrant Shares, Convertible Preferred Stock or Conversion Shares to sell any such securities without registration. 15. Miscellaneous. (a) All covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not. Without limiting the generality of the foregoing, the registration rights conferred herein on the holders of Restricted Stock, Series B Warrants, Series B Warrant Shares, Original Stockholders Stock, Convertible Preferred Stock and Conversion Shares shall inure to the benefit of any and all subsequent holders from time to time of the Restricted Stock, Series B Warrants, Series B Warrant Shares, Original Stockholders Stock, Convertible Preferred Stock and Conversion Shares for so long as the certificates representing the Restricted Stock, Series B Warrants, Series B Warrant Shares, Original Stockholders Stock, Convertible Preferred Stock or Conversion Shares, as the case may be, shall be required to bear the legend specified in Section 2 hereof. (b) All notices, requests, consents and other communications hereunder shall be in writing and shall be mailed by first class registered mail, postage prepaid, addressed as follows: 18 if to the Company, to it at: AMERISAFE, Inc. 2301 Highway 190 West DeRidder, Louisiana 70634 Attention: President Telecopy: (318) 463-7298 if to any holder of Restricted Stock, Series B Warrants or Series B Warrant Shares, to it at its address as set forth in Schedule I hereto; if to any holder of Original Stockholders Stock, to it at its address as set forth in Schedule II hereto; if to any holder of Convertible Preferred Stock or Conversion Shares, to it at its address as set forth in Schedule III hereto; if to any subsequent holder of Restricted Stock, Series B Warrants, Series B Warrant Shares, Original Stockholders Stock, Convertible Preferred Stock or Conversion Shares, to it at such address as may have been furnished to the Company in writing by such holder; or, in any case, at such other address or addresses as shall have been furnished in writing to the Company (in the case of a holder of Restricted Stock, Series B Warrants, Series B Warrant Shares, Original Stockholders Stock, Convertible Preferred Stock or Conversion Shares) or to the holders of Restricted Stock, Series B Warrants, Series B Warrant Shares, Original Stockholders Stock, Convertible Preferred Stock or Conversion Shares (in the case of the Company). (c) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. (d) This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and may not be modified or amended except in writing with the consent of at least (i) holders of a majority of the Restricted Stock (treating for such purpose the holders of Series A Warrants as the holders of the Series A Warrant Shares issuable upon exercise thereof), (ii) holders of a majority of the Series B Warrant Shares (treating for such purpose the holders of Series B Warrants as the holders of the Series B Warrant Shares issuable upon exercise thereof), (iii) holders of a majority of the Original Stockholders Stock and (iv) holders of not less than 66-2/3% of the Conversion Shares (treating for such purpose the holders of Convertible Preferred Stock as the holders of the Conversion Shares issuable upon conversion thereof); provided that this Agreement may be amended to grant registration rights with respect to new securities to be issued by the Company after the date hereof with the consent of holders of at least a majority of Restricted Stock, Series B Warrant Shares, Original Stockholders Stock and Conversion Shares, voting as one class of stock (and treating the holders of Series A Warrants, Series B Warrants and Convertible Preferred Stock as the holders of the Series A Warrant Shares, Series B Warrant Shares and Conversion Shares issuable upon exercise or conversion thereof, as applicable); provided, further, however, that such grants of registration rights shall not affect the relative rights of the Restricted Stock, Series B 19 Warrant Shares, Original Stockholders Stock and Conversion Shares hereunder with respect to each other. (e) This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 20 Please indicate your acceptance of the foregoing by signing and returning the enclosed counterpart of this letter, whereupon this letter (herein sometimes called "this Agreement") shall be a binding agreement between the Company and each of you. Very truly yours, AMERISAFE, Inc. By /s/ Mark R. Anderson ------------------------ Name: Title: AGREED TO AND ACCEPTED as of the date first above written. WELSH, CARSON, ANDERSON & STOWE VII, L.P. By WCAS VII Partners, L.P. General Partner By /s/ Laura Van Buren ---------------------------------- General Partner WCAS HEALTHCARE PARTNERS, L.P. By: WCAS HC Partners General Partner By /s/ Laura Van Buren (Attorney-in-Fact) -------------------------------------- General Partner Patrick J. Welsh Russell L. Carson Bruce K. Anderson Andrew M. Paul Thomas E. McInerney Laura VanBuren James B. Hoover Robert A. Minicucci Anthony J. de Nicola Paul B. Queally By /s/ Laura Van Buren --------------------------------------- Name: Individually and as Attorney-in-Fact 21 EX-5.1 4 d27260exv5w1.txt FORM OF OPINION/CONSENT OF JONES DAY EXHIBIT 5.1 [Jones Day Letterhead] _________, 2005 AMERISAFE, Inc. 2301 Highway 190 West DeRidder, Louisiana 70634 Re: ______________ shares of Common Stock, par value $0.01 per share, to be Offered Through Underwriters Ladies and Gentlemen: We are acting as counsel for AMERISAFE, Inc., a Texas corporation (the "Company"), in connection with the issuance and sale of up to ______________ shares of Common Stock, par value $0.01 per share, of the Company (the "Shares") pursuant to the Underwriting Agreement (the "Underwriting Agreement") proposed to be entered into between the Company and certain shareholders of the Company to be named therein and Friedman, Billings, Ramsey & Co., Inc., Keefe, Bruyette & Woods, Inc. and William Blair & Company, LLC, as representatives of the underwriters to be named therein ("Underwriters"). In rendering this opinion, we have examined such documents and records, including an examination of originals or copies certified or otherwise identified to our satisfaction, and matters of law as we have deemed necessary for purposes of this opinion. Based upon the foregoing and subject to the qualifications and limitations stated herein, we are of the opinion that the Shares are duly authorized and, when issued and delivered to the Underwriters pursuant to the terms of the Underwriting Agreement against payment of the consideration therefor as provided therein, will be validly issued, fully paid, and nonassessable. Our examination of matters of law in connection with the opinion expressed herein has been limited to, and accordingly our opinion herein is limited to, the laws of the State of Texas. We express no opinion with respect to the laws of any other jurisdiction. AMERISAFE, Inc. _________, 2005 Page 2 We hereby consent to the filing of this opinion as Exhibit 5.1 to Registration Statement No. 333-_______ on Form S-1 (the "Registration Statement") filed by the Company to effect registration of the Shares under the Securities Act of 1933, as amended (the "Act") and to the reference to us under the caption "Legal Matters" in the prospectus constituting a part of such Registration Statement. In giving such consent, we do not hereby admit that we are included in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Securities and Exchange Commission promulgated thereunder. Very truly yours, EX-10.1 5 d27260exv10w1.txt EXECUTIVE AGREEMENT Exhibit 10.1 EXECUTIVE AGREEMENT This EXECUTIVE AGREEMENT ("Agreement") with an effective date of January 1, 2004 is entered into by and between AMERISAFE, INC., a Texas corporation (the "Company"), and Mark R. Anderson (the "Executive"). WITNESSETH: WHEREAS the Company desires to continue the employment and/or engagement of services of Executive with the Company for the period provided in this Agreement, and the Executive desires to continue such employment with and/or provide services to the Company, all in accordance with the terms and conditions set forth below; NOW, THEREFORE, for and in consideration of the premises hereof and the mutual covenants contained herein, the parties hereto hereby covenant and agree as follows: 1. Employment. (a) The Company hereby agrees to continue to employ and/or engage the services of the Executive, and the Executive hereby accepts such employment and/or engagement of services with the Company, for the period set forth in Section 2 hereof, subject to the terms and conditions hereinafter set forth. (b) The Executive affirms and represents that he is under no obligation to any former employer or other party which is in any way inconsistent with, or which imposes any restriction upon, the Executive's employment hereunder with the Company, the employment of the Executive by the Company, or the Executive's undertakings under this Agreement. 2. Term of Employment. Unless earlier terminated by the Executive or the Company as provided in this Agreement, the term of the Executive's employment and/or engagement under this Agreement shall be for a period beginning on January 1, 2004 (the "Effective Date") and ending on the third anniversary of the Effective Date, January 1, 2007, provided, however, that this Agreement shall automatically renew for successive one year periods, unless either party shall notify the other in writing not less than thirty (30) days prior to the third anniversary date or any successive anniversary date that it does not intend to renew this Agreement. Such period, plus any annual renewal periods, or, if the Executive's employment or engagement hereunder is earlier terminated as provided herein and including termination pursuant to Section 9 (a)(i)-(iii), such shorter period, is sometimes referred to herein as the "Employment Term". 3. Duties. The Executive shall be employed and/or engaged by the Company as Chairman of the Board of Directors or such other position and/or title as designated by the Board of Directors and shall endeavor in good faith to competently perform such duties as are inherent in his employment and/or engagement and shall also perform and discharge such other duties and responsibilities as the Board of Directors of the Company shall from time to time reasonably determine, not inconsistent with his position as Chairman of the Board of Directors and/or any other position and/or title as designated by the Board of Directors. Executive shall also comply with any Articles of Incorporation and By-Laws of the Company, as well as any other applicable rules, agreements, policies and/or covenants concerning or related to corporate governance of the Company. The Company and the Executive mutually agree that the scope of the Executive's duties will require frequent travel and the Company specifically authorizes the Executive, for the benefit of the Company and the Executive, to perform his duties principally from his personal residence in Florida, with such travel to other locations from time to time as the Board of Directors of the Company may reasonably prescribe. Except as may otherwise be approved in advance by the Board of Directors of the Company, and except during vacation periods and reasonable periods of absence due to sickness, personal injury or other disability, the Executive shall devote his full time during the first year of the Employment Term to the services required of him hereunder; provided that the foregoing shall not prohibit the Executive from engaging in reasonable charitable and community activities. The Executive shall render his business services exclusively to the Company and its subsidiaries during the first year of the Employment Term and shall use his good faith efforts, judgment and energy to improve and advance the business and interests of the Company and its subsidiaries in a manner consistent with the duties of his position. During the second and subsequent years of the Employment Term the Executive is allowed to engage in other business activities subject to the terms of Sections 4, 8, and 10 of this agreement. During the second and subsequent years of the Employment Term, the Executive shall reasonably and in good faith cooperate with the Company and shall attend and participate in meetings, conferences and/or other business events as requested by the Board of Directors. During the second and subsequent years of the Employment Term, the Executive shall also perform such other acts and/or perform such other duties as may be required and/or necessary for the Company and/or the Executive to fulfill legal, regulatory and/or compliance obligations, fiduciary responsibilities and/or corporate reporting and/or governance requirements. 4. Conflicts of Interest and Compliance. Executive shall not engage in any conflict of interest and/or take any actions or engage in any conduct which is contrary to the exclusive interests of the Company. Executive shall comply with all applicable laws and regulations (federal, state and/or local) and shall comply with all applicable directives, orders and regulations of any governmental agency or regulatory body including federal, state and local agencies and bodies. Executive shall also comply with all policies and procedures of the Company and directives of the Board of Directors. Executive understands, acknowledges and agrees that he/she may hold a position of trust and that fiduciary duties and responsibilities may apply under applicable law and that these duties and responsibilities may be continuing in nature, even after separation from employment and/or engagement of services. Executive agrees to fully and faithfully perform and discharge all such duties, responsibilities and obligations. 5. EEO Compliance. Executive shall not engage in any conduct which constitutes an unlawful employment practice or which violates any laws or regulations (federal, state and/or local) prohibiting discrimination, harassment and/or retaliation. Executive acknowledges that the Company is an Equal Opportunity Employer and prohibits all forms of unlawful discrimination in the terms and conditions of employment and prohibits all forms of harassment, including sexual harassment. 2 6. Salary and Bonus. (a) Salary. As compensation for the services to be performed by the Executive hereunder during the Employment Term, the Company shall pay the Executive a base salary at the annual rate of not less than $350,000 during the first year (2004) of the Employment Term; $200,000 during the second year (2005) of the Employment Term; and, $175,000 during the third year (2006) and subsequent years of the Employment Term (said amount, together with any increases thereto as may be determined from time to time by the Compensation Committee of the Board of Directors of the Company in its sole discretion, being hereinafter referred to as "Salary"). Any Salary payable hereunder shall be paid in regular intervals in accordance with the Company's payroll practices from time to time in effect, but in no event less than monthly. (b) Bonus. The Executive shall be eligible to receive bonus compensation from the Company in respect of each fiscal year (or portion thereof) occurring during the Employment Term in amounts, if any, as may be determined by the Compensation Committee of the Board of Directors of the Company in its sole discretion. (c) Withholding, Etc. The payment of any Salary and Bonus under this Section 6 shall be subject to applicable withholding and payroll taxes, and such other deductions as may be required under the Company's employee benefit plans. 7. Other Benefits. During the Employment Term, the Executive shall: (a) be eligible to participate in all employee fringe benefits and pension and/or profit sharing plans that may be provided by the Company for its senior executive officers in accordance with the provision of any such plans, as the same may be in effect from time to time; (b) be eligible to participate in all medical and health plans or other employee welfare benefit plans that may be provided by the company for its senior executive officers in accordance with the provisions of any such plans, as the same be in effect from time to time; (c) be entitled to at least 28 vacation/personal days during the first year of the Employment Term (2004); the Executive shall also be entitled to all paid holidays given by the company to its other senior executive officers; (d) be entitled to sick pay and disability benefits in accordance with any Company policy that may be applicable to senior executive officers from time to time, (e) be entitled to a car allowance at the same level of reimbursement received by the Executive during the 2003 calendar year for the entire period of the Employment Term; and 3 (f) be entitled to reimbursement for all reasonable out-of-pocket business expenses incurred by the Executive in the performance of his duties hereunder in accordance with company policy that may be applicable to senior executive officers from time to time. 8. Confidential Information. The Executive hereby covenants, agrees and acknowledges as follows: (a) The Executive has and will have access to and will participate in the development of or be acquainted with confidential or proprietary information and trade secrets that directly or indirectly relate to the business, prospects, operations and other aspects of the Company and any other present or future affiliates, subsidiaries and/or related entities of the Company (collectively with the Company, the "Companies"), including but not limited to (1) customer lists; the identity, lists or descriptions of new or prospective customers; financial statements; cost reports or other financial information; contract proposals or bidding information, business plans; training and operations methods and manuals; personnel records; software programs; reports and correspondence; and management systems, policies or procedures, including related forms and manuals; (ii) information pertaining to future developments such as future marketing or acquisition plans or ideas; and (iii) all other tangible and intangible property, which are used in the business and operations of the Companies but not made public. The information and trade secrets relating to the business of the Companies described hereinabove in this paragraph (a) are hereinafter referred to collectively as the "Confidential Information", provided that the term "Confidential Information" shall not include any information (x) that is or becomes publicly available (other than as a result of violation of this Agreement by the Executive), or (y) that the Executive receives or received on a non-confidential basis from a source (other than the Companies or any of their representatives) that is not prohibited from disclosing such information by a legal, contractual or fiduciary obligation (provided, however that the Executive shall not be deemed to be in violation of this clause (y) unless he has actual knowledge of any such obligation on the party of any such source). (b) The Executive shall not disclose, use or make known for his or another's benefit any Confidential Information or use such Confidential Information in any way except in connection with the performance of the Executive's duties under this Agreement. The Executive may disclose Confidential Information in response to an order or subpoena of a court or governmental agency of competent jurisdiction and authority provided, however, notice of such order or subpoena shall be immediately communicated to the Company telephonically and in writing so that the Company shall have an opportunity to intervene and assert its rights to nondisclosure prior to any response by Executive to such an order or subpoena and in such notice, Executive shall advise as to whether or not he/she intends to comply with and/or respond to the order and/or subpoena. (c) The Executive acknowledges and agrees that a remedy at law for any breach or threatened breach of the provisions of this Section 8 would be inadequate and, 4 therefore, agrees that the Company shall be entitled to injunctive relief in addition to any other available rights and remedies in case of any such breach or threatened breach; provided, however, that nothing contained herein shall be construed as prohibiting the Company from pursuing any other rights and remedies available for any such breach or threatened breach. (d) The Executive agrees that upon termination of his employment and/or engagement with the company for any reason, the Executive shall promptly return to the Company all Confidential Information in his possession in whatever form maintained (including, without limitation, documentation in any format or medium, computer disks and other electronic media). (e) The obligations of the Executive under this Section 8 shall, except as otherwise provided herein, survive the termination of the Employment Term and/or the expiration or termination of this Agreement for a period of two years. 9. Termination. (a) The Executive's employment and/or engagement hereunder shall be terminated upon the occurrence of any of the following: (i) death of the Executive; (ii) termination of the Executive's employment hereunder by the Executive at any time (a "Resignation"); (iii) a Termination for Cause (as defined herein); (iv) a Termination Without Cause (as defined herein); The term "Termination for Cause" shall mean a termination of the Executive's employment and/or engagement hereunder by action of the Board of Directors of the Company at any time, including during the Employment Term, as a result of any of the following with respect to the Executive: (1) conviction of the commission of a felony, (2) acts of dishonesty or moral turpitude which are materially detrimental to the Companies, (3) acts or omissions which the Executive reasonably knew were likely to materially damage the business of the Company, (4) failure by the Executive to obey the reasonable and lawful orders of the Board of Directors of the Company, or (5) gross negligence by the Executive in the performance of, or willful disregard by the Executive of, his obligations hereunder; provided, however, that prior to any termination pursuant to clauses (4) or (5) above, the Board of Directors of the Company shall have provided the Executive with written notice of such action, failure or event and a reasonable period in which to cure the same. This advance notice and cure provision for termination pursuant to clauses (4) or (5) above shall not apply and is not required if giving notice and/or a cure period would be contrary to the best interests of the Company. 5 The term "Termination Without Cause" shall mean the Company is giving written notice at any time, including during the Employment Term, to the Executive that the Executive's employment and/or engagement is being terminated or nonrenewed (pursuant to paragraph 2. hereof) other than pursuant to clauses (i), (ii), or (iii) of the first paragraph of this Section 9(a). (b) Notwithstanding anything to the contrary expressed herein, the Company shall not be obligated to make any payments to the Executive or on his behalf of whatever kind or nature by reason of the Executive's cessation of employment and/or engagement pursuant to clauses (i), (ii), or (iii) of the first paragraph of this Section 9(a), other than (i) such amounts, if any, of his Salary as shall be accrued and remained unpaid as of the date of said cessation and (ii) such other amounts, if any, which may be then otherwise payable to the Executive pursuant to the terns of the Company's benefits plans or pursuant to Section 7 above. (c) Notwithstanding anything to the contrary expressed herein if the Executive's cessation of employment and/or engagement is pursuant to clause (iv) of the first paragraph of this Section 9(a) on or after January 1st, 2007, the Company shall not be obligated to make any payments to the Executive or on his behalf of whatever kind or nature other than (i) such amounts, if any, of his Salary as shall be accrued and remained unpaid as of the date of said cessation and (ii) such other amounts, if any, which may be then otherwise payable to the Executive pursuant to the terms of the Company's benefits plans or pursuant to Section 7 above. (d) Notwithstanding anything to the contrary expressed herein if the Executive's cessation of employment and/or engagement is pursuant to clause (iv) of the first paragraph of this Section 9(a) at any time before January 1st, 2007 the Employment Term shall be defined as the period beginning on January 1st, 2004 and ending on January 1st, 2007 and the Company shall be obligated to make salary and bonus payments to the Executive or on his behalf according to the terms of Section 6, and provide the benefits to the Executive or on his behalf, and such other amounts, if any, according to the terms of the Company's benefit plans or pursuant to Section 7 above, during the entire Employment Term. In this regard, the salary, bonus and benefits obligations in Section 6 and Section 7 shall continue to the date of cessation through the close of business on December 31, 2006 in the same manner, method, terms and/or installments as if employment and/or engagement of services had not ceased. There shall not be any right of the Executive to receive any lump sum payments and/or any acceleration of any amounts (salary, bonus or otherwise) or of any benefits. 10. Restrictive Covenants. 10.01 Non-competition and Non-solicitation of Customers (a) The Executive agrees that during the Employment Term (as defined in Section 2 of this Agreement), without the prior written consent of the 6 Company, Executive shall refrain, directly or indirectly, and whether as a principal, agent, employee, owner, partner, officer, director, shareholder, member or otherwise, alone or in association with any other person or entity, from carrying on or engaging in a business similar to that of the Company and/or from soliciting customers of the Company within the Designated Area, so long as the Company carries on like a business therein. (b) Definition of Designated Area. The term "Designated Area" shall mean the states, parishes, counties and/or municipalities designated in Attachment "A". (c) Business of the Company. Executive acknowledges and understands that the "business" of the Company involves and relates to the underwriting of risks for highly hazardous worker's compensation insurance and related services. Executive further acknowledges, agrees and represents that he/she understands and knows the business in which the Company is engaged and the scope, activities and/or business pursuits involved in the business of the Company and in the underwriting of risks for highly hazardous worker's compensation insurance and related services. Executive further acknowledges and understands that the non-competition and non-solicitation of customer restrictions in this Agreement prohibit the Executive from engaging, in any capacity and/or any position, and/or from conducting any activities and/or business similar to that of the Company and under the specific terms and conditions of this Agreement. (e) Customers of the Company. For purposes of this Agreement, "customers" shall include, but are not limited to, insured businesses and/or entities who have and/or have had insurance coverage with the Company and insurance agents with whom the Company has contracts, agreements, arrangements and/or any type of business, insurance placement and/or working relationship. Executive acknowledges and represents that he/she understands the nature of the Company's customer relationships and who and/or what comprises its customers. 10.02 Non-solicitation. Executive shall not, during the Employment Term, directly or indirectly solicit or induce, or attempt to solicit or induce, any employee, agent of or consultant to the Company to leave his or her employment or terminate his or her consultation agreement or similar relationship with the Company. 10.03 Amerisafe Designation. As used in this Section 10, Amerisafe, Inc. and/or the "Company" includes Amerisafe, Inc., American Interstate Insurance Company, Silver Oak Casualty, Inc. and any and all predecessor entities, successor entities, affiliate entities, parent companies and subsidiaries. The parties acknowledge and agree that the restrictive covenants in this Section 10 inure to the benefit of and operate for the interest of all of the above-mentioned companies and affiliates. 7 10.04 Remedies. In the event of a breach, or a threatened or attempted breach, of any provision of this Section 10 by the Executive, the parties recognize that such a breach would cause irreparable harm to the Company, thus the Company shall, in addition to all other remedies, be entitled to: (a) a temporary, preliminary and/or permanent injunction against such breach without the necessity of showing any actual damages or any irreparable injury; (b) a decree for the specific performance of this Agreement; and/or (c) damages, attorney's fees and costs. All remedies in favor of Company shall not be exclusive, but shall be cumulative. 10.05 Construction, Reformation and Severability. It is understood and agreed that, should any portion of any clause or paragraph of this Section 10 be deemed too broad to permit enforcement to its full extent, or should any portion of any clause or paragraph of this Section 10 be deemed unreasonable, then said clause or paragraph shall be reformed and enforced to the maximum extent permitted by law. Additionally, if any of the provisions of this Section 10 are ever found by a court of competent jurisdiction to exceed the maximum enforceable (i) periods of time, (ii) geographic areas of restriction, (iii) scope of non-competition or non-solicitation and/or (iv) description of the Company's business or customers, or for any other reason, then such unenforceable element(s) of this Section 10 shall be reformed and reduced to the maximum periods of time, geographic areas of restriction, scope of non-competition or non-solicitation and/or description of the Company's business that is permitted by law. In this regard, any unenforceable, unreasonable and/or overly broad provision shall be reformed and/or severed so as to permit enforcement to the fullest extent permitted by law. Reformation and severability shall apply. 10.06 Reasonableness. Executive acknowledges, represents and agrees that the restrictive covenants in this Section 10 are reasonable in nature, scope, time and territory and in the terms and conditions set forth herein. Executive acknowledges, represents and agrees that the Company has expended substantial cost in training Executive and that the Company has provided him/her with access to valuable information and has provided him/her with valuable experience. In addition, Executive acknowledges, represents and agrees that the Company has placed Executive in contact with its customers and has made Executive part of its business plans. Executive further acknowledges, represents and agrees that Executive would not have obtained such training, experience, contacts and information from other sources without the employment relationship with the Company. Executive further acknowledges, represents and agrees that the foregoing have occurred and/or resulted based on the Company's reliance on these restrictive covenants and Executive's representations and obligations made herein. Executive further acknowledges, represents and agrees that this Section 10 and the obligations of Executive under these restrictive covenants are reasonable in order to protect the legitimate interests of the Company. Executive further acknowledges, represents and agrees that by virtue of his/her job position, he/she has become an integral and influential component of the Company's current and future business plans. It is Executive's desire and intent that this Agreement be given full force and effect. 11. Non-Assignability. (a) Neither this Agreement nor any right or interest hereunder shall be assignable by the Executive or his beneficiaries or legal representatives without the Company's prior written consent; provided, however, that nothing in this Section 11(a) shall 8 preclude the Executive from designating a beneficiary to receive any benefit payable hereunder upon his death or incapacity. (b) Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to exclusion, attachment, levy or similar process or to assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect. 12. Binding Effect. Without limiting or diminishing the effect of Section 11 hereof, this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors, legal representatives and assigns. 13. Notices. All notices which are required or may be given pursuant to the terms of this Agreement shall be in writing and shall be sufficient in all respects if given in writing and (i) delivered personally, (ii) five business days after being mailed by certified or registered mail, return receipt requested and postage prepaid, (iii) sent via a nationally recognized overnight courier, or (iv) sent via facsimile confirmed by certified or registered mail, return receipt requested and postage prepaid, if to the Company at the Company's principal place of business, and if to the Executive, at his home address most recently filed with the Company, or to such other address or addresses as either party shall have designated in writing to the other party hereto. 14. Law Governing. This Agreement shall be governed by and construed in accordance with the laws of the State of Louisiana and without regard to the application of conflict of laws principles and/or conflicts of laws and statutory provisions of the State of Louisiana. 15. Severability. The Executive agrees that in the event that any court of competent jurisdiction shall finally hold that any provision of this Agreement is void or constitutes an unreasonable restriction against the Executive, this agreement shall not be rendered void but shall apply with respect to such extent as such court may judicially determine constitutes a reasonable restriction under the circumstances. If any part of this Agreement is held by a court of competent jurisdiction to be invalid, illegible or incapable of being enforced in whole or in part by reason of any rule of law or public policy, such part shall be deemed to be severed from the remainder of this Agreement for the purpose only of the particular legal proceedings in question and all other covenants and provisions of this Agreement shall in every other respect continue in full force and effect and no covenant or provision shall be deemed dependent upon any other covenant or provision. Severability and reformation shall apply. It is understood and agreed that, should any portion of any clause or paragraph of this Agreement be deemed too broad to permit enforcement to its full extent, or should any portion of any clause or paragraph of this Agreement be deemed unreasonable, then said clause or paragraph shall be reformed and enforced to the maximum extent permitted by law. 9 16. Waiver. Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment of any right or power hereunder at any one or more times be deemed a waiver or relinquishment of such right or power at any other time or times. 17. Entire Agreement; Modifications. This Agreement, with referenced Attachment "A," constitutes the entire and final expression of the agreement of the parties with respect to the subject matter hereof and supersedes all prior and/or contemporaneous agreements, oral and written, between the parties hereto with respect to the subject matter hereof. This Agreement may be modified or amended only by an instrument in writing signed by both parties hereto. 18. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. AMERISAFE, INC. BY: /s/ C. Allen Bradley, Jr. -------------------------- C. Allen Bradley, Jr. EXECUTIVE: BY: /s/ Mark R. Anderson -------------------- Mark R. Anderson 10 EX-10.2 6 d27260exv10w2.txt EMPLOYMENT AGREEMENT - C. ALLEN BRADLEY, JR. Exhibit 10.2 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT dated as of January 1, 2004 by and between AMERISAFE, INC., a Texas corporation (the "Company"), and C. Allen Bradley, Jr. (the "Employee"). WITNESSETH: WHEREAS the Company desires to induce the Employee to continue in the employment by the company for the period provided in this Agreement, and the Employee is willing to continue such employment with the Company on a full-time basis, all in accordance with the terms and conditions set forth below; NOW, THEREFORE, for and in consideration of the premises hereof and the mutual covenants contained herein, the parties hereto hereby covenant and agree as follows: 1. Employment. (a) The Company hereby agrees to continue to employ the Employee, and the Employee hereby accepts such employment with the Company, for the period set forth in Section 2 hereof, subject to the terms and conditions hereinafter set forth. (b) The Employee affirms and represents that he is under no obligation to any former employer or other party which is in any way inconsistent with, or which imposes any restriction upon, the Employee's employment hereunder with the Company, the employment of the Employee by the Company, or the Employee's undertakings under this Agreement. 2. Term of Employment. Unless earlier terminated by the Employee or the Company as provided in this Agreement, the term of the Employee's employment under this Agreement shall be for a period beginning on January 1, 2004 (the "Effective Date") and ending on the second anniversary of the Effective Date, January 1, 2006, provided, however, that this Agreement shall automatically renew for successive one year periods, unless either party shall notify the other in writing not less than thirty (30) days prior to the second anniversary date or any successive anniversary date that it does not intend to renew this Agreement. Such period, plus any annual renewal periods, or, if the Employee's employment hereunder is earlier terminated as provided herein and including termination pursuant to Section 9(a)(i)-(v), such shorter period, is sometimes referred to herein as the "Employment Term". 3. Duties. The Employee shall be employed by the Company as a senior executive officer and shall endeavor in good faith to competently perform such duties as inherent in his/her employment and/or any designated job position and/or as specified by the Company and shall also perform and discharge such other employment duties and responsibilities as the Board of Directors of the Company shall from time to time reasonably determine, not inconsistent with his/her position as a senior executive officer with the Company. Employee shall also comply with any By-Laws of the Company, as applicable. The Employee shall perform his duties principally at the offices of the Company at 2301 Highway 190 West, DeRidder, Louisiana, with such travel to such other locations from time to time as the Board of Directors of the Company may reasonably prescribe. Except as may otherwise be approved in advance by the Board of Directors of the Company, and except during vacation periods and reasonable periods of absence due to sickness, personal injury or other disability, the Employee shall devote his full time during normal business hours throughout the Employment Term to the services required of him hereunder; provided that the foregoing shall not prohibit the Employee from engaging in reasonable charitable and community activities. The Employee shall render his business services exclusively to the Company and its subsidiaries during the Employment Term and shall use his good faith efforts, judgment and energy to improve and advance the business and interests of the Company and its subsidiaries in a manner consistent with the duties of his position. 4. Conflicts of Interest and Compliance. Employee shall not engage in any conflict of interest and/or take any actions or engage in any conduct which is contrary to the exclusive interests of the Company. Employee shall comply with all applicable laws and regulations (federal, state and/or local) and shall comply with all applicable directives, orders and regulations of any governmental agency or regulatory body including federal, state and local agencies and bodies. Employee shall also comply with all policies and procedures of the Company and directives of the Board of Directors. Employee understands, acknowledges and agrees that he/she may hold a position of trust and that fiduciary duties and responsibilities may apply under applicable law and that these duties and responsibilities may be continuing in nature, even after separation from employment. Employee agrees to fully and faithfully perform and discharge all such duties, responsibilities and obligations. 5. EEO Compliance. Employee shall not engage in any conduct which constitutes an unlawful employment practice or which violates any laws or regulations (federal, state and/or local) prohibiting discrimination, harassment and/or retaliation. Employee acknowledges that the Company is an Equal Opportunity Employer and prohibits all forms of unlawful discrimination in the terms and conditions of employment and prohibits all forms of harassment, including sexual harassment. 6. Salary and Bonus. (a) Salary. As compensation for the services to be performed by the Employee hereunder during the Employment Term, the Company shall pay the Employee a base salary at the annual rate of not less than Two Hundred Seventy-Five Thousand Dollars ($275,000.00) (said amount, together with any increases thereto as may be determined from time to time by the Compensation Committee of the Board of Directors of the Company in its sole discretion, being hereinafter referred to as "Salary"). Any Salary payable hereunder shall be paid in regular intervals in accordance with the Company's payroll practices from time to time in effect, but in no event less than monthly. (b) Bonus. The Employee shall be eligible to receive bonus compensation from the Company in respect of each fiscal year (or portion thereof) occurring during the 2 Employment Term in amounts, if any, as may be determined by the Compensation Committee of the Board of Directors of the Company in its sole discretion on the basis of performance-based criteria to be established from time to time by such Committee in its sole discretion. (c) Withholding, Etc. The payment of any Salary and Bonus under this Section 6, and the payment of any severance pay pursuant to Section 9 hereof, shall be subject to applicable withholding and payroll taxes and such other deductions as may be required under the Company's employee benefit plans. 7. Other Benefits. During the Employment Term, the Employee shall: (a) be eligible to participate in all employee fringe benefits and pension and/or profit sharing plans that may be provided by the Company for its other senior executive officers in accordance with the provision of any such plans, as the same may be in effect from time to time; (b) be eligible to participate in all medical and health plans or other employee welfare benefit plans that may be provided by the company for its other senior executive officers in accordance with the provisions of any such plans, as the same be in effect from time to time; (c) be entitled to at least 23 vacation/personal days in each calendar year; the Employee shall also be entitled to all paid holidays given by the company to its other senior executive officers; (d) be entitled to sick pay and disability benefits in accordance with any Company policy that may be applicable to other senior executive officers from time to time, (e) be entitled to a car allowance consistent with Company practice as of the date hereof; and (f) be entitled to reimbursement for all reasonable out-of-pocket business expenses incurred by the Employee in the performance of his duties hereunder in accordance with company policy that may be applicable to senior executive officers from time to time. 8. Confidential Information. The Employee hereby covenants, agrees and acknowledges as follows: (a) The Employee has and will have access to and will participate in the development of or be acquainted with confidential or proprietary information and trade secrets that directly or indirectly relate to the business, prospects, operations and other aspects of the Company and any other present or future subsidiaries of the Company (collectively with the Company, the "Companies"), including but not limited to (1) customer lists; the identity, lists or descriptions of new or 3 prospective customers; financial statements; cost reports or other financial information; contract proposals or bidding information, business plans; training and operations methods and manuals; personnel records; software programs; reports and correspondence; and management systems, policies or procedures, including related forms and manuals; (ii) information pertaining to future developments such as future marketing or acquisition plans or ideas; and (iii) all other tangible and intangible property, which are used in the business and operations of the Companies but not made public. The information and trade secrets relating to the business of the Companies described hereinabove in this paragraph (a) are hereinafter referred to collectively as the "Confidential Information", provided that the term "Confidential Information" shall not include any information (x) that is or becomes publicly available (other than as a result of violation of this Agreement by the Employee), or (y) that the Employee receives or received on a non-confidential basis from a source (other than the Companies or any of their representatives) that is not prohibited from disclosing such information by a legal, contractual or fiduciary obligation (provided, however that the Employee shall not be deemed to be in violation of this clause (y) unless he has actual knowledge of any such obligation on the party of any such source). (b) The Employee shall not disclose, use or make known for his or another's benefit any Confidential Information or use such Confidential Information in any way except in connection with the performance of the Employee's duties under this Agreement. The Employee may disclose Confidential Information in response to an order or subpoena of a court or governmental agency of competent jurisdiction and authority provided, however, notice of such order or subpoena shall be immediately communicated to the Company telephonically and in writing so that the Company shall have an opportunity to intervene and assert its rights to nondisclosure prior to any response by Employee to such an order or subpoena and in such notice, Employee shall advise as to whether or not he/she intends to comply with and/or respond to the order and/or subpoena. (c) The Employee acknowledges and agrees that a remedy at law for any breach or threatened breach of the provisions of this Section 8 would be inadequate and, therefore, agrees that the Company shall be entitled to injunctive relief in addition to any other available rights and remedies in case of any such breach or threatened breach; provided, however, that nothing contained herein shall be construed as prohibiting the Company from pursuing any other rights and remedies available for any such breach or threatened breach. (d) The Employee agrees that upon termination of his employment with the company for any reason, the Employee shall promptly return to the Company all Confidential Information in his possession in whatever form maintained (including, without limitation, computer disks and other electronic media). (e) The obligations of the Employee under this Section 8 shall, except as otherwise provided herein, survive the termination of the Employment Term and/or the expiration or termination of this Agreement for a period of five years. 4 9. Termination. (a) The Employee's employment hereunder shall be terminated upon the occurrence of any of the following: (i) death of the Employee; (ii) the Employee's inability to perform his duties on account of disability or incapacity for a period of one hundred eighty (180) or more days, whether or not consecutive, within any period of twelve (12) consecutive months; (iii) a Termination for Cause (as defined herein); (iv) a Termination Without Cause (as defined herein); or (v) termination of the Employee's employment hereunder by the Employee at any time other than a termination by the Employee pursuant to Section 9(a)(iv) hereof (a "Resignation"). The term "Termination for Cause" shall mean a termination of the Employee's employment hereunder by action of the Board of Directors of the Company at any time, including during the Employment Term, as a result of any of the following with respect to the Employee: (1) indictment or arrest for the alleged commission of a felony, (2) acts of dishonesty or moral turpitude which are materially detrimental to the Companies, (3) acts or omissions which the Employee reasonably knew were likely to materially damage the business of the Company, (4) failure by the Employee to obey the reasonable and lawful orders of the Board of Directors of the Company, or (5) gross negligence by the Employee in the performance of, or willful disregard by the Employee of, his obligations hereunder; provided, however, that prior to any termination pursuant to clauses (4) or (5) above, the Board of Directors of the Company shall have provided the Employee with written notice of such action, failure or event and a reasonable period in which to cure the same. This advance notice and cure provision for termination pursuant to clauses (4) or (5) above shall not apply and is not required if giving notice and/or a cure period would be contrary to the best interests of the Company. The term "Termination Without Cause" shall mean: (1) the Company is giving written notice at any time, including during the Employment Term, to the Employee that the Employee's employment is being terminated or non-renewed (pursuant to paragraph 2. hereof) other than pursuant to clauses (i), (ii) or (iii) of the first paragraph of this Section 9(a), or (2) the Employee giving written notice to the Company that he is terminating his employment with the Company upon the occurrence of any of the following items: 5 (A) significant adverse change in the nature or scope of the authorities, powers, functions, responsibilities or duties associated with the job position designated and/or existing at the effective date of this Agreement, a reduction in the Employee's Salary, or the termination of the Employee's rights to any employee benefits to which he was entitled pursuant to this Agreement (other than a termination of rights or benefits applicable to all executive officers), any of which is not remedied within 10 calendar days after receipt by the Company of written notice from the Employee of such change, reduction or termination as the case may be; (B) the Company shall require the Employee to have his principal location of work changed to any location which is in excess of 25 miles from the location thereof as of the date of this Agreement without his prior written consent; or (C) without limiting the generality or effect of the foregoing, any material breach of this Agreement by the Company or any successor thereto. (D) a "Change of Control". For purposes of this Agreement and this provision, a Change of Control shall mean the following: (i) sale of all or substantially all of the Company's assets to any person or entity; (ii) a merger, consolidation or other similar business combination of the Company or of the subsidiaries of the Company, taken as a whole (the Subsidiaries"), with or into another company other than AmCOMP Incorporated, with the effect that, immediately following such merger, consolidation or other business combination, the Qualified Shareholders of the Company or the Subsidiaries, taken as a whole, prior to such merger, consolidation or other business combination hold less than 50% of the combined voting power of the then outstanding securities of the surviving company of such merger, consolidation or other business combination ordinarily ( and apart from rights accruing under special circumstances) having the right to vote in the election of directors; OR (iii) a sale, transfer and/or acquisition of a majority of the common stock of the Company to a person or entity that is not a "Qualified Shareholder." For purposes of this Agreement and this provision, a Change of Control shall not mean a public offering of equity securities of the Company registered under the Securities Act of 1933, as amended. For purposes of this Agreement and this provision, "Qualified Shareholders" is defined as and shall mean WCAS VII, L.P. Sprout Group and affiliates of either WCAS VII, L.P. or Sprout Group. (b) In the event that the Employee's employment is terminated at any time by a Termination Without Cause, for a 18 month period following the effective date of 6 such termination, the company shall pay (as severance, termination pay, contract payout, compensation and/or liquidated damages) the Salary that would have otherwise been payable to the Employee during such period. This amount will be paid during such period in accordance with the Company's then existing payroll practices, methods and/or pay periods. In addition, in the event that Employee's employment is terminated at any time by Termination Without Cause, the Company will pay and/or reimburse Employee for a 18 month period following such termination the actual cost of COBRA continuing health coverage premiums. In this regard, if the Employee is eligible for COBRA continuing health benefits and if Employee timely elects COBRA continuing health care coverage, the Company will pay and/or reimburse up to a maximum of 18 months of COBRA continuing health care coverage premiums. It shall be at the Company's option and discretion to either pay the COBRA premiums directly or to reimburse the Employee for premiums that the Employee pays for COBRA continuing health coverage. Any premiums or amounts due for COBRA continuing health coverage beyond the 18 month period referenced above shall be at the sole cost and expense of Employee and will not be paid and/or reimbursed by the Company. The above described obligations of the Company (continuation of salary for a 18 month period following Termination Without Cause and payment of COBRA premiums for a 18 month period following Termination Without Cause) shall be the exclusive remedies and payment obligations and no other amounts or obligations will be due and owing by the Company to Employee. In this regard, Termination Without Cause may be effectuated at any time during the Employment Term or renewal and the only amounts that the Company will be obligated or required to pay are the amounts calculated according to the formulas set forth above. (c) Notwithstanding anything to the contrary expressed or implied herein, except as required by applicable law and except as set forth in Section 9(b) above, the Company shall not be obligated to make any payments to the Employee or on his behalf of whatever kind or nature by reason of the Employee's cessation of employment (including, without limitation, by reason of a Termination for Cause), other than (i) such amounts, if any, of his Salary as shall be accrued and remained unpaid as of the date of said cessation and (ii) such other amounts, if any, which may be then otherwise payable to the Employee pursuant to the terms of the Company's benefits plans or pursuant to Section 7 above. 10. Restrictive Covenants 10.01 Noncompetition and Nonsolicitation of Customers. (a) The Employee agrees that during the Noncompete Period (as defined herein), without the prior written consent of the Company, Employee shall refrain, directly or indirectly, and whether as a principal, agent, employee, owner, partner, officer, director, shareholder, member or otherwise, alone or in association with any other person or entity, from carrying on or engaging in a business similar to that of the 7 Company and/or from soliciting customers of the Company within the Designated Area, so long as the Company carries on like a business therein. (b) Noncompete Period. For purposes of this Agreement, the "Noncompete Period" shall mean the Employment Term plus: (i) in the event that the employment of the Employee is terminated by a Termination Without Cause, a period of 18 months. As such, the Noncompete Period would be the term and duration of employment and would extend beyond termination and/or separation for 18 months; or (ii) in the event that the employment of the Employee is terminated by the Company by a Termination With Cause, or by the Employee's Resignation pursuant to Section 9(v) of this Agreement or the Employee's nonrenewal under Section 2 of this Agreement, the Noncompete Period shall expire upon the expiration, termination and/or separation of the Employee's employment with the Company; provided, however, in such event the Company shall have the exclusive option and absolute right of extending the Noncompete Period for a period of 18 months following the termination and/or separation of employment if the Company: (1) delivers written notice to the Employee irrevocably exercising such option before employment termination and/or separation or within 180 days after employment separation and/or termination and (2) agrees to pay and does pay the employee the Salary and benefit amounts as designated under Section 9(b) of this Agreement for such 18 month period. If the Company exercises this option and right and complies with the requirements for same, the Noncompete Period shall be extended for the 18 month period designated and Employee agrees and acknowledges that he/she is bound by such period. (c) Definition of Designated Area. The term "Designated Area" shall mean the states, parishes, counties and/or municipalities designated in Attachment "A". (d) Business of the Company. Employee acknowledges and understands that the "business" of the Company involves and relates to the underwriting of risks for worker's compensation insurance and related services. Employee further acknowledges, agrees and represents that he/she understands and knows the business in which the Company is engaged and the scope, activities and/or business pursuits involved in the business of the Company and in the underwriting of risks for worker's compensation insurance and related services. Employee further acknowledges and understands that the noncompetition and nonsolicitation of customer restrictions in this Agreement prohibit the Employee from engaging, in any capacity and/or any position, and/or from conducting any activities and/or business similar to that of the Company and under the specific terms and conditions of this Agreement. 8 (e) Customers of the Company. For purposes of this Agreement, "customers" shall include, but are not limited to, insured businesses and/or entities who have and/or have had insurance coverage with the Company and insurance agents with whom the Company has contracts, agreements, arrangements and/or any type of business, insurance placement and/or working relationship. Employee acknowledges and represents that he/she understands the nature of the Company's customer relationships and who and/or what comprises its customers. 10.02 Nonsolicitation. Employee shall not, during the Noncompete Period, directly or indirectly solicit or induce, or attempt to solicit or induce, any employee, agent of or consultant to the Company to leave his or her employment or terminate his or her consultation agreement or similar relationship with the Company. 10.03 Amerisafe Designation. As used in this Section 10, Amerisafe, Inc. and/or the "Company" includes Amerisafe, Inc., American Interstate Insurance Company, Silver Oak Casualty, Inc. and any and all predecessor entities, successor entities, affiliate entities, parent companies and subsidiaries. The parties acknowledge and agree that the restrictive covenants in this Section 10 enure to the benefit of and operate for the interest of all of the above-mentioned companies and affiliates. 10.04 Remedies. In the event of a breach, or a threatened or attempted breach, of any provision of this Section 10 by the Employee, the parties recognize that such a breach would cause irreparable harm to the Company, thus the Company shall, in addition to all other remedies, be entitled to: (a) a temporary, preliminary and/or permanent injunction against such breach without the necessity of showing any actual damages or any irreparable injury; (b) a decree for the specific performance of this Agreement; and/or (c) damages, attorney's fees and costs. All remedies in favor of Company shall not be exclusive, but shall be cumulative. 10.05 Construction, Reformation and Severability. It is understood and agreed that, should any portion of any clause or paragraph of this Section 10 be deemed too broad to permit enforcement to its full extent, or should any portion of any clause or paragraph of this Section 10 be deemed unreasonable, then said clause or paragraph shall be reformed and enforced to the maximum extent permitted by law. Additionally, if any of the provisions of this Section 10 are ever found by a court of competent jurisdiction to exceed the maximum enforceable (i) periods of time, (ii) geographic areas of restriction, (iii) scope of noncompetition or nonsolicitation and/or (iv) description of the Company's business or customers, or for any other reason, then such unenforceable element(s) of this Section 10 shall be reformed and reduced to the maximum periods of time, geographic areas of restriction, scope of noncompetition or nonsolicitation and/or description of the Company's business that is permitted by law. In this regard, any unenforceable, unreasonable and/or overly broad provision shall be reformed and/or severed so as to permit enforcement to the fullest extent permitted by law. Reformation and severability shall apply. 10.06 Reasonableness. Employee acknowledges, represents and agrees that the restrictive covenants in this Section 10 are reasonable in nature, scope, time and territory and in the terms and conditions set forth herein. Employee acknowledges, represents and agrees that the Company has expended substantial cost in training Employee and that the Company has 9 provided him/her with access to valuable information and has provided him/her with valuable experience. In addition, Employee acknowledges, represents and agrees that the Company has placed Employee in contact with its customers and has made Employee part of its business plans. Employee further acknowledges, represents and agrees that Employee would not have obtained such training, experience, contacts and information from other sources without the employment relationship with the Company. Employee further acknowledges, represents and agrees that the foregoing have occurred and/or resulted based on the Company's reliance on these restrictive covenants and Employee's representations and obligations made herein. Employee further acknowledges, represents and agrees that this Section 10 and the obligations of Employee under these restrictive covenants are reasonable in order to protect the legitimate interests of the Company. Employee further acknowledges, represents and agrees that by virtue of his/her job position, he/she has become an integral and influential component of the Company's current and future business plans. It is Employee's desire and intent that this Agreement be given full force and effect. 11. Non-Assignability. (a) Neither this Agreement nor any right or interest hereunder shall be assignable by the Employee or his beneficiaries or legal representatives without the Company's prior written consent; provided, however, that nothing in this Section 11(a) shall preclude the Employee from designating a beneficiary to receive any benefit payable hereunder upon his death or incapacity. (b) Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to exclusion, attachment, levy or similar process or to assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect. 12. Binding Effect. Without limiting or diminishing the effect of Section 11 hereof, this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors, legal representatives and assigns. 13. Notices. All notices which are required or may be given pursuant to the terms of this Agreement shall be in writing and shall be sufficient in all respects if given in writing and (i) delivered personally, (ii) five business days after being mailed by certified or registered mail, return receipt requested and postage prepaid, (iii) sent via a nationally recognized overnight courier, or (iv) sent via facsimile confirmed by certified or registered mail, return receipt requested and postage prepaid, if to the Company at the Company's principal place of business, and if to the Employee, at his home address most recently filed with the Company, or to such other address or addresses as either party shall have designated in writing to the other party hereto. 10 14. Law Governing. This Agreement shall be governed by and construed in accordance with the laws of the State of Louisiana. 15. Severability. The Employee agrees that in the event that any court of competent jurisdiction shall finally hold that any provision of this Agreement is void or constitutes an unreasonable restriction against the Employee, this Agreement shall not be rendered void but shall apply with respect to such extent as such court may judicially determine constitutes a reasonable restriction under the circumstances. If any part of this Agreement is held by a court of competent jurisdiction to be invalid, illegible or incapable of being enforced in whole or in part by reason of any rule of law or public policy, such part shall be deemed to be severed from the remainder of this Agreement for the purpose only of the particular legal proceedings in question and all other covenants and provisions of this Agreement shall in every other respect continue in full force and effect and no covenant or provision shall be deemed dependent upon any other covenant or provision. Severability and reformation shall apply. It is understood and agreed that, should any portion of any clause or paragraph of this Agreement be deemed too broad to permit enforcement to its full extent, or should any portion of any clause or paragraph of this Agreement be deemed unreasonable, then said clause or paragraph shall be reformed and enforced to the maximum extent permitted by law. 16. Waiver. Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment of any right or power hereunder at any one or more times be deemed a waiver or relinquishment of such right or power at any other time or times. 17. Entire Agreement; Modifications. This Agreement, with referenced Attachment "A," constitutes the entire and final expression of the agreement of the parties with respect to the subject matter hereof and supersedes all prior and/or contemporaneous agreements, oral and written, between the parties hereto with respect to the subject matter hereof. This Agreement may be modified or amended only by an instrument in writing signed by both parties hereto. 11 18. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. AMERISAFE, INC. BY: /s/ Mark R. Anderson ---------------------------------------- EMPLOYEE: BY: /s/ C. Allen Bradley, Jr. ---------------------------------------- C. Allen Bradley, Jr. 12 EMPLOYMENT AGREEMENT AMENDMENT NO 1 This First Amendment to the Employment Agreement dated January 1, 2004 by and between Amerisafe, Inc., a Texas corporation (the "Company"), and C. Allen Bradley, Jr. (the "Employee"), hereby amends the Agreement as follows: Item 2. Term of Employment The paragraph beginning, "Unless earlier terminated by the Employee or the Company as provided in this Agreement, the term of the Employee's employment under this Agreement shall be for a period beginning on January 1, 2004 (the "Effective Date") and ending on the second anniversary of the Effective Date, January 1, 2006..." is hereby amended to read: "Unless earlier terminated by the Employee or the Company as provided in this Agreement, the term of the Employee's employment under this Agreement shall be for a period beginning on January 1, 2004 (the "Effective Date") and ending on the fourth anniversary of the Effective Date, January 1, 2008..." This Amendment is effective June 17, 2005. AMERISAFE, Inc. By: /s/ Arthur L. Hunt ---------------------------------------- Arthur L. Hunt, Executive Vice President Acknowledged and agreed to June 17, 2005 /s/ C. Allen Bradley, Jr. ---------------------------------------- C. Allen Bradley, Jr. EX-10.3 7 d27260exv10w3.txt EMPLOYMENT AGREEMENT - C. GEOFFREY R. BANTA Exhibit 10.3 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT dated as of January 1, 2004 by and between AMERISAFE, INC., a Texas corporation (the "Company"), and Geoffrey R. Banta (the "Employee"). WITNESSETH: WHEREAS the Company desires to induce the Employee to continue in the employment by the company for the period provided in this Agreement, and the Employee is willing to continue such employment with the Company on a full-time basis, all in accordance with the terms and conditions set forth below; NOW, THEREFORE, for and in consideration of the premises hereof and the mutual covenants contained herein, the parties hereto hereby covenant and agree as follows: 1. Employment. (a) The Company hereby agrees to continue to employ the Employee, and the Employee hereby accepts such employment with the Company, for the period set forth in Section 2 hereof, subject to the terms and conditions hereinafter set forth. (b) The Employee affirms and represents that he is under no obligation to any former employer or other party which is in any way inconsistent with, or which imposes any restriction upon, the Employee's employment hereunder with the Company, the employment of the Employee by the Company, or the Employee's undertakings under this Agreement. 2. Term of Employment. Unless earlier terminated by the Employee or the Company as provided in this Agreement, the term of the Employee's employment under this Agreement shall be for a period beginning on January 1, 2004 (the "Effective Date") and ending on the second anniversary of the Effective Date, January 1, 2006, provided, however, that this Agreement shall automatically renew for successive one year periods, unless either party shall notify the other in writing not less than thirty (30) days prior to the second anniversary date or any successive anniversary date that it does not intend to renew this Agreement. Such period, plus any annual renewal periods, or, if the Employee's employment hereunder is earlier terminated as provided herein and including termination pursuant to Section 9(a)(i)-(v), such shorter period, is sometimes referred to herein as the "Employment Term". 3. Duties. The Employee shall be employed by the Company as a senior executive officer and shall endeavor in good faith to competently perform such duties as inherent in his/her employment and/or any designated job position and/or as specified by the Company and shall also perform and discharge such other employment duties and responsibilities as the Board of Directors of the Company shall from time to time reasonably determine, not inconsistent with his/her position as a senior executive officer with the Company. Employee shall also comply with any By-Laws of the Company, as applicable. The Employee shall perform his duties principally at the offices of the Company at 2301 Highway 190 West, DeRidder, Louisiana, with such travel to such other locations from time to time as the Board of Directors of the Company may reasonably prescribe. Except as may otherwise be approved in advance by the Board of Directors of the Company, and except during vacation periods and reasonable periods of absence due to sickness, personal injury or other disability, the Employee shall devote his full time during normal business hours throughout the Employment Term to the services required of him hereunder; provided that the foregoing shall not prohibit the Employee from engaging in reasonable charitable and community activities. The Employee shall render his business services exclusively to the Company and its subsidiaries during the Employment Term and shall use his good faith efforts, judgment and energy to improve and advance the business and interests of the Company and its subsidiaries in a manner consistent with the duties of his position. 4. Conflicts of Interest and Compliance. Employee shall not engage in any conflict of interest and/or take any actions or engage in any conduct which is contrary to the exclusive interests of the Company. Employee shall comply with all applicable laws and regulations (federal, state and/or local) and shall comply with all applicable directives, orders and regulations of any governmental agency or regulatory body including federal, state and local agencies and bodies. Employee shall also comply with all policies and procedures of the Company and directives of the Board of Directors. Employee understands, acknowledges and agrees that he/she may hold a position of trust and that fiduciary duties and responsibilities may apply under applicable law and that these duties and responsibilities may be continuing in nature, even after separation from employment. Employee agrees to fully and faithfully perform and discharge all such duties, responsibilities and obligations. 5. EEO Compliance. Employee shall not engage in any conduct which constitutes an unlawful employment practice or which violates any laws or regulations (federal, state and/or local) prohibiting discrimination, harassment and/or retaliation. Employee acknowledges that the Company is an Equal Opportunity Employer and prohibits all forms of unlawful discrimination in the terms and conditions of employment and prohibits all forms of harassment, including sexual harassment. 6. Salary and Bonus. (a) Salary. As compensation for the services to be performed by the Employee hereunder during the Employment Term, the Company shall pay the Employee a base salary at the annual rate of not less than Two Hundred Thousand Dollars ($200,000.00) (said amount, together with any increases thereto as may be determined from time to time by the Compensation Committee of the Board of Directors of the Company in its sole discretion, being hereinafter referred to as "Salary"). Any Salary payable hereunder shall be paid in regular intervals in accordance with the Company's payroll practices from time to time in effect, but in no event less than monthly. (b) Bonus. The Employee shall be eligible to receive bonus compensation from the Company in respect of each fiscal year (or portion thereof) occurring during the 2 Employment Term in amounts, if any, as may be determined by the Compensation Committee of the Board of Directors of the Company in its sole discretion on the basis of performance-based criteria to be established from time to time by such Committee in its sole discretion. (c) Withholding, Etc. The payment of any Salary and Bonus under this Section 6, and the payment of any severance pay pursuant to Section 9 hereof, shall be subject to applicable withholding and payroll taxes and such other deductions as may be required under the Company's employee benefit plans. 7. Other Benefits. During the Employment Term, the Employee shall: (a) be eligible to participate in all employee fringe benefits and pension and/or profit sharing plans that may be provided by the Company for its other senior executive officers in accordance with the provision of any such plans, as the same may be in effect from time to time; (b) be eligible to participate in all medical and health plans or other employee welfare benefit plans that may be provided by the company for its other senior executive officers in accordance with the provisions of any such plans, as the same be in effect from time to time; (c) be entitled to at least 23 vacation/personal days in each calendar year; the Employee shall also be entitled to all paid holidays given by the company to its other senior executive officers; (d) be entitled to sick pay and disability benefits in accordance with any Company policy that may be applicable to other senior executive officers from time to time, (e) be entitled to a car allowance consistent with Company practice as of the date hereof; and (f) be entitled to reimbursement for all reasonable out-of-pocket business expenses incurred by the Employee in the performance of his duties hereunder in accordance with company policy that may be applicable to senior executive officers from time to time. 8. Confidential Information. The Employee hereby covenants, agrees and acknowledges as follows: (a) The Employee has and will have access to and will participate in the development of or be acquainted with confidential or proprietary information and trade secrets that directly or indirectly relate to the business, prospects, operations and other aspects of the Company and any other present or future subsidiaries of the Company (collectively with the Company, the "Companies"), including but not limited to (1) customer lists; the identity, lists or descriptions of new or 3 prospective customers; financial statements; cost reports or other financial information; contract proposals or bidding information, business plans; training and operations methods and manuals; personnel records; software programs; reports and correspondence; and management systems, policies or procedures, including related forms and manuals; (ii) information pertaining to future developments such as future marketing or acquisition plans or ideas; and (iii) all other tangible and intangible property, which are used in the business and operations of the Companies but not made public. The information and trade secrets relating to the business of the Companies described hereinabove in this paragraph (a) are hereinafter referred to collectively as the "Confidential Information", provided that the term "Confidential Information" shall not include any information (x) that is or becomes publicly available (other than as a result of violation of this Agreement by the Employee), or (y) that the Employee receives or received on a non-confidential basis from a source (other than the Companies or any of their representatives) that is not prohibited from disclosing such information by a legal, contractual or fiduciary obligation (provided, however that the Employee shall not be deemed to be in violation of this clause (y) unless he has actual knowledge of any such obligation on the party of any such source). (b) The Employee shall not disclose, use or make known for his or another's benefit any Confidential Information or use such Confidential Information in any way except in connection with the performance of the Employee's duties under this Agreement. The Employee may disclose Confidential Information in response to an order or subpoena of a court or governmental agency of competent jurisdiction and authority provided, however, notice of such order or subpoena shall be immediately communicated to the Company telephonically and in writing so that the Company shall have an opportunity to intervene and assert its rights to nondisclosure prior to any response by Employee to such an order or subpoena and in such notice, Employee shall advise as to whether or not he/she intends to comply with and/or respond to the order and/or subpoena. (c) The Employee acknowledges and agrees that a remedy at law for any breach or threatened breach of the provisions of this Section 8 would be inadequate and, therefore, agrees that the Company shall be entitled to injunctive relief in addition to any other available rights and remedies in case of any such breach or threatened breach; provided, however, that nothing contained herein shall be construed as prohibiting the Company from pursuing any other rights and remedies available for any such breach or threatened breach. (d) The Employee agrees that upon termination of his employment with the company for any reason, the Employee shall promptly return to the Company all Confidential Information in his possession in whatever form maintained (including, without limitation, computer disks and other electronic media). (e) The obligations of the Employee under this Section 8 shall, except as otherwise provided herein, survive the termination of the Employment Term and/or the expiration or termination of this Agreement for a period of five years. 4 9. Termination. (a) The Employee's employment hereunder shall be terminated upon the occurrence of any of the following: (i) death of the Employee; (ii) the Employee's inability to perform his duties on account of disability or incapacity for a period of one hundred eighty (180) or more days, whether or not consecutive, within any period of twelve (12) consecutive months; (iii) a Termination for Cause (as defined herein); (iv) a Termination Without Cause (as defined herein); or (v) termination of the Employee's employment hereunder by the Employee at any time other than a termination by the Employee pursuant to Section 9(a)(iv) hereof (a "Resignation"). The term "Termination for Cause" shall mean a termination of the Employee's employment hereunder by action of the Board of Directors of the Company at any time, including during the Employment Term, as a result of any of the following with respect to the Employee: (1) indictment or arrest for the alleged commission of a felony, (2) acts of dishonesty or moral turpitude which are materially detrimental to the Companies, (3) acts or omissions which the Employee reasonably knew were likely to materially damage the business of the Company, (4) failure by the Employee to obey the reasonable and lawful orders of the Board of Directors of the Company, or (5) gross negligence by the Employee in the performance of, or willful disregard by the Employee of, his obligations hereunder; provided, however, that prior to any termination pursuant to clauses (4) or (5) above, the Board of Directors of the Company shall have provided the Employee with written notice of such action, failure or event and a reasonable period in which to cure the same. This advance notice and cure provision for termination pursuant to clauses (4) or (5) above shall not apply and is not required if giving notice and/or a cure period would be contrary to the best interests of the Company. The term "Termination Without Cause" shall mean: (1) the Company is giving written notice at any time, including during the Employment Term, to the Employee that the Employee's employment is being terminated or non-renewed (pursuant to paragraph 2. hereof) other than pursuant to clauses (i), (ii) or (iii) of the first paragraph of this Section 9(a), or (2) the Employee giving written notice to the Company that he is terminating his employment with the Company upon the occurrence of any of the following items: 5 (A) significant adverse change in the nature or scope of the authorities, powers, functions, responsibilities or duties associated with the job position designated and/or existing at the effective date of this Agreement, a reduction in the Employee's Salary, or the termination of the Employee's rights to any employee benefits to which he was entitled pursuant to this Agreement (other than a termination of rights or benefits applicable to all executive officers), any of which is not remedied within 10 calendar days after receipt by the Company of written notice from the Employee of such change, reduction or termination as the case may be; (B) the Company shall require the Employee to have his principal location of work changed to any location which is in excess of 25 miles from the location thereof as of the date of this Agreement without his prior written consent; or (C) without limiting the generality or effect of the foregoing, any material breach of this Agreement by the Company or any successor thereto. (D) a "Change of Control". For purposes of this Agreement and this provision, a Change of Control shall mean the following: (i) sale of all or substantially all of the Company's assets to any person or entity; (ii) a merger, consolidation or other similar business combination of the Company or of the subsidiaries of the Company, taken as a whole (the Subsidiaries"), with or into another company other than AmCOMP Incorporated, with the effect that, immediately following such merger, consolidation or other business combination, the Qualified Shareholders of the Company or the Subsidiaries, taken as a whole, prior to such merger, consolidation or other business combination hold less than 50% of the combined voting power of the then outstanding securities of the surviving company of such merger, consolidation or other business combination ordinarily ( and apart from rights accruing under special circumstances) having the right to vote in the election of directors; OR (iii) a sale, transfer and/or acquisition of a majority of the common stock of the Company to a person or entity that is not a "Qualified Shareholder." For purposes of this Agreement and this provision, a Change of Control shall not mean a public offering of equity securities of the Company registered under the Securities Act of 1933, as amended. For purposes of this Agreement and this provision, "Qualified Shareholders" is defined as and shall mean WCAS VII, L.P. Sprout Group and affiliates of either WCAS VII, L.P. or Sprout Group. (b) In the event that the Employee's employment is terminated at any time by a Termination Without Cause, for a 12 month period following the effective date of 6 such termination, the company shall pay (as severance, termination pay, contract payout, compensation and/or liquidated damages) the Salary that would have otherwise been payable to the Employee during such period. This amount will be paid during such period in accordance with the Company's then existing payroll practices, methods and/or pay periods. In addition, in the event that Employee's employment is terminated at any time by Termination Without Cause, the Company will pay and/or reimburse Employee for a 12 month period following such termination the actual cost of COBRA continuing health coverage premiums. In this regard, if the Employee is eligible for COBRA continuing health benefits and if Employee timely elects COBRA continuing health care coverage, the Company will pay and/or reimburse up to a maximum of 12 months of COBRA continuing health care coverage premiums. It shall be at the Company's option and discretion to either pay the COBRA premiums directly or to reimburse the Employee for premiums that the Employee pays for COBRA continuing health coverage. Any premiums or amounts due for COBRA continuing health coverage beyond the 12 month period referenced above shall be at the sole cost and expense of Employee and will not be paid and/or reimbursed by the Company. The above described obligations of the Company (continuation of salary for a 12 month period following Termination Without Cause and payment of COBRA premiums for a 12 month period following Termination Without Cause) shall be the exclusive remedies and payment obligations and no other amounts or obligations will be due and owing by the Company to Employee. In this regard, Termination Without Cause may be effectuated at any time during the Employment Term or renewal and the only amounts that the Company will be obligated or required to pay are the amounts calculated according to the formulas set forth above. (c) Notwithstanding anything to the contrary expressed or implied herein, except as required by applicable law and except as set forth in Section 9(b) above, the Company shall not be obligated to make any payments to the Employee or on his behalf of whatever kind or nature by reason of the Employee's cessation of employment (including, without limitation, by reason of a Termination for Cause), other than (i) such amounts, if any, of his Salary as shall be accrued and remained unpaid as of the date of said cessation and (ii) such other amounts, if any, which may be then otherwise payable to the Employee pursuant to the terms of the Company's benefits plans or pursuant to Section 7 above. 10. Restrictive Covenants 10.01 Noncompetition and Nonsolicitation of Customers. (a) The Employee agrees that during the Noncompete Period (as defined herein), without the prior written consent of the Company, Employee shall refrain, directly or indirectly, and whether as a principal, agent, employee, owner, partner, officer, director, shareholder, member or otherwise, alone or in association with any other person or entity, from carrying on or engaging in a business similar to that of the 7 Company and/or from soliciting customers of the Company within the Designated Area, so long as the Company carries on like a business therein. (b) Noncompete Period. For purposes of this Agreement, the "Noncompete Period" shall mean the Employment Term plus: (i) in the event that the employment of the Employee is terminated by a Termination Without Cause, a period of 12 months. As such, the Noncompete Period would be the term and duration of employment and would extend beyond termination and/or separation for 12 months; or (ii) in the event that the employment of the Employee is terminated by the Company by a Termination With Cause, or by the Employee's Resignation pursuant to Section 9(v) of this Agreement or the Employee's nonrenewal under Section 2 of this Agreement, the Noncompete Period shall expire upon the expiration, termination and/or separation of the Employee's employment with the Company; provided, however, in such event the Company shall have the exclusive option and absolute right of extending the Noncompete Period for a period of 12 months following the termination and/or separation of employment if the Company: (1) delivers written notice to the Employee irrevocably exercising such option before employment termination and/or separation or within 180 days after employment separation and/or termination and (2) agrees to pay and does pay the employee the Salary and benefit amounts as designated under Section 9(b) of this Agreement for such 12 month period. If the Company exercises this option and right and complies with the requirements for same, the Noncompete Period shall be extended for the 12 month period designated and Employee agrees and acknowledges that he/she is bound by such period. (c) Definition of Designated Area. The term "Designated Area" shall mean the states, parishes, counties and/or municipalities designated in Attachment "A". (d) Business of the Company. Employee acknowledges and understands that the "business" of the Company involves and relates to the underwriting of risks for worker's compensation insurance and related services. Employee further acknowledges, agrees and represents that he/she understands and knows the business in which the Company is engaged and the scope, activities and/or business pursuits involved in the business of the Company and in the underwriting of risks for worker's compensation insurance and related services. Employee further acknowledges and understands that the noncompetition and nonsolicitation of customer restrictions in this Agreement prohibit the Employee from engaging, in any capacity and/or any position, and/or from conducting any activities and/or business similar to that of the Company and under the specific terms and conditions of this Agreement. 8 (e) Customers of the Company. For purposes of this Agreement, "customers" shall include, but are not limited to, insured businesses and/or entities who have and/or have had insurance coverage with the Company and insurance agents with whom the Company has contracts, agreements, arrangements and/or any type of business, insurance placement and/or working relationship. Employee acknowledges and represents that he/she understands the nature of the Company's customer relationships and who and/or what comprises its customers. 10.02 Nonsolicitation. Employee shall not, during the Noncompete Period, directly or indirectly solicit or induce, or attempt to solicit or induce, any employee, agent of or consultant to the Company to leave his or her employment or terminate his or her consultation agreement or similar relationship with the Company. 10.03 Amerisafe Designation. As used in this Section 10, Amerisafe, Inc. and/or the "Company" includes Amerisafe, Inc., American Interstate Insurance Company, Silver Oak Casualty, Inc. and any and all predecessor entities, successor entities, affiliate entities, parent companies and subsidiaries. The parties acknowledge and agree that the restrictive covenants in this Section 10 enure to the benefit of and operate for the interest of all of the above-mentioned companies and affiliates. 10.04 Remedies. In the event of a breach, or a threatened or attempted breach, of any provision of this Section 10 by the Employee, the parties recognize that such a breach would cause irreparable harm to the Company, thus the Company shall, in addition to all other remedies, be entitled to: (a) a temporary, preliminary and/or permanent injunction against such breach without the necessity of showing any actual damages or any irreparable injury; (b) a decree for the specific performance of this Agreement; and/or (c) damages, attorney's fees and costs. All remedies in favor of Company shall not be exclusive, but shall be cumulative. 10.05 Construction, Reformation and Severability. It is understood and agreed that, should any portion of any clause or paragraph of this Section 10 be deemed too broad to permit enforcement to its full extent, or should any portion of any clause or paragraph of this Section 10 be deemed unreasonable, then said clause or paragraph shall be reformed and enforced to the maximum extent permitted by law. Additionally, if any of the provisions of this Section 10 are ever found by a court of competent jurisdiction to exceed the maximum enforceable (i) periods of time, (ii) geographic areas of restriction, (iii) scope of noncompetition or nonsolicitation and/or (iv) description of the Company's business or customers, or for any other reason, then such unenforceable element(s) of this Section 10 shall be reformed and reduced to the maximum periods of time, geographic areas of restriction, scope of noncompetition or nonsolicitation and/or description of the Company's business that is permitted by law. In this regard, any unenforceable, unreasonable and/or overly broad provision shall be reformed and/or severed so as to permit enforcement to the fullest extent permitted by law. Reformation and severability shall apply. 10.06 Reasonableness. Employee acknowledges, represents and agrees that the restrictive covenants in this Section 10 are reasonable in nature, scope, time and territory and in the terms and conditions set forth herein. Employee acknowledges, represents and agrees that the Company has 9 expended substantial cost in training Employee and that the Company has provided him/her with access to valuable information and has provided him/her with valuable experience. In addition, Employee acknowledges, represents and agrees that the Company has placed Employee in contact with its customers and has made Employee part of its business plans. Employee further acknowledges, represents and agrees that Employee would not have obtained such training, experience, contacts and information from other sources without the employment relationship with the Company. Employee further acknowledges, represents and agrees that the foregoing have occurred and/or resulted based on the Company's reliance on these restrictive covenants and Employee's representations and obligations made herein. Employee further acknowledges, represents and agrees that this Section 10 and the obligations of Employee under these restrictive covenants are reasonable in order to protect the legitimate interests of the Company. Employee further acknowledges, represents and agrees that by virtue of his/her job position, he/she has become an integral and influential component of the Company's current and future business plans. It is Employee's desire and intent that this Agreement be given full force and effect. 11. Non-Assignability. (a) Neither this Agreement nor any right or interest hereunder shall be assignable by the Employee or his beneficiaries or legal representatives without the Company's prior written consent; provided, however, that nothing in this Section 11(a) shall preclude the Employee from designating a beneficiary to receive any benefit payable hereunder upon his death or incapacity. (b) Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to exclusion, attachment, levy or similar process or to assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect. 12. Binding Effect. Without limiting or diminishing the effect of Section 11 hereof, this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors, legal representatives and assigns. 13. Notices. All notices which are required or may be given pursuant to the terms of this Agreement shall be in writing and shall be sufficient in all respects if given in writing and (i) delivered personally, (ii) five business days after being mailed by certified or registered mail, return receipt requested and postage prepaid, (iii) sent via a nationally recognized overnight courier, or (iv) sent via facsimile confirmed by certified or registered mail, return receipt requested and postage prepaid, if to the Company at the Company's principal place of business, and if to the Employee, at his home address most recently filed with the Company, or to such other address or addresses as either party shall have designated in writing to the other party hereto. 10 14. Law Governing. This Agreement shall be governed by and construed in accordance with the laws of the State of Louisiana. 15. Severability. The Employee agrees that in the event that any court of competent jurisdiction shall finally hold that any provision of this Agreement is void or constitutes an unreasonable restriction against the Employee, this Agreement shall not be rendered void but shall apply with respect to such extent as such court may judicially determine constitutes a reasonable restriction under the circumstances. If any part of this Agreement is held by a court of competent jurisdiction to be invalid, illegible or incapable of being enforced in whole or in part by reason of any rule of law or public policy, such part shall be deemed to be severed from the remainder of this Agreement for the purpose only of the particular legal proceedings in question and all other covenants and provisions of this Agreement shall in every other respect continue in full force and effect and no covenant or provision shall be deemed dependent upon any other covenant or provision. Severability and reformation shall apply. It is understood and agreed that, should any portion of any clause or paragraph of this Agreement be deemed too broad to permit enforcement to its full extent, or should any portion of any clause or paragraph of this Agreement be deemed unreasonable, then said clause or paragraph shall be reformed and enforced to the maximum extent permitted by law. 16. Waiver. Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment of any right or power hereunder at any one or more times be deemed a waiver or relinquishment of such right or power at any other time or times. 17. Entire Agreement; Modifications. This Agreement, with referenced Attachment "A," constitutes the entire and final expression of the agreement of the parties with respect to the subject matter hereof and supersedes all prior and/or contemporaneous agreements, oral and written, between the parties hereto with respect to the subject matter hereof. This Agreement may be modified or amended only by an instrument in writing signed by both parties hereto. 11 18. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. AMERISAFE, INC. BY: /s/ C. Allen Bradley, Jr. ------------------------------ Employee: /s/ Geoffrey R. Banta --------------------------------- Signature 12 EMPLOYMENT AGREEMENT AMENDMENT NO 1 This First Amendment to the Employment Agreement dated January 1, 2004 by and between Amerisafe, Inc., a Texas corporation (the "Company"), and Geoffrey R. Banta (the "Employee"), hereby amends the Agreement as follows: Item 2. Term of Employment The paragraph beginning, "Unless earlier terminated by the Employee or the Company as provided in this Agreement, the term of the Employee's employment under this Agreement shall be for a period beginning on January 1, 2004 (the "Effective Date") and ending on the second anniversary of the Effective Date, January 1, 2006..." is hereby amended to read: "Unless earlier terminated by the Employee or the Company as provided in this Agreement, the term of the Employee's employment under this Agreement shall be for a period beginning on January 1, 2004 (the "Effective Date") and ending on the fourth anniversary of the Effective Date, January 1, 2008..." This Amendment is effective June 17, 2005. AMERISAFE, Inc. By: /s/ C. Allen Bradley, Jr. ----------------------------- C. Allen Bradley, Jr., President and CEO Acknowledged and agreed to June 17, 2005 /s/ Geoffrey R. Banta ------------------------------ Geoffrey R. Banta EX-10.4 8 d27260exv10w4.txt EMPLOYMENT AGREEMENT - ARTHUR L. HUNT Exhibit 10.4 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT dated as of January 1, 2004 by and between AMERISAFE, INC., a Texas corporation (the "Company"), and Arthur L. Hunt (the "Employee"). WITNESSETH: WHEREAS the Company desires to induce the Employee to continue in the employment by the company for the period provided in this Agreement, and the Employee is willing to continue such employment with the Company on a full-time basis, all in accordance with the terms and conditions set forth below; NOW, THEREFORE, for and in consideration of the premises hereof and the mutual covenants contained herein, the parties hereto hereby covenant and agree as follows: 1. Employment. (a) The Company hereby agrees to continue to employ the Employee, and the Employee hereby accepts such employment with the Company, for the period set forth in Section 2 hereof, subject to the terms and conditions hereinafter set forth. (b) The Employee affirms and represents that he is under no obligation to any former employer or other party which is in any way inconsistent with, or which imposes any restriction upon, the Employee's employment hereunder with the Company, the employment of the Employee by the Company, or the Employee's undertakings under this Agreement. 2. Term of Employment. Unless earlier terminated by the Employee or the Company as provided in this Agreement, the term of the Employee's employment under this Agreement shall be for a period beginning on January 1, 2004 (the "Effective Date") and ending on the second anniversary of the Effective Date, January 1, 2006, provided, however, that this Agreement shall automatically renew for successive one year periods, unless either party shall notify the other in writing not less than thirty (30) days prior to the second anniversary date or any successive anniversary date that it does not intend to renew this Agreement. Such period, plus any annual renewal periods, or, if the Employee's employment hereunder is earlier terminated as provided herein and including termination pursuant to Section 9(a)(i)-(v), such shorter period, is sometimes referred to herein as the "Employment Term". 3. Duties. The Employee shall be employed by the Company as a senior executive officer and shall endeavor in good faith to competently perform such duties as inherent in his/her employment and/or any designated job position and/or as specified by the Company and shall also perform and discharge such other employment duties and responsibilities as the Board of Directors of the Company shall from time to time reasonably determine, not inconsistent with his/her position as a senior executive officer with the Company. Employee shall also comply with any By-Laws of the Company, as applicable. The Employee shall perform his duties principally at the offices of the Company at 2301 Highway 190 West, DeRidder, Louisiana, with such travel to such other locations from time to time as the Board of Directors of the Company may reasonably prescribe. Except as may otherwise be approved in advance by the Board of Directors of the Company, and except during vacation periods and reasonable periods of absence due to sickness, personal injury or other disability, the Employee shall devote his full time during normal business hours throughout the Employment Term to the services required of him hereunder; provided that the foregoing shall not prohibit the Employee from engaging in reasonable charitable and community activities. The Employee shall render his business services exclusively to the Company and its subsidiaries during the Employment Term and shall use his good faith efforts, judgment and energy to improve and advance the business and interests of the Company and its subsidiaries in a manner consistent with the duties of his position. 4. Conflicts of Interest and Compliance. Employee shall not engage in any conflict of interest and/or take any actions or engage in any conduct which is contrary to the exclusive interests of the Company. Employee shall comply with all applicable laws and regulations (federal, state and/or local) and shall comply with all applicable directives, orders and regulations of any governmental agency or regulatory body including federal, state and local agencies and bodies. Employee shall also comply with all policies and procedures of the Company and directives of the Board of Directors. Employee understands, acknowledges and agrees that he/she may hold a position of trust and that fiduciary duties and responsibilities may apply under applicable law and that these duties and responsibilities may be continuing in nature, even after separation from employment. Employee agrees to fully and faithfully perform and discharge all such duties, responsibilities and obligations. 5. EEO Compliance. Employee shall not engage in any conduct which constitutes an unlawful employment practice or which violates any laws or regulations (federal, state and/or local) prohibiting discrimination, harassment and/or retaliation. Employee acknowledges that the Company is an Equal Opportunity Employer and prohibits all forms of unlawful discrimination in the terms and conditions of employment and prohibits all forms of harassment, including sexual harassment. 6. Salary and Bonus. (a) Salary. As compensation for the services to be performed by the Employee hereunder during the Employment Term, the Company shall pay the Employee a base salary at the annual rate of not less than Two Hundred Fifteen Thousand Dollars ($215,000.00) (said amount, together with any increases thereto as may be determined from time to time by the Compensation Committee of the Board of Directors of the Company in its sole discretion, being hereinafter referred to as "Salary"). Any Salary payable hereunder shall be paid in regular intervals in accordance with the Company's payroll practices from time to time in effect, but in no event less than monthly. (b) Bonus. The Employee shall be eligible to receive bonus compensation from the Company in respect of each fiscal year (or portion thereof) occurring during the 2 Employment Term in amounts, if any, as may be determined by the Compensation Committee of the Board of Directors of the Company in its sole discretion on the basis of performance-based criteria to be established from time to time by such Committee in its sole discretion. (c) Withholding, Etc. The payment of any Salary and Bonus under this Section 6, and the payment of any severance pay pursuant to Section 9 hereof, shall be subject to applicable withholding and payroll taxes and such other deductions as may be required under the Company's employee benefit plans. 7. Other Benefits. During the Employment Term, the Employee shall: (a) be eligible to participate in all employee fringe benefits and pension and/or profit sharing plans that may be provided by the Company for its other senior executive officers in accordance with the provision of any such plans, as the same may be in effect from time to time; (b) be eligible to participate in all medical and health plans or other employee welfare benefit plans that may be provided by the company for its other senior executive officers in accordance with the provisions of any such plans, as the same be in effect from time to time; (c) be entitled to at least 23 vacation/personal days in each calendar year; the Employee shall also be entitled to all paid holidays given by the company to its other senior executive officers; (d) be entitled to sick pay and disability benefits in accordance with any Company policy that may be applicable to other senior executive officers from time to time, (e) be entitled to a car allowance consistent with Company practice as of the date hereof; and (f) be entitled to reimbursement for all reasonable out-of-pocket business expenses incurred by the Employee in the performance of his duties hereunder in accordance with company policy that may be applicable to senior executive officers from time to time. 8. Confidential Information. The Employee hereby covenants, agrees and acknowledges as follows: (a) The Employee has and will have access to and will participate in the development of or be acquainted with confidential or proprietary information and trade secrets that directly or indirectly relate to the business, prospects, operations and other aspects of the Company and any other present or future subsidiaries of the Company (collectively with the Company, the "Companies"), including but not limited to (1) customer lists; the identity, lists or descriptions of new or 3 prospective customers; financial statements; cost reports or other financial information; contract proposals or bidding information, business plans; training and operations methods and manuals; personnel records; software programs; reports and correspondence; and management systems, policies or procedures, including related forms and manuals; (ii) information pertaining to future developments such as future marketing or acquisition plans or ideas; and (iii) all other tangible and intangible property, which are used in the business and operations of the Companies but not made public. The information and trade secrets relating to the business of the Companies described hereinabove in this paragraph (a) are hereinafter referred to collectively as the "Confidential Information", provided that the term "Confidential Information" shall not include any information (x) that is or becomes publicly available (other than as a result of violation of this Agreement by the Employee), or (y) that the Employee receives or received on a non-confidential basis from a source (other than the Companies or any of their representatives) that is not prohibited from disclosing such information by a legal, contractual or fiduciary obligation (provided, however that the Employee shall not be deemed to be in violation of this clause (y) unless he has actual knowledge of any such obligation on the party of any such source). (b) The Employee shall not disclose, use or make known for his or another's benefit any Confidential Information or use such Confidential Information in any way except in connection with the performance of the Employee's duties under this Agreement. The Employee may disclose Confidential Information in response to an order or subpoena of a court or governmental agency of competent jurisdiction and authority provided, however, notice of such order or subpoena shall be immediately communicated to the Company telephonically and in writing so that the Company shall have an opportunity to intervene and assert its rights to nondisclosure prior to any response by Employee to such an order or subpoena and in such notice, Employee shall advise as to whether or not he/she intends to comply with and/or respond to the order and/or subpoena. (c) The Employee acknowledges and agrees that a remedy at law for any breach or threatened breach of the provisions of this Section 8 would be inadequate and, therefore, agrees that the Company shall be entitled to injunctive relief in addition to any other available rights and remedies in case of any such breach or threatened breach; provided, however, that nothing contained herein shall be construed as prohibiting the Company from pursuing any other rights and remedies available for any such breach or threatened breach. (d) The Employee agrees that upon termination of his employment with the company for any reason, the Employee shall promptly return to the Company all Confidential Information in his possession in whatever form maintained (including, without limitation, computer disks and other electronic media). (e) The obligations of the Employee under this Section 8 shall, except as otherwise provided herein, survive the termination of the Employment Term and/or the expiration or termination of this Agreement for a period of five years. 4 9. Termination. (a) The Employee's employment hereunder shall be terminated upon the occurrence of any of the following: (i) death of the Employee; (ii) the Employee's inability to perform his duties on account of disability or incapacity for a period of one hundred eighty (180) or more days, whether or not consecutive, within any period of twelve (12) consecutive months; (iii) a Termination for Cause (as defined herein); (iv) a Termination Without Cause (as defined herein); or (v) termination of the Employee's employment hereunder by the Employee at any time other than a termination by the Employee pursuant to Section 9(a)(iv) hereof (a "Resignation"). The term "Termination for Cause" shall mean a termination of the Employee's employment hereunder by action of the Board of Directors of the Company at any time, including during the Employment Term, as a result of any of the following with respect to the Employee: (1) indictment or arrest for the alleged commission of a felony, (2) acts of dishonesty or moral turpitude which are materially detrimental to the Companies, (3) acts or omissions which the Employee reasonably knew were likely to materially damage the business of the Company, (4) failure by the Employee to obey the reasonable and lawful orders of the Board of Directors of the Company, or (5) gross negligence by the Employee in the performance of, or willful disregard by the Employee of, his obligations hereunder; provided, however, that prior to any termination pursuant to clauses (4) or (5) above, the Board of Directors of the Company shall have provided the Employee with written notice of such action, failure or event and a reasonable period in which to cure the same. This advance notice and cure provision for termination pursuant to clauses (4) or (5) above shall not apply and is not required if giving notice and/or a cure period would be contrary to the best interests of the Company. The term "Termination Without Cause" shall mean: (1) the Company is giving written notice at any time, including during the Employment Term, to the Employee that the Employee's employment is being terminated or non-renewed (pursuant to paragraph 2. hereof) other than pursuant to clauses (i), (ii) or (iii) of the first paragraph of this Section 9(a), or (2) the Employee giving written notice to the Company that he is terminating his employment with the Company upon the occurrence of any of the following items: 5 (A) significant adverse change in the nature or scope of the authorities, powers, functions, responsibilities or duties associated with the job position designated and/or existing at the effective date of this Agreement, a reduction in the Employee's Salary, or the termination of the Employee's rights to any employee benefits to which he was entitled pursuant to this Agreement (other than a termination of rights or benefits applicable to all executive officers), any of which is not remedied within 10 calendar days after receipt by the Company of written notice from the Employee of such change, reduction or termination as the case may be; (B) the Company shall require the Employee to have his principal location of work changed to any location which is in excess of 25 miles from the location thereof as of the date of this Agreement without his prior written consent; or (C) without limiting the generality or effect of the foregoing, any material breach of this Agreement by the Company or any successor thereto. (D) a "Change of Control". For purposes of this Agreement and this provision, a Change of Control shall mean the following: (i) sale of all or substantially all of the Company's assets to any person or entity; (ii) a merger, consolidation or other similar business combination of the Company or of the subsidiaries of the Company, taken as a whole (the Subsidiaries"), with or into another company other than AmCOMP Incorporated, with the effect that, immediately following such merger, consolidation or other business combination, the Qualified Shareholders of the Company or the Subsidiaries, taken as a whole, prior to such merger, consolidation or other business combination hold less than 50% of the combined voting power of the then outstanding securities of the surviving company of such merger, consolidation or other business combination ordinarily ( and apart from rights accruing under special circumstances) having the right to vote in the election of directors; OR (iii) a sale, transfer and/or acquisition of a majority of the common stock of the Company to a person or entity that is not a "Qualified Shareholder." For purposes of this Agreement and this provision, a Change of Control shall not mean a public offering of equity securities of the Company registered under the Securities Act of 1933, as amended. For purposes of this Agreement and this provision, "Qualified Shareholders" is defined as and shall mean WCAS VII, L.P. Sprout Group and affiliates of either WCAS VII, L.P. or Sprout Group. (b) In the event that the Employee's employment is terminated at any time by a Termination Without Cause, for a 12 month period following the effective date of 6 such termination, the company shall pay (as severance, termination pay, contract payout, compensation and/or liquidated damages) the Salary that would have otherwise been payable to the Employee during such period. This amount will be paid during such period in accordance with the Company's then existing payroll practices, methods and/or pay periods. In addition, in the event that Employee's employment is terminated at any time by Termination Without Cause, the Company will pay and/or reimburse Employee for a 12 month period following such termination the actual cost of COBRA continuing health coverage premiums. In this regard, if the Employee is eligible for COBRA continuing health benefits and if Employee timely elects COBRA continuing health care coverage, the Company will pay and/or reimburse up to a maximum of 12 months of COBRA continuing health care coverage premiums. It shall be at the Company's option and discretion to either pay the COBRA premiums directly or to reimburse the Employee for premiums that the Employee pays for COBRA continuing health coverage. Any premiums or amounts due for COBRA continuing health coverage beyond the 12 month period referenced above shall be at the sole cost and expense of Employee and will not be paid and/or reimbursed by the Company. The above described obligations of the Company (continuation of salary for a 12 month period following Termination Without Cause and payment of COBRA premiums for a 12 month period following Termination Without Cause) shall be the exclusive remedies and payment obligations and no other amounts or obligations will be due and owing by the Company to Employee. In this regard, Termination Without Cause may be effectuated at any time during the Employment Term or renewal and the only amounts that the Company will be obligated or required to pay are the amounts calculated according to the formulas set forth above. (c) Notwithstanding anything to the contrary expressed or implied herein, except as required by applicable law and except as set forth in Section 9(b) above, the Company shall not be obligated to make any payments to the Employee or on his behalf of whatever kind or nature by reason of the Employee's cessation of employment (including, without limitation, by reason of a Termination for Cause), other than (i) such amounts, if any, of his Salary as shall be accrued and remained unpaid as of the date of said cessation and (ii) such other amounts, if any, which may be then otherwise payable to the Employee pursuant to the terms of the Company's benefits plans or pursuant to Section 7 above. 10. Restrictive Covenants 10.01 Noncompetition and Nonsolicitation of Customers. (a) The Employee agrees that during the Noncompete Period (as defined herein), without the prior written consent of the Company, Employee shall refrain, directly or indirectly, and whether as a principal, agent, employee, owner, partner, officer, director, shareholder, member or otherwise, alone or in association with any other person or entity, from carrying on or engaging in a business similar to that of the 7 Company and/or from soliciting customers of the Company within the Designated Area, so long as the Company carries on like a business therein. (b) Noncompete Period. For purposes of this Agreement, the "Noncompete Period" shall mean the Employment Term plus: (i) in the event that the employment of the Employee is terminated by a Termination Without Cause, a period of 12 months. As such, the Noncompete Period would be the term and duration of employment and would extend beyond termination and/or separation for 12 months; or (ii) in the event that the employment of the Employee is terminated by the Company by a Termination With Cause, or by the Employee's Resignation pursuant to Section 9(v) of this Agreement or the Employee's nonrenewal under Section 2 of this Agreement, the Noncompete Period shall expire upon the expiration, termination and/or separation of the Employee's employment with the Company; provided, however, in such event the Company shall have the exclusive option and absolute right of extending the Noncompete Period for a period of 12 months following the termination and/or separation of employment if the Company: (1) delivers written notice to the Employee irrevocably exercising such option before employment termination and/or separation or within 180 days after employment separation and/or termination and (2) agrees to pay and does pay the employee the Salary and benefit amounts as designated under Section 9(b) of this Agreement for such 12 month period. If the Company exercises this option and right and complies with the requirements for same, the Noncompete Period shall be extended for the 12 month period designated and Employee agrees and acknowledges that he/she is bound by such period. (c) Definition of Designated Area. The term "Designated Area" shall mean the states, parishes, counties and/or municipalities designated in Attachment "A". (d) Business of the Company. Employee acknowledges and understands that the "business" of the Company involves and relates to the underwriting of risks for worker's compensation insurance and related services. Employee further acknowledges, agrees and represents that he/she understands and knows the business in which the Company is engaged and the scope, activities and/or business pursuits involved in the business of the Company and in the underwriting of risks for worker's compensation insurance and related services. Employee further acknowledges and understands that the noncompetition and nonsolicitation of customer restrictions in this Agreement prohibit the Employee from engaging, in any capacity and/or any position, and/or from conducting any activities and/or business similar to that of the Company and under the specific terms and conditions of this Agreement. 8 (e) Customers of the Company. For purposes of this Agreement, "customers" shall include, but are not limited to, insured businesses and/or entities who have and/or have had insurance coverage with the Company and insurance agents with whom the Company has contracts, agreements, arrangements and/or any type of business, insurance placement and/or working relationship. Employee acknowledges and represents that he/she understands the nature of the Company's customer relationships and who and/or what comprises its customers. 10.02 Nonsolicitation. Employee shall not, during the Noncompete Period, directly or indirectly solicit or induce, or attempt to solicit or induce, any employee, agent of or consultant to the Company to leave his or her employment or terminate his or her consultation agreement or similar relationship with the Company. 10.03 Amerisafe Designation. As used in this Section 10, Amerisafe, Inc. and/or the "Company" includes Amerisafe, Inc., American Interstate Insurance Company, Silver Oak Casualty, Inc. and any and all predecessor entities, successor entities, affiliate entities, parent companies and subsidiaries. The parties acknowledge and agree that the restrictive covenants in this Section 10 enure to the benefit of and operate for the interest of all of the above-mentioned companies and affiliates. 10.04 Remedies. In the event of a breach, or a threatened or attempted breach, of any provision of this Section 10 by the Employee, the parties recognize that such a breach would cause irreparable harm to the Company, thus the Company shall, in addition to all other remedies, be entitled to: (a) a temporary, preliminary and/or permanent injunction against such breach without the necessity of showing any actual damages or any irreparable injury; (b) a decree for the specific performance of this Agreement; and/or (c) damages, attorney's fees and costs. All remedies in favor of Company shall not be exclusive, but shall be cumulative. 10.05 Construction, Reformation and Severability. It is understood and agreed that, should any portion of any clause or paragraph of this Section 10 be deemed too broad to permit enforcement to its full extent, or should any portion of any clause or paragraph of this Section 10 be deemed unreasonable, then said clause or paragraph shall be reformed and enforced to the maximum extent permitted by law. Additionally, if any of the provisions of this Section 10 are ever found by a court of competent jurisdiction to exceed the maximum enforceable (i) periods of time, (ii) geographic areas of restriction, (iii) scope of noncompetition or nonsolicitation and/or (iv) description of the Company's business or customers, or for any other reason, then such unenforceable element(s) of this Section 10 shall be reformed and reduced to the maximum periods of time, geographic areas of restriction, scope of noncompetition or nonsolicitation and/or description of the Company's business that is permitted by law. In this regard, any unenforceable, unreasonable and/or overly broad provision shall be reformed and/or severed so as to permit enforcement to the fullest extent permitted by law. Reformation and severability shall apply. 10.06 Reasonableness. Employee acknowledges, represents and agrees that the restrictive covenants in this Section 10 are reasonable in nature, scope, time and territory and in the terms and conditions set forth herein. Employee acknowledges, represents and agrees that the Company has expended substantial cost in training Employee and that the Company has 9 provided him/her with access to valuable information and has provided him/her with valuable experience. In addition, Employee acknowledges, represents and agrees that the Company has placed Employee in contact with its customers and has made Employee part of its business plans. Employee further acknowledges, represents and agrees that Employee would not have obtained such training, experience, contacts and information from other sources without the employment relationship with the Company. Employee further acknowledges, represents and agrees that the foregoing have occurred and/or resulted based on the Company's reliance on these restrictive covenants and Employee's representations and obligations made herein. Employee further acknowledges, represents and agrees that this Section 10 and the obligations of Employee under these restrictive covenants are reasonable in order to protect the legitimate interests of the Company. Employee further acknowledges, represents and agrees that by virtue of his/her job position, he/she has become an integral and influential component of the Company's current and future business plans. It is Employee's desire and intent that this Agreement be given full force and effect. 11. Non-Assignability. (a) Neither this Agreement nor any right or interest hereunder shall be assignable by the Employee or his beneficiaries or legal representatives without the Company's prior written consent; provided, however, that nothing in this Section 11(a) shall preclude the Employee from designating a beneficiary to receive any benefit payable hereunder upon his death or incapacity. (b) Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to exclusion, attachment, levy or similar process or to assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect. 12. Binding Effect. Without limiting or diminishing the effect of Section 11 hereof, this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors, legal representatives and assigns. 13. Notices. All notices which are required or may be given pursuant to the terms of this Agreement shall be in writing and shall be sufficient in all respects if given in writing and (i) delivered personally, (ii) five business days after being mailed by certified or registered mail, return receipt requested and postage prepaid, (iii) sent via a nationally recognized overnight courier, or (iv) sent via facsimile confirmed by certified or registered mail, return receipt requested and postage prepaid, if to the Company at the Company's principal place of business, and if to the Employee, at his home address most recently filed with the Company, or to such other address or addresses as either party shall have designated in writing to the other party hereto. 10 14. Law Governing. This Agreement shall be governed by and construed in accordance with the laws of the State of Louisiana. 15. Severability. The Employee agrees that in the event that any court of competent jurisdiction shall finally hold that any provision of this Agreement is void or constitutes an unreasonable restriction against the Employee, this Agreement shall not be rendered void but shall apply with respect to such extent as such court may judicially determine constitutes a reasonable restriction under the circumstances. If any part of this Agreement is held by a court of competent jurisdiction to be invalid, illegible or incapable of being enforced in whole or in part by reason of any rule of law or public policy, such part shall be deemed to be severed from the remainder of this Agreement for the purpose only of the particular legal proceedings in question and all other covenants and provisions of this Agreement shall in every other respect continue in full force and effect and no covenant or provision shall be deemed dependent upon any other covenant or provision. Severability and reformation shall apply. It is understood and agreed that, should any portion of any clause or paragraph of this Agreement be deemed too broad to permit enforcement to its full extent, or should any portion of any clause or paragraph of this Agreement be deemed unreasonable, then said clause or paragraph shall be reformed and enforced to the maximum extent permitted by law. 16. Waiver. Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment of any right or power hereunder at any one or more times be deemed a waiver or relinquishment of such right or power at any other time or times. 17. Entire Agreement; Modifications. This Agreement, with referenced Attachment "A," constitutes the entire and final expression of the agreement of the parties with respect to the subject matter hereof and supersedes all prior and/or contemporaneous agreements, oral and written, between the parties hereto with respect to the subject matter hereof. This Agreement may be modified or amended only by an instrument in writing signed by both parties hereto. 11 18. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. AMERISAFE, INC. BY: /s/ C. Allen Bradley, Jr. ------------------------------ EMPLOYEE: /s/ Arthur L. Hunt --------------------------------- Arthur L. Hunt 12 EMPLOYMENT AGREEMENT AMENDMENT NO 1 This First Amendment to the Employment Agreement dated January 1, 2004 by and between Amerisafe, Inc., a Texas corporation (the "Company"), and Arthur L. Hunt (the "Employee"), hereby amends the Agreement as follows: Item 2. Term of Employment The paragraph beginning, "Unless earlier terminated by the Employee or the Company as provided in this Agreement, the term of the Employee's employment under this Agreement shall be for a period beginning on January 1, 2004 (the "Effective Date") and ending on the second anniversary of the Effective Date, January 1, 2006..." is hereby amended to read: "Unless earlier terminated by the Employee or the Company as provided in this Agreement, the term of the Employee's employment under this Agreement shall be for a period beginning on January 1, 2004 (the "Effective Date") and ending on the fourth anniversary of the Effective Date, January 1, 2008..." This Amendment is effective June 17, 2005. AMERISAFE, Inc. By: /s/ C. Allen Bradley, Jr. ----------------------------- C. Allen Bradley, Jr., President and CEO Acknowledged and agreed to June 17, 2005 /s/ Arthur L. Hunt ------------------------------ Arthur L. Hunt EX-10.5 9 d27260exv10w5.txt EMPLOYMENT AGREEMENT - CRAIG P. LEACH Exhibit 10.5 EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT dated as of January 1, 2004 by and between AMERISAFE, INC., a Texas corporation (the "Company"), and Craig P. Leach (the "Employee"). WITNESSETH: WHEREAS the Company desires to induce the Employee to continue in the employment by the company for the period provided in this Agreement, and the Employee is willing to continue such employment with the Company on a full-time basis, all in accordance with the terms and conditions set forth below; NOW, THEREFORE, for and in consideration of the premises hereof and the mutual covenants contained herein, the parties hereto hereby covenant and agree as follows: 1. Employment. (a) The Company hereby agrees to continue to employ the Employee, and the Employee hereby accepts such employment with the Company, for the period set forth in Section 2 hereof, subject to the terms and conditions hereinafter set forth. (b) The Employee affirms and represents that he is under no obligation to any former employer or other party which is in any way inconsistent with, or which imposes any restriction upon, the Employee's employment hereunder with the Company, the employment of the Employee by the Company, or the Employee's undertakings under this Agreement. 2. Term of Employment. Unless earlier terminated by the Employee or the Company as provided in this Agreement, the term of the Employee's employment under this Agreement shall be for a period beginning on January 1, 2004 (the "Effective Date") and ending on the second anniversary of the Effective Date, January 1, 2006, provided, however, that this Agreement shall automatically renew for successive one year periods, unless either party shall notify the other in writing not less than thirty (30) days prior to the second anniversary date or any successive anniversary date that it does not intend to renew this Agreement. Such period, plus any annual renewal periods, or, if the Employee's employment hereunder is earlier terminated as provided herein and including termination pursuant to Section 9(a)(i)-(v), such shorter period, is sometimes referred to herein as the "Employment Term". 3. Duties. The Employee shall be employed by the Company as a senior executive officer and shall endeavor in good faith to competently perform such duties as inherent in his/her employment and/or any designated job position and/or as specified by the Company and shall also perform and discharge such other employment duties and responsibilities as the Board of Directors of the Company shall from time to time reasonably determine, not inconsistent with his/her position as a senior executive officer with the Company. Employee shall also comply with any By-Laws of the Company, as applicable. The Employee shall perform his duties principally at the offices of the Company at 2301 Highway 190 West, DeRidder, Louisiana, with such travel to such other locations from time to time as the Board of Directors of the Company may reasonably prescribe. Except as may otherwise be approved in advance by the Board of Directors of the Company, and except during vacation periods and reasonable periods of absence due to sickness, personal injury or other disability, the Employee shall devote his full time during normal business hours throughout the Employment Term to the services required of him hereunder; provided that the foregoing shall not prohibit the Employee from engaging in reasonable charitable and community activities. The Employee shall render his business services exclusively to the Company and its subsidiaries during the Employment Term and shall use his good faith efforts, judgment and energy to improve and advance the business and interests of the Company and its subsidiaries in a manner consistent with the duties of his position. 4. Conflicts of Interest and Compliance. Employee shall not engage in any conflict of interest and/or take any actions or engage in any conduct which is contrary to the exclusive interests of the Company. Employee shall comply with all applicable laws and regulations (federal, state and/or local) and shall comply with all applicable directives, orders and regulations of any governmental agency or regulatory body including federal, state and local agencies and bodies. Employee shall also comply with all policies and procedures of the Company and directives of the Board of Directors. Employee understands, acknowledges and agrees that he/she may hold a position of trust and that fiduciary duties and responsibilities may apply under applicable law and that these duties and responsibilities may be continuing in nature, even after separation from employment. Employee agrees to fully and faithfully perform and discharge all such duties, responsibilities and obligations. 5. EEO Compliance. Employee shall not engage in any conduct which constitutes an unlawful employment practice or which violates any laws or regulations (federal, state and/or local) prohibiting discrimination, harassment and/or retaliation. Employee acknowledges that the Company is an Equal Opportunity Employer and prohibits all forms of unlawful discrimination in the terms and conditions of employment and prohibits all forms of harassment, including sexual harassment. 6. Salary and Bonus. (a) Salary. As compensation for the services to be performed by the Employee hereunder during the Employment Term, the Company shall pay the Employee a base salary at the annual rate of not less than Two Hundred Fifteen Thousand Dollars ($215,000.00) (said amount, together with any increases thereto as may be determined from time to time by the Compensation Committee of the Board of Directors of the Company in its sole discretion, being hereinafter referred to as "Salary"). Any Salary payable hereunder shall be paid in regular intervals in accordance with the Company's payroll practices from time to time in effect, but in no event less than monthly. (b) Bonus. The Employee shall be eligible to receive bonus compensation from the Company in respect of each fiscal year (or portion thereof) occurring during the 2 Employment Term in amounts, if any, as may be determined by the Compensation Committee of the Board of Directors of the Company in its sole discretion on the basis of performance-based criteria to be established from time to time by such Committee in its sole discretion. (c) Withholding, Etc. The payment of any Salary and Bonus under this Section 6, and the payment of any severance pay pursuant to Section 9 hereof, shall be subject to applicable withholding and payroll taxes and such other deductions as may be required under the Company's employee benefit plans. 7. Other Benefits. During the Employment Term, the Employee shall: (a) be eligible to participate in all employee fringe benefits and pension and/or profit sharing plans that may be provided by the Company for its other senior executive officers in accordance with the provision of any such plans, as the same may be in effect from time to time; (b) be eligible to participate in all medical and health plans or other employee welfare benefit plans that may be provided by the company for its other senior executive officers in accordance with the provisions of any such plans, as the same be in effect from time to time; (c) be entitled to at least 23 vacation/personal days in each calendar year; the Employee shall also be entitled to all paid holidays given by the company to its other senior executive officers; (d) be entitled to sick pay and disability benefits in accordance with any Company policy that may be applicable to other senior executive officers from time to time, (e) be entitled to a car allowance consistent with Company practice as of the date hereof; and (f) be entitled to reimbursement for all reasonable out-of-pocket business expenses incurred by the Employee in the performance of his duties hereunder in accordance with company policy that may be applicable to senior executive officers from time to time. 8. Confidential Information. The Employee hereby covenants, agrees and acknowledges as follows: (a) The Employee has and will have access to and will participate in the development of or be acquainted with confidential or proprietary information and trade secrets that directly or indirectly relate to the business, prospects, operations and other aspects of the Company and any other present or future subsidiaries of the Company (collectively with the Company, the "Companies"), including but not limited to (1) customer lists; the identity, lists or descriptions of new or 3 prospective customers; financial statements; cost reports or other financial information; contract proposals or bidding information, business plans; training and operations methods and manuals; personnel records; software programs; reports and correspondence; and management systems, policies or procedures, including related forms and manuals; (ii) information pertaining to future developments such as future marketing or acquisition plans or ideas; and (iii) all other tangible and intangible property, which are used in the business and operations of the Companies but not made public. The information and trade secrets relating to the business of the Companies described hereinabove in this paragraph (a) are hereinafter referred to collectively as the "Confidential Information", provided that the term "Confidential Information" shall not include any information (x) that is or becomes publicly available (other than as a result of violation of this Agreement by the Employee), or (y) that the Employee receives or received on a non-confidential basis from a source (other than the Companies or any of their representatives) that is not prohibited from disclosing such information by a legal, contractual or fiduciary obligation (provided, however that the Employee shall not be deemed to be in violation of this clause (y) unless he has actual knowledge of any such obligation on the party of any such source). (b) The Employee shall not disclose, use or make known for his or another's benefit any Confidential Information or use such Confidential Information in any way except in connection with the performance of the Employee's duties under this Agreement. The Employee may disclose Confidential Information in response to an order or subpoena of a court or governmental agency of competent jurisdiction and authority provided, however, notice of such order or subpoena shall be immediately communicated to the Company telephonically and in writing so that the Company shall have an opportunity to intervene and assert its rights to nondisclosure prior to any response by Employee to such an order or subpoena and in such notice, Employee shall advise as to whether or not he/she intends to comply with and/or respond to the order and/or subpoena. (c) The Employee acknowledges and agrees that a remedy at law for any breach or threatened breach of the provisions of this Section 8 would be inadequate and, therefore, agrees that the Company shall be entitled to injunctive relief in addition to any other available rights and remedies in case of any such breach or threatened breach; provided, however, that nothing contained herein shall be construed as prohibiting the Company from pursuing any other rights and remedies available for any such breach or threatened breach. (d) The Employee agrees that upon termination of his employment with the company for any reason, the Employee shall promptly return to the Company all Confidential Information in his possession in whatever form maintained (including, without limitation, computer disks and other electronic media). (e) The obligations of the Employee under this Section 8 shall, except as otherwise provided herein, survive the termination of the Employment Term and/or the expiration or termination of this Agreement for a period of five years. 4 9. Termination. (a) The Employee's employment hereunder shall be terminated upon the occurrence of any of the following: (i) death of the Employee; (ii) the Employee's inability to perform his duties on account of disability or incapacity for a period of one hundred eighty (180) or more days, whether or not consecutive, within any period of twelve (12) consecutive months; (iii) a Termination for Cause (as defined herein); (iv) a Termination Without Cause (as defined herein); or (v) termination of the Employee's employment hereunder by the Employee at any time other than a termination by the Employee pursuant to Section 9(a)(iv) hereof (a "Resignation"). The term "Termination for Cause" shall mean a termination of the Employee's employment hereunder by action of the Board of Directors of the Company at any time, including during the Employment Term, as a result of any of the following with respect to the Employee: (1) indictment or arrest for the alleged commission of a felony, (2) acts of dishonesty or moral turpitude which are materially detrimental to the Companies, (3) acts or omissions which the Employee reasonably knew were likely to materially damage the business of the Company, (4) failure by the Employee to obey the reasonable and lawful orders of the Board of Directors of the Company, or (5) gross negligence by the Employee in the performance of, or willful disregard by the Employee of, his obligations hereunder; provided, however, that prior to any termination pursuant to clauses (4) or (5) above, the Board of Directors of the Company shall have provided the Employee with written notice of such action, failure or event and a reasonable period in which to cure the same. This advance notice and cure provision for termination pursuant to clauses (4) or (5) above shall not apply and is not required if giving notice and/or a cure period would be contrary to the best interests of the Company. The term "Termination Without Cause" shall mean: (1) the Company is giving written notice at any time, including during the Employment Term, to the Employee that the Employee's employment is being terminated or non-renewed (pursuant to paragraph 2. hereof) other than pursuant to clauses (i), (ii) or (iii) of the first paragraph of this Section 9(a), or (2) the Employee giving written notice to the Company that he is terminating his employment with the Company upon the occurrence of any of the following items: 5 (A) significant adverse change in the nature or scope of the authorities, powers, functions, responsibilities or duties associated with the job position designated and/or existing at the effective date of this Agreement, a reduction in the Employee's Salary, or the termination of the Employee's rights to any employee benefits to which he was entitled pursuant to this Agreement (other than a termination of rights or benefits applicable to all executive officers), any of which is not remedied within 10 calendar days after receipt by the Company of written notice from the Employee of such change, reduction or termination as the case may be; (B) the Company shall require the Employee to have his principal location of work changed to any location which is in excess of 25 miles from the location thereof as of the date of this Agreement without his prior written consent; or (C) without limiting the generality or effect of the foregoing, any material breach of this Agreement by the Company or any successor thereto. (D) a "Change of Control". For purposes of this Agreement and this provision, a Change of Control shall mean the following: (i) sale of all or substantially all of the Company's assets to any person or entity; (ii) a merger, consolidation or other similar business combination of the Company or of the subsidiaries of the Company, taken as a whole (the Subsidiaries"), with or into another company other than AmCOMP Incorporated, with the effect that, immediately following such merger, consolidation or other business combination, the Qualified Shareholders of the Company or the Subsidiaries, taken as a whole, prior to such merger, consolidation or other business combination hold less than 50% of the combined voting power of the then outstanding securities of the surviving company of such merger, consolidation or other business combination ordinarily ( and apart from rights accruing under special circumstances) having the right to vote in the election of directors; OR (iii) a sale, transfer and/or acquisition of a majority of the common stock of the Company to a person or entity that is not a "Qualified Shareholder." For purposes of this Agreement and this provision, a Change of Control shall not mean a public offering of equity securities of the Company registered under the Securities Act of 1933, as amended. For purposes of this Agreement and this provision, "Qualified Shareholders" is defined as and shall mean WCAS VII, L.P. Sprout Group and affiliates of either WCAS VII, L.P. or Sprout Group. (b) In the event that the Employee's employment is terminated at any time by a Termination Without Cause, for a 12 month period following the effective date of 6 such termination, the company shall pay (as severance, termination pay, contract payout, compensation and/or liquidated damages) the Salary that would have otherwise been payable to the Employee during such period. This amount will be paid during such period in accordance with the Company's then existing payroll practices, methods and/or pay periods. In addition, in the event that Employee's employment is terminated at any time by Termination Without Cause, the Company will pay and/or reimburse Employee for a 12 month period following such termination the actual cost of COBRA continuing health coverage premiums. In this regard, if the Employee is eligible for COBRA continuing health benefits and if Employee timely elects COBRA continuing health care coverage, the Company will pay and/or reimburse up to a maximum of 12 months of COBRA continuing health care coverage premiums. It shall be at the Company's option and discretion to either pay the COBRA premiums directly or to reimburse the Employee for premiums that the Employee pays for COBRA continuing health coverage. Any premiums or amounts due for COBRA continuing health coverage beyond the 12 month period referenced above shall be at the sole cost and expense of Employee and will not be paid and/or reimbursed by the Company. The above described obligations of the Company (continuation of salary for a 12 month period following Termination Without Cause and payment of COBRA premiums for a 12 month period following Termination Without Cause) shall be the exclusive remedies and payment obligations and no other amounts or obligations will be due and owing by the Company to Employee. In this regard, Termination Without Cause may be effectuated at any time during the Employment Term or renewal and the only amounts that the Company will be obligated or required to pay are the amounts calculated according to the formulas set forth above. (c) Notwithstanding anything to the contrary expressed or implied herein, except as required by applicable law and except as set forth in Section 9(b) above, the Company shall not be obligated to make any payments to the Employee or on his behalf of whatever kind or nature by reason of the Employee's cessation of employment (including, without limitation, by reason of a Termination for Cause), other than (i) such amounts, if any, of his Salary as shall be accrued and remained unpaid as of the date of said cessation and (ii) such other amounts, if any, which may be then otherwise payable to the Employee pursuant to the terms of the Company's benefits plans or pursuant to Section 7 above. 10. Restrictive Covenants 10.01 Noncompetition and Nonsolicitation of Customers. (a) The Employee agrees that during the Noncompete Period (as defined herein), without the prior written consent of the Company, Employee shall refrain, directly or indirectly, and whether as a principal, agent, employee, owner, partner, officer, director, shareholder, member or otherwise, alone or in association with any other person or entity, from carrying on or engaging in a business similar to that of the 7 Company and/or from soliciting customers of the Company within the Designated Area, so long as the Company carries on like a business therein. (b) Noncompete Period. For purposes of this Agreement, the "Noncompete Period" shall mean the Employment Term plus: (i) in the event that the employment of the Employee is terminated by a Termination Without Cause, a period of 12 months. As such, the Noncompete Period would be the term and duration of employment and would extend beyond termination and/or separation for 12 months; or (ii) in the event that the employment of the Employee is terminated by the Company by a Termination With Cause, or by the Employee's Resignation pursuant to Section 9(v) of this Agreement or the Employee's nonrenewal under Section 2 of this Agreement, the Noncompete Period shall expire upon the expiration, termination and/or separation of the Employee's employment with the Company; provided, however, in such event the Company shall have the exclusive option and absolute right of extending the Noncompete Period for a period of 12 months following the termination and/or separation of employment if the Company: (1) delivers written notice to the Employee irrevocably exercising such option before employment termination and/or separation or within 180 days after employment separation and/or termination and (2) agrees to pay and does pay the employee the Salary and benefit amounts as designated under Section 9(b) of this Agreement for such 12 month period. If the Company exercises this option and right and complies with the requirements for same, the Noncompete Period shall be extended for the 12 month period designated and Employee agrees and acknowledges that he/she is bound by such period. (c) Definition of Designated Area. The term "Designated Area" shall mean the states, parishes, counties and/or municipalities designated in Attachment "A". (d) Business of the Company. Employee acknowledges and understands that the "business" of the Company involves and relates to the underwriting of risks for worker's compensation insurance and related services. Employee further acknowledges, agrees and represents that he/she understands and knows the business in which the Company is engaged and the scope, activities and/or business pursuits involved in the business of the Company and in the underwriting of risks for worker's compensation insurance and related services. Employee further acknowledges and understands that the noncompetition and nonsolicitation of customer restrictions in this Agreement prohibit the Employee from engaging, in any capacity and/or any position, and/or from conducting any activities and/or business similar to that of the Company and under the specific terms and conditions of this Agreement. 8 (e) Customers of the Company. For purposes of this Agreement, "customers" shall include, but are not limited to, insured businesses and/or entities who have and/or have had insurance coverage with the Company and insurance agents with whom the Company has contracts, agreements, arrangements and/or any type of business, insurance placement and/or working relationship. Employee acknowledges and represents that he/she understands the nature of the Company's customer relationships and who and/or what comprises its customers. 10.02 Nonsolicitation. Employee shall not, during the Noncompete Period, directly or indirectly solicit or induce, or attempt to solicit or induce, any employee, agent of or consultant to the Company to leave his or her employment or terminate his or her consultation agreement or similar relationship with the Company. 10.03 Amerisafe Designation. As used in this Section 10, Amerisafe, Inc. and/or the "Company" includes Amerisafe, Inc., American Interstate Insurance Company, Silver Oak Casualty, Inc. and any and all predecessor entities, successor entities, affiliate entities, parent companies and subsidiaries. The parties acknowledge and agree that the restrictive covenants in this Section 10 enure to the benefit of and operate for the interest of all of the above-mentioned companies and affiliates. 10.04 Remedies. In the event of a breach, or a threatened or attempted breach, of any provision of this Section 10 by the Employee, the parties recognize that such a breach would cause irreparable harm to the Company, thus the Company shall, in addition to all other remedies, be entitled to: (a) a temporary, preliminary and/or permanent injunction against such breach without the necessity of showing any actual damages or any irreparable injury; (b) a decree for the specific performance of this Agreement; and/or (c) damages, attorney's fees and costs. All remedies in favor of Company shall not be exclusive, but shall be cumulative. 10.05 Construction, Reformation and Severability. It is understood and agreed that, should any portion of any clause or paragraph of this Section 10 be deemed too broad to permit enforcement to its full extent, or should any portion of any clause or paragraph of this Section 10 be deemed unreasonable, then said clause or paragraph shall be reformed and enforced to the maximum extent permitted by law. Additionally, if any of the provisions of this Section 10 are ever found by a court of competent jurisdiction to exceed the maximum enforceable (i) periods of time, (ii) geographic areas of restriction, (iii) scope of noncompetition or nonsolicitation and/or (iv) description of the Company's business or customers, or for any other reason, then such unenforceable element(s) of this Section 10 shall be reformed and reduced to the maximum periods of time, geographic areas of restriction, scope of noncompetition or nonsolicitation and/or description of the Company's business that is permitted by law. In this regard, any unenforceable, unreasonable and/or overly broad provision shall be reformed and/or severed so as to permit enforcement to the fullest extent permitted by law. Reformation and severability shall apply. 10.06 Reasonableness. Employee acknowledges, represents and agrees that the restrictive covenants in this Section 10 are reasonable in nature, scope, time and territory and in the terms and conditions set forth herein. Employee acknowledges, represents and agrees that the Company has expended substantial cost in training Employee and that the Company has 9 provided him/her with access to valuable information and has provided him/her with valuable experience. In addition, Employee acknowledges, represents and agrees that the Company has placed Employee in contact with its customers and has made Employee part of its business plans. Employee further acknowledges, represents and agrees that Employee would not have obtained such training, experience, contacts and information from other sources without the employment relationship with the Company. Employee further acknowledges, represents and agrees that the foregoing have occurred and/or resulted based on the Company's reliance on these restrictive covenants and Employee's representations and obligations made herein. Employee further acknowledges, represents and agrees that this Section 10 and the obligations of Employee under these restrictive covenants are reasonable in order to protect the legitimate interests of the Company. Employee further acknowledges, represents and agrees that by virtue of his/her job position, he/she has become an integral and influential component of the Company's current and future business plans. It is Employee's desire and intent that this Agreement be given full force and effect. 11. Non-Assignability. (a) Neither this Agreement nor any right or interest hereunder shall be assignable by the Employee or his beneficiaries or legal representatives without the Company's prior written consent; provided, however, that nothing in this Section 11(a) shall preclude the Employee from designating a beneficiary to receive any benefit payable hereunder upon his death or incapacity. (b) Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to exclusion, attachment, levy or similar process or to assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect. 12. Binding Effect. Without limiting or diminishing the effect of Section 11 hereof, this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors, legal representatives and assigns. 13. Notices. All notices which are required or may be given pursuant to the terms of this Agreement shall be in writing and shall be sufficient in all respects if given in writing and (i) delivered personally, (ii) five business days after being mailed by certified or registered mail, return receipt requested and postage prepaid, (iii) sent via a nationally recognized overnight courier, or (iv) sent via facsimile confirmed by certified or registered mail, return receipt requested and postage prepaid, if to the Company at the Company's principal place of business, and if to the Employee, at his home address most recently filed with the Company, or to such other address or addresses as either party shall have designated in writing to the other party hereto. 10 14. Law Governing. This Agreement shall be governed by and construed in accordance with the laws of the State of Louisiana. 15. Severability. The Employee agrees that in the event that any court of competent jurisdiction shall finally hold that any provision of this Agreement is void or constitutes an unreasonable restriction against the Employee, this Agreement shall not be rendered void but shall apply with respect to such extent as such court may judicially determine constitutes a reasonable restriction under the circumstances. If any part of this Agreement is held by a court of competent jurisdiction to be invalid, illegible or incapable of being enforced in whole or in part by reason of any rule of law or public policy, such part shall be deemed to be severed from the remainder of this Agreement for the purpose only of the particular legal proceedings in question and all other covenants and provisions of this Agreement shall in every other respect continue in full force and effect and no covenant or provision shall be deemed dependent upon any other covenant or provision. Severability and reformation shall apply. It is understood and agreed that, should any portion of any clause or paragraph of this Agreement be deemed too broad to permit enforcement to its full extent, or should any portion of any clause or paragraph of this Agreement be deemed unreasonable, then said clause or paragraph shall be reformed and enforced to the maximum extent permitted by law. 16. Waiver. Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment of any right or power hereunder at any one or more times be deemed a waiver or relinquishment of such right or power at any other time or times. 17. Entire Agreement; Modifications. This Agreement, with referenced Attachment "A," constitutes the entire and final expression of the agreement of the parties with respect to the subject matter hereof and supersedes all prior and/or contemporaneous agreements, oral and written, between the parties hereto with respect to the subject matter hereof. This Agreement may be modified or amended only by an instrument in writing signed by both parties hereto. 11 18. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. AMERISAFE, INC. By: /s/ C. Allen Bradley, Jr. -------------------------- EMPLOYEE: /s/ Craig P. Leach ----------------------------- Craig P. Leach 12 EMPLOYMENT AGREEMENT AMENDMENT NO 1 This First Amendment to the Employment Agreement dated January 1, 2004 by and between Amerisafe, Inc., a Texas corporation (the "Company"), and Craig P. Leach (the "Employee"), hereby amends the Agreement as follows: Item 2. Term of Employment The paragraph beginning, "Unless earlier terminated by the Employee or the Company as provided in this Agreement, the term of the Employee's employment under this Agreement shall be for a period beginning on January 1, 2004 (the "Effective Date") and ending on the second anniversary of the Effective Date, January 1, 2006..." is hereby amended to read: "Unless earlier terminated by the Employee or the Company as provided in this Agreement, the term of the Employee's employment under this Agreement shall be for a period beginning on January 1, 2004 (the "Effective Date") and ending on the fourth anniversary of the Effective Date, January 1, 2008..." This Amendment is effective June 17, 2005. AMERISAFE, Inc. By: /s/ C. Allen Bradley, Jr. ---------------------------------------- C. Allen Bradley, Jr., President and CEO Acknowledged and agreed to June 17, 2005 /s/ Craig P. Leach --------------------------------------------- Craig P. Leach EX-10.6 10 d27260exv10w6.txt FORM OF 2005 EQUITY INCENTIVE PLAN Exhibit 10.6 AMERISAFE, INC. 2005 EQUITY INCENTIVE PLAN 1. PURPOSE. The purpose of the 2005 Equity Incentive Plan is to attract and retain officers and other key employees for the Company and its Subsidiaries and to provide to such persons appropriate incentives and rewards for superior performance. 2. DEFINITIONS. As used in this Plan, (a) "Award" means any award of Option Rights, Restricted Stock or Restricted Stock Units granted under the Plan. (b) "Award Agreement" means a written agreement setting forth the terms, conditions and restrictions of the Award granted to the Participant. An Award Agreement may be an "Option Award Agreement," a "Restricted Stock Award Agreement" or a "Restricted Stock Unit Award Agreement." (c) "Board" means the Board of Directors of the Company and, to the extent of any delegation by the Board to a committee (or subcommittee thereof) pursuant to Section 12 of this Plan, such committee (or subcommittee). (d) "Change in Control" has the meaning provided in Section 9 of this Plan. (e) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (f) "Common Shares" means the shares of common stock, par value $0.01 per share, of the Company or any security into which such Common Shares may be changed by reason of any transaction or event of the type referred to in Section 8 of this Plan. (g) "Company" means AMERISAFE, Inc., a Texas corporation. (h) "Covered Employee" means a Participant who is, or is determined by the Board to be likely to become, a "covered employee" within the meaning of Section 162(m) of the Code (or any successor provision). (i) "Date of Grant" means the date specified by the Board on which an Award will become effective (which date will not be earlier than the date on which the Board takes action with respect thereto). (j) "Director" means a member of the Board of Directors of the Company. (k) "Effective Date" means _______ __, 2005. (l) "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, as such law, rules and regulations may be amended from time to time. (m) "Incentive Stock Options" means Option Rights that are intended to qualify as "incentive stock options" under Section 422 of the Code or any successor provision. (n) "Incumbent Directors" means the individuals who, as of the Effective Date, are Directors of the Company and any individual becoming a Director subsequent to the date thereof whose election, nomination for election by the Company's shareholders, or appointment, was approved by a vote of at least two-thirds of the then Incumbent Directors (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for Director, without objection to such nomination); provided, however, that an individual shall not be an Incumbent Director if such individual's election or appointment to the Board occurs as a result of an actual or threatened election contest (as described in Rule 14a-12(c) of the Exchange Act) with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board. (o) "Management Objectives" means the measurable performance objective or objectives established pursuant to this Plan for, when so determined by the Board, Participants who have received grants of Option Rights, Restricted Stock or Restricted Stock Units. Management Objectives may be described in terms of Company-wide objectives or objectives that are related to the performance of the individual Participant or of the Subsidiary, division, department, region or function within the Company or Subsidiary in which the Participant is employed. The Management Objectives may be made relative to the performance of other companies. The Management Objectives applicable to any Award to a Covered Employee will be based on specified levels of or growth in one or more of the following criteria: 1. cash flow/net assets ratio; 2. return on total capital; 3. return on equity; 4. earnings per share growth; 5. revenue growth; 6. total return to shareholders; 7. loss ratio; and 8. premium volume. If the Board determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which it conducts its business, or other events or circumstances render the Management Objectives unsuitable, the Board may in its discretion modify such Management Objectives or the related minimum acceptable level of achievement, in whole or in part, as the Board deems appropriate and equitable, except in the case of a Covered Employee where such action would result in the loss of the otherwise available exemption of the Award under Section 162(m) of the Code. In such case, the Board will not make any modification of the Management Objectives or minimum acceptable level of achievement with respect to such Covered Employee. 2 (p) "Market Value per Share" means, as of any particular date, (i) the closing sale price per Common Share on that date (or if there are no sales on that date, on the next preceding trading date during which a sale occurred) as reported on the Nasdaq National Market System, or if the Common Shares are not then-traded on the Nasdaq National Market System, the principal exchange on which the Common Shares are then trading, or (ii) if clause (i) does not apply, the fair value of the Common Shares as determined by the Board. (q) "Optionee" means the optionee named in an Award Agreement evidencing an outstanding Option Right. (r) "Option Price" means the purchase price payable on exercise of an Option Right. (s) "Option Right" means the right to purchase Common Shares upon exercise of an option granted pursuant to Section 4 of this Plan. (t) "Participant" means a person who is selected by the Board to receive benefits under this Plan and who is at the time an officer or other key employee of the Company or any one or more of its Subsidiaries, or who has agreed to commence serving in any of such capacities within 90 days of the Date of Grant. The term "Participant" shall also include any person who provides services to the Company (other than in the capacity as a member of the Board) or a Subsidiary that are equivalent to those typically provided by an employee. (u) "Person" means any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act). (v) "Plan" means this 2005 Equity Incentive Plan. (w) "Restricted Stock" means Common Shares granted or sold pursuant to Section 5 of this Plan as to which neither the substantial risk of forfeiture nor the prohibition on transfers has expired. (x) "Restriction Period" means the period of time during which Restricted Stock Units are subject to a substantial risk of forfeiture (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Board, in its discretion), as provided in Section 6 of this Plan. (y) "Restricted Stock Unit" means an award made pursuant to Section 6 of this Plan of the right to receive Common Shares or cash at the end of a specified period. (z) "Subsidiary" means a corporation, company or other entity (i) more than 50 percent of whose outstanding shares or other securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or other securities (as may be the case in a partnership, limited liability company, business trust or other legal entity), but more than 50 percent of whose ownership interest representing the right generally to make decisions for such entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company except that for purposes of determining whether any person may be a Participant for purposes of any grant of Incentive Stock Options, "Subsidiary" means any corporation in which the Company owns or controls, directly or indirectly, more than 3 50 percent of the total combined voting power represented by all classes of stock issued by such corporation. (aa) "Voting Securities" means, at any time, (i) the securities entitled to vote generally in the election of Directors in the case of the Company, or (ii) the securities entitled to vote generally in the election of members of the board of directors or similar body in the case of another legal entity. 3. SHARES AVAILABLE UNDER THE PLAN. (a) Subject to adjustment as provided in Section 3(b) and Section 8 of this Plan, the number of Common Shares that may be issued or transferred (i) upon the exercise of Option Rights, (ii) as Restricted Stock and released from substantial risks of forfeiture thereof, or (iii) as Restricted Stock Units, shall not exceed in the aggregate __________ Common Shares. Such shares may be authorized but unissued shares or treasury shares or a combination of the foregoing. (b) The number of shares available in Section 3(a) above shall be adjusted to account for shares relating to Awards that expire or are canceled or forfeited. Upon payment in cash of the benefit provided by any Award granted under this Plan, any shares that were covered by that Award shall again be available for issue or transfer hereunder. (c) Notwithstanding anything in this Section 3 or elsewhere in this Plan to the contrary but subject to adjustment as provided in Section 8 of this Plan, (i) the aggregate number of Common Shares actually issued or transferred by the Company upon the exercise of Incentive Stock Options will not exceed ___________ Common Shares; (ii) no Participant will be granted Option Rights, Restricted Stock or Restricted Stock Units during the term of the Plan, in the aggregate, for more than ________ Common Shares during any calendar year; (iii) the number of shares issued as Restricted Stock and Restricted Stock Units (after taking into account any forfeitures, expirations, cancellations or transfers upon expiration of any withholding amount) will not during the term of the Plan in the aggregate exceed ____________ Common Shares. 4. OPTION RIGHTS. The Board may, from time to time and upon such terms and conditions as it may determine, authorize the granting to Participants of options to purchase Common Shares. Each such grant may utilize any or all of the authorizations, and will be subject to all of the requirements contained in the following provisions: (a) Each grant will specify the number of Common Shares covered by such grant, subject to the limitations set forth in Section 3 of this Plan. (b) Each grant will specify an Option Price per share, which may not be less than the Market Value per Share on the Date of Grant. (c) Each grant will specify the date or event (which may include the achievement of specified Management Objectives) when all or any portion of the Option Right is to become exercisable, and may provide for the earlier exercise of such Option Right in the event of a Change in Control. Notwithstanding the foregoing, no Option Right will be exercisable more than 10 years from the Date of Grant. 4 (d) Each grant will specify whether the Option Price will be payable (i) in cash or by check acceptable to the Company or by wire transfer of immediately available funds, (ii) by the actual or constructive transfer to the Company of Common Shares owned by the Optionee for at least 6 months having a Market Value per Share at the time of exercise equal to the total Option Price, or (iii) by a combination of such methods of payment. (e) To the extent permitted by law, any grant may provide for deferred payment of the Option Price from the proceeds of sale through a bank or broker on a date satisfactory to the Company of some or all of the shares to which such exercise relates. (f) Successive grants may be made to the same Participant whether or not any Option Rights previously granted to such Participant remain unexercised. (g) Option Rights granted under this Plan may be (i) options, including, without limitation, Incentive Stock Options, that are intended to qualify under particular provisions of the Code, (ii) options that are not intended so to qualify, or (iii) combinations of the foregoing. (h) Each grant of Option Rights shall be evidenced by an Award Agreement, which shall specify whether the Option Right is intended to be an Incentive Stock Option. Each Award Agreement shall be subject to the Plan and shall contain such terms and provisions, consistent with this Plan, as the Board may approve, and, if the Board shall so provide, may require the satisfaction or achievement of certain Management Objectives as a condition to the exercise thereof. 5. RESTRICTED STOCK. The Board may also authorize the grant or sale of Restricted Stock to Participants. Each such grant or sale may utilize any or all of the authorizations, and will be subject to all of the requirements, contained in the following provisions: (a) Each such grant or sale will constitute an immediate transfer of the ownership of Common Shares to the Participant in consideration of the performance of services, entitling such Participant to voting, dividend and other ownership rights, but subject to the substantial risk of forfeiture and restrictions on transfer as provided in this Plan or the applicable Award Agreement. (b) Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value per Share at the Date of Grant. (c) Each such grant or sale will provide that the Restricted Stock covered by such grant or sale will be subject to a "substantial risk of forfeiture" within the meaning of Section 83 of the Code for a period to be determined by the Board at the Date of Grant and set forth in an Award Agreement. Notwithstanding the foregoing, each such grant may provide for the earlier lapse of such substantial risk of forfeiture upon (i) the Participant achieving Management Objectives specified in such grant, or (ii) a Change in Control. (d) Each such grant or sale will provide that during the period for which such substantial risk of forfeiture is to continue, the transferability of the Restricted Stock will be prohibited or restricted in the manner and to the extent prescribed by the Board at the Date of 5 Grant (which restrictions may include, without limitation, rights of repurchase or first refusal in the Company or provisions subjecting the Restricted Stock to a continuing substantial risk of forfeiture in the hands of any transferee). (e) Any such grant or sale of Restricted Stock may require that any or all dividends or other distributions paid thereon during the period of such restrictions be automatically deferred and reinvested in additional shares of Restricted Stock, which may be subject to the same restrictions as the underlying award. (f) Each grant or sale of Restricted Stock will be evidenced by an Award Agreement and will contain such terms and provisions, consistent with this Plan, as the Board may approve. Unless otherwise directed by the Board, all certificates representing shares of Restricted Stock will be held in custody by the Company until all restrictions thereon will have lapsed, together with a stock power or powers executed by the Participant in whose name such certificates are registered, endorsed in blank and covering such Shares. 6. RESTRICTED STOCK UNITS. The Board may also authorize the grant or sale of Restricted Stock Units to Participants. Each such grant or sale may utilize any or all of the authorizations, and will be subject to all of the requirements contained in the following provisions: (a) Each such grant or sale will constitute the agreement by the Company to deliver Common Shares or cash to the Participant in the future in consideration of the performance of services, but subject to the fulfillment of such conditions during the Restriction Period as the Board may specify. (b) Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value per Share at the Date of Grant. (c) Each such grant or sale will be subject to a Restriction Period as determined by the Board at the Date of Grant, and may provide for the earlier lapse or other modification of such Restriction Period upon (i) the Participant achieving Management Objectives specified in such grant or (ii) a Change in Control. (d) During the Restriction Period, the Participant will have no right to transfer any rights under his or her Restricted Stock Units and will have no rights of ownership in the Restricted Stock Units and will have no right to vote them, but the Board may, at or after the Date of Grant, authorize the payment of dividend equivalents on such Restricted Stock Units on either a current or deferred or contingent basis. (e) Each grant or sale of Restricted Stock Units will be evidenced by an Award Agreement and will contain such terms and provisions, consistent with this Plan, as the Board may approve. 6 7. TRANSFERABILITY. Except as otherwise determined by the Board, no Award shall be transferable by a Participant other than by will or the laws of descent and distribution. Except as otherwise determined by the Board, Option Rights shall be exercisable during the Optionee's lifetime only by him or her or by his or her guardian or legal representative. 8. ADJUSTMENTS. The Board may make or provide for such adjustments in the numbers of Common Shares covered by outstanding Option Rights and Restricted Stock Units granted hereunder and in the kind of securities covered thereby as the Board, in its sole discretion, exercised in good faith, may determine is equitably required to prevent dilution or enlargement of the rights of Participants or Optionees that otherwise would result from (a) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, or (b) any merger, consolidation, spin-off, split- off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect similar to any of the foregoing. Moreover, in the event of any such transaction or event, the Board, in its discretion, may provide in substitution for any or all outstanding Awards under this Plan such alternative consideration as it, in good faith, may determine to be equitable in the circumstances and may require in connection therewith the surrender of all Awards so replaced. The Board may also make or provide for such adjustments in the numbers of shares specified in Section 3 of this Plan as the Board in its sole discretion, exercised in good faith, may determine is appropriate to reflect any transaction or event described in this Section 8; provided, however, that any such adjustment to the number specified in Section 3(c)(i) will be made only if and to the extent that such adjustment would not cause any Option intended to qualify as an Incentive Stock Option to fail so to qualify. 9. CHANGE IN CONTROL. For purposes of this Plan, except as may be otherwise defined in an individual Participant's Award Agreement, a "Change in Control" shall mean the occurrence of any of the following events: (a) the acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of the then outstanding Voting Securities of the Company; provided, however, that for purposes of this Section 9(a), the following acquisitions shall not constitute a Change in Control: (A) any acquisition by the Company or a Subsidiary of Voting Securities, (B) any acquisition of Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary or (C) any acquisition of Voting Securities by any Person pursuant to a Business Combination that complies with clauses (A), (B) and (C) of Section 9(c) below; (b) a majority of the Board ceases to be comprised of Incumbent Directors; (c) consummation of a reorganization, merger or consolidation, a sale or other disposition of all or substantially all of the assets of the Company or other transaction (each, a "Business Combination"), unless, in each case, immediately following the Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners of Voting Securities immediately prior to the Business Combination beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding Voting Securities of the entity resulting from the Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or 7 substantially all of the Company's assets either directly or through one or more subsidiaries), (B) no Person (other than the Company, such entity resulting from the Business Combination, or any employee benefit plan (or related trust) sponsored or maintained by the Company, any Subsidiary or such entity resulting from the Business Combination) beneficially owns, directly or indirectly, 35% or more of the combined voting power of the then outstanding Voting Securities of the entity resulting from the Business Combination; provided, however, that no Person will be treated for purposes of this Section 9(c) as beneficially owning 35% or more of the Voting Securities of the entity resulting from the Business Combination solely as a result of the Voting Securities held in the Company prior to consummation of the Business Combination and (C) at least a majority of the members of the board of directors of the entity resulting from the Business Combination were Incumbent Directors at the time of the execution of the initial agreement or of the action of the Board providing for the Business Combination; or (d) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company, except pursuant to a Business Combination that complies with clauses (A), (B) and (C) of Section 9(c) hereof. Notwithstanding anything to the contrary contained in this Section 9, a Person who holds 35% or more of the Voting Securities of the Company on the Effective Date will not be deemed to have acquired 35% or more of the Voting Securities of the Company for purposes of Section 9(a) of this Plan (and as a result, such circumstance shall not constitute a Change in Control) unless after the Effective Date such person acquires, in one or more transactions, additional Voting Securities of the Company representing 1% or more of the then outstanding Voting Securities of the Company it being understood that an increase in the percentage of Voting Securities held by a Person as a result of the Company's repurchase of Voting Securities of the Company is not an acquisition of Voting Securities by such Person. 10. FRACTIONAL SHARES. The Company will not be required to issue any fractional Common Shares pursuant to this Plan. The Board may provide for the elimination of fractions or for the settlement of fractions in cash. 11. WITHHOLDING TAXES. To the extent that the Company is required to withhold federal, state, local or foreign taxes in connection with any payment made or benefit realized by a Participant or other person under this Plan, and the amounts available to the Company for such withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the Participant or such other person make arrangements satisfactory to the Board for payment of the balance of such taxes required to be withheld, which arrangements (in the discretion of the Board) may include relinquishment of a portion of such benefit. 12. ADMINISTRATION OF THE PLAN. (a) This Plan will be administered by the Board, which may from time to time delegate all or any part of its authority under this Plan to the Compensation Committee of the Board (or a subcommittee thereof), as constituted from time to time. To the extent of any such delegation, references in this Plan to the Board will be deemed to be references to such committee or subcommittee. 8 (b) The interpretation and construction by the Board of any provision of this Plan or of any Award Agreement and any determination by the Board pursuant to any provision of this Plan or of any such Award Agreement will be final and conclusive. No member of the Board will be liable for any such action or determination made in good faith. 13. AMENDMENTS AND OTHER MATTERS (a) The Board may at any time and from time to time amend the Plan in whole or in part; provided, however, that any amendment (i) which must be approved by the shareholders of the Company in order to comply with applicable law or the rules of the Nasdaq National Market System or, if the Common Shares are not traded on the Nasdaq National Market System, the principal national securities exchange upon which the Common Shares are traded or quoted, or (ii) which would increase the benefits accruing to Participants, increase the aggregate number of Common Shares that may be issued under the Plan or materially modify the eligibility requirements for participating in the Plan, will not be effective unless and until the shareholders of the Company have approved such amendment. (b) The Board will not, without the further approval of the shareholders of the Company, authorize the amendment of any outstanding Option Right to reduce the Option Price. Furthermore, no Option Right will be cancelled and replaced with awards having a lower Option Price without further approval of the shareholders of the Company. This Section 13(b) is intended to prohibit the repricing of "underwater" Option Rights and will not be construed to prohibit the adjustments provided for in Section 8 of this Plan. (c) The Board also may permit Participants to elect to defer the issuance of Common Shares or the settlement of Awards in cash under the Plan pursuant to such rules, procedures or programs as it may establish for purposes of this Plan. The Board also may provide that deferred issuances and settlements include the payment or crediting of dividend equivalents or interest on the deferral amounts. (d) In case of termination of employment by reason of death, disability or normal or early retirement, or in the case of hardship or other special circumstances, of a Participant who holds an Option Right not immediately exercisable in full, or any shares of Restricted Stock as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, or any Restricted Stock Units as to which the Restriction Period has not been completed, the Board may, in its sole discretion, accelerate the time at which such Option Right or other Award may be exercised or the time at which such substantial risk of forfeiture or prohibition or restriction on transfer will lapse or the time when such Restriction Period will end or may waive any other limitation or requirement under any such Award. (e) This Plan will not confer upon any Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor will it interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate such Participant's employment or other service at any time. (f) The Board may amend the terms of any Award granted under this Plan prospectively or retroactively but, subject to Section 8, no such amendment shall impair the rights of any holder without his or her consent. 9 14. GOVERNING LAW. The Plan and all grants and Awards and actions taken thereunder shall be governed by and construed in accordance with the internal substantive laws of the State of Texas. 15. TERMINATION. This plan will expire on the tenth anniversary of the Effective Date (the "Expiration Date"). No grant will be made under this Plan after the Expiration Date, but all grants made on or prior to such date will continue in effect thereafter subject to the terms thereof and of this Plan. The Board may, in its discretion, terminate this Plan at any time. Termination of this Plan will not affect the rights of Participants or their successors under any Awards outstanding hereunder and not exercised in full on the date of termination. 16. GENERAL PROVISIONS. (a) No Award under this Plan may be exercised by the holder thereof if such exercise, and the receipt of cash or stock thereunder, would be, in the opinion of counsel selected by the Board, contrary to law or the regulations of any duly constituted authority having jurisdiction over this Plan. (b) Absence on leave approved by an officer of the Company or any of its Subsidiaries shall not be considered interruption or termination of service of any employee for any purposes of this Plan or Awards granted hereunder, except that no Awards may be granted to an employee while he or she is absent on leave. (c) No Participant shall have any rights as a shareholder with respect to any Common Shares subject to Awards granted to him or her under this Plan prior to the date as of which he or she is actually recorded as the holder of such Common Shares upon the stock records of the Company. (d) All notices under this Plan will be in writing, and if to the Company, will be delivered to the Secretary of the Company or mailed to its principal executive office, addressed to the attention of the Secretary; and if to a Participant, shall be delivered personally or mailed to the Participant at the address appearing in the records of the Company or Subsidiary. Such address may be changed at any time by written notice to the other party. 10 EX-10.7 11 d27260exv10w7.txt FORM OF INCENTIVE STOCK OPTION AWARD AGREEMENT Exhibit 10.7 AMERISAFE, INC. 2005 EQUITY INCENTIVE PLAN INCENTIVE STOCK OPTION AWARD AGREEMENT THIS OPTION AWARD AGREEMENT (this "Agreement"), dated as of __________, is entered into between AMERISAFE, INC. a Texas corporation (the "Company"), and ____________________ ("Optionee"). Capitalized terms used herein but not defined shall have the meanings assigned to those terms in the AMERISAFE, Inc. 2005 Equity Incentive Plan (the "Plan"). 1. Grant of Option Right. Pursuant to the Plan, the Company hereby grants to Optionee, as a Participant in the Plan and effective as of the Date of Grant (as defined in Section 3), an option right ("Option Right") to purchase ___ shares ("Option Shares") of the Company's common stock, par value $0.01 per share ("Common Shares"), at the price of $_________ per share (the "Option Price"). 2. Type of Option Right. The Option Right is intended to qualify as an "incentive stock option" within the meaning of Section 422 of the Code. 3. Date of Grant. The effective date of the grant of this Option Right is _______ ("Date of Grant"). 4. Date of Expiration. This Option Right shall expire on the tenth anniversary of the Date of Grant (the "Date of Expiration"), unless earlier terminated under Section 7(a). 5. Vesting of Option Right. (a) Except as otherwise provided in this Agreement, the Option Right shall become vested and exercisable to the extent of 20% of the Option Shares on each of the first five anniversaries of the Date of Grant; provided, however, that if the Board determines that Optionee has satisfied the management objectives established by the Board and attached as Appendix A hereto as of the ____ anniversary of the Date of Grant, the Option Right shall become fully vested and exercisable on the ____ anniversary of the Date of Grant. (b) Notwithstanding the provisions of Section 5(a) above, the Option Right shall become immediately vested and exercisable in full upon the occurrence of a Change in Control, as defined in the Plan. (c) Notwithstanding Section 5(a) above, the Board, in its sole discretion, may determine within 60 days following one of the events described in clauses (i) through (iii) below that the Option Right shall become immediately exercisable in full (i) if Optionee becomes permanently disabled (as determined by the Board), (ii) if Optionee dies while an employee of the Company or a Subsidiary, (iii) if Optionee retires at or after the earliest voluntary retirement age permitted by his or her employer or with the consent of the Board, or (iv) under other special circumstances. 6. Manner of Exercise. (a) To the extent that the Option Right is exercisable in accordance with Section 5, the Option Right may be exercised by Optionee at any time, or from time to time, in whole or in part on or prior to the Termination Date; provided, however, that Optionee must exercise the Option Right in multiples of 100 Option Shares unless fewer than 100 Option Shares are available for purchase by Optionee under this Agreement at the time of exercise. (b) Optionee shall exercise the Option Right by delivering a signed written notice to the Company, which notice shall specify the number of Option Shares to be purchased and be accompanied by payment in full of the Option Price and any required taxes (as provided in the Plan) for the number of Option Shares specified for purchase; provided, however, that payment of the Option Price may be deferred and paid from the proceeds of sale through a bank or broker on a date satisfactory to the Company of some or all of the shares to which such exercise relates. (c) The Option Price shall be payable (i) in cash or by check acceptable to the Company or by wire transfer of immediately available funds, (ii) by the actual or constructive transfer to the Company of Common Shares owned by Optionee for at least six months having a Market Value per Share at the time of exercise equal to the total Option Price, or (iii) by a combination of such methods of payment. (d) The Company's obligation to deliver Option Shares to Optionee is subject to and conditioned upon Optionee satisfying all tax obligations associated with Optionee's exercise of the Option Right. The Company and its Subsidiaries, as applicable, shall be entitled to deduct from any payment otherwise due to Optionee the amount necessary to satisfy all such taxes. (e) Upon full payment of the Option Price and satisfaction of all applicable tax obligations, and subject to the applicable terms and conditions of the Plan and the terms and conditions of this Agreement, the Company will cause certificates for the Option Shares purchased hereunder to be delivered to Optionee. 7. Termination. (a) The Option Right shall terminate on the earliest of the following dates (such date, the "Termination Date"): (i) 90 days after Optionee's employment with the Company or a Subsidiary is terminated for any reason other than permanent disability (as determined by the Board) or death; provided, however, that Optionee's Option Right shall terminate immediately if Optionee is terminated for cause. For purposes of the foregoing, termination for cause shall [mean the involuntary termination of Optionee's employment initiated by Optionee's employer for any of the disciplinary reasons set forth in the employee handbook of Optionee's employer] [be as defined in Optionee's employment agreement] as in effect at the time of termination. (ii) One year after Optionee becomes permanently disabled (as determined by the Board) or dies, if Optionee dies or becomes permanently disabled while an employee of the Company or Subsidiary; or (iii) The Date of Expiration. (b) Subject to Section 5(c), during the 90-day period referred to in Section 7(a)(i) above and the one-year period referred to in Section 7(a)(ii) above, the Option Right may be exercised only to the extent that, at the time that Optionee ceases to be an employee of the Company or a Subsidiary, it is exercisable pursuant to Section 5 hereof. (c) For the purposes of this Agreement, the continuous employment of Optionee with the Company or a Subsidiary shall not be deemed to have been interrupted, and Optionee shall not be deemed to have ceased to be an employee of the Company or Subsidiary by reason of (i) the transfer of Optionee's employment among the Company and its Subsidiaries, (ii) an approved leave of absence of not more than 90 days, or (iii) the period of any leave of absence required to be granted by the Company under any law, rule, regulation or contract applicable to Optionee's employment with the Company or any Subsidiary. 8. Share Certificates. All certificates evidencing Option Shares purchased pursuant hereto, and any certificates for Common Shares issued as dividends on, in exchange of, or as replacements for, certificates evidencing Option Shares which, in the opinion of counsel for the Company, are subject to similar legal requirements, shall have endorsed thereon before issuance such restrictive or other legends as the Company (upon advice of counsel) may deem necessary or advisable. The Company and any transfer agent shall not be required to register or record the transfer of any such shares unless and until the Company or its transfer agent shall have received from Optionee's counsel an opinion, in a form satisfactory to the Company, that any such transfer will not be in violation of any applicable law, rule or regulation. Optionee agrees not to sell, assign, pledge or otherwise dispose of any Option Shares or any Common Shares that are subject to restrictions on transfer described in this Section 8 without the Company first receiving such an opinion. 9. Transfer. The Option Right may not be transferred by Optionee except by will or the laws of descent and distribution and may not be exercised during the lifetime of Optionee except by Optionee or Optionee's guardian or legal representative acting on behalf of Optionee in a fiduciary capacity under state law and court supervision. 10. Disqualifying Dispositions. If within one year of exercising the Option Right, Optionee sells, assigns or transfers such Common Shares, Optionee agrees to provide immediate written notice to the Company of such disposition including the date, number of shares and consideration received for such disposition. 11. Compliance with Law. The Company shall make reasonable efforts to comply with all applicable federal or state securities laws; provided, however, that notwithstanding any other provision of this Agreement, the Option Right shall not be exercisable if the exercise and issuance of the Option Shares would result in a violation of any such laws. 12. Employment Rights. This Agreement shall not confer on Optionee any right with respect to the continuance of employment or other service with the Company or any Subsidiary. No provision of this Agreement shall limit in any way whatsoever any right that the Company or a Subsidiary may otherwise have to terminate the employment of Optionee at any time. 13. Communications. All notices, demands and other communications required or permitted hereunder or designated to be given with respect to the rights or interests covered by this Agreement shall be deemed to have been properly given or delivered when delivered personally or sent by certified or registered mail, return receipt requested, U.S. mail or reputable overnight carrier, with full postage prepaid and addressed to the parties as follows: If to the Company, at: the Company's principal executive attention of the Secretary office, addressed to the If to Optionee, at: Optionee's address provided by Optionee on the last page hereof Either the Company or Optionee may change the above designated address by written notice to the other specifying such new address. 14. Interpretation. The interpretation and construction of this Agreement by the Board shall be final and conclusive. No member of the Board shall be liable for any such action or determination made in good faith. 15. Amendments. The Plan may be amended, suspended or terminated and this Agreement may be amended by the Board for purposes of satisfying changes in the law or for any other lawful purposes, provided that (i) no such action shall adversely affect Optionee's rights under this Agreement without Optionee's consent, and (ii) all such amendments shall be in writing. 16. Integration. The Option Right is granted pursuant to the Plan. Notwithstanding anything in this Agreement to the contrary, this Agreement is subject to all of the terms and conditions of the Plan, a copy of which has been made available to the Optionee and is available upon request to the Secretary at the address specified in Section 13 and which is incorporated herein by reference. As such, this Agreement and the Plan embody the entire agreement and understanding of the Company and Optionee and supersede any prior understandings or agreements, whether written or oral, with respect to the Option Right. 17. Severance. In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof and the remaining provisions hereof shall continue to be valid and fully enforceable. 18. Governing Law. This Agreement is made under, and shall be construed in accordance with, the laws of the State of Texas, without regard to the conflict of laws principles thereof. 19. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, this Agreement is executed by a duly authorized representative of the Company on the day and year first above written. AMERISAFE, INC. By: ________________________________________ Name: _______________________________________ Title: ______________________________________ The undersigned Optionee hereby acknowledges receipt of an executed original of this Agreement and accepts the Option Right subject to the applicable terms and conditions of the Plan and the terms and conditions hereinabove set forth. Date: _________________________ _____________________________ Optionee OPTIONEE: Please complete/update the following information, as applicable. Name: ________________________________________ ________________________________________ Home Address: ________________________________________ ________________________________________ Social Security Number: ________________________________________ EX-10.8 12 d27260exv10w8.txt FORM OF NON-QUALIFIED STOCK OPTION AWARD AGREEMENT Exhibit 10.8 AMERISAFE, INC. 2005 EQUITY INCENTIVE PLAN NONQUALIFIED STOCK OPTION AWARD AGREEMENT THIS OPTION AWARD AGREEMENT (this "Agreement"), dated as of __________, is entered into between AMERISAFE, INC. a Texas corporation (the "Company"), and ____________________ ("Optionee"). Capitalized terms used herein but not defined shall have the meanings assigned to those terms in the AMERISAFE, Inc. 2005 Equity Incentive Plan (the "Plan"). 1. Grant of Option Right. Pursuant to the Plan, the Company hereby grants to Optionee, as a Participant in the Plan and effective as of the Date of Grant (as defined in Section 3), an option right ("Option Right") to purchase ___ shares ("Option Shares") of the Company's common stock, par value $0.01 per share ("Common Shares"), at the price of $_________ per share (the "Option Price"). 2. Type of Option Right. The Option Right is intended to be a nonqualified stock option and shall not be treated as an "incentive stock option" within the meaning of Section 422 of the Code. 3. Date of Grant. The effective date of the grant of this Option Right is _______ ("Date of Grant"). 4. Date of Expiration. This Option Right shall expire on the tenth anniversary of the Date of Grant (the "Date of Expiration"), unless earlier terminated under Section 7(a). 5. Vesting of Option Right. (a) Except as otherwise provided in this Agreement, the Option Right shall become vested and exercisable to the extent of 20% of the Option Shares on each of the first five anniversaries of the Date of Grant; provided, however, that if the Board determines that Optionee has satisfied the management objectives established by the Board and attached as Appendix A hereto as of the ____ anniversary of the Date of Grant, the Option Right shall become fully vested and exercisable on the ____ anniversary of the Date of Grant. (b) Notwithstanding the provisions of Section 5(a) above, the Option Right shall become immediately vested and exercisable in full upon the occurrence of a Change in Control, as defined in the Plan. (c) Notwithstanding Section 5(a) above, the Board, in its sole discretion, may determine within 60 days following one of the events described in clauses (i) through (iii) below that the Option Right shall become immediately exercisable in full (i) if Optionee becomes permanently disabled (as determined by the Board), (ii) if Optionee dies while an employee of the Company or a Subsidiary, (iii) if Optionee retires at or after the earliest voluntary retirement age permitted by his or her employer or with the consent of the Board, or (iv) under other special circumstances. 6. Manner of Exercise. (a) To the extent that the Option Right is exercisable in accordance with Section 5, the Option Right may be exercised by Optionee at any time, or from time to time, in whole or in part on or prior to the Termination Date; provided, however, that Optionee must exercise the Option Right in multiples of 100 Option Shares unless fewer than 100 Option Shares are available for purchase by Optionee under this Agreement at the time of exercise. (b) Optionee shall exercise the Option Right by delivering a signed written notice to the Company, which notice shall specify the number of Option Shares to be purchased and be accompanied by payment in full of the Option Price and any required taxes (as provided in the Plan) for the number of Option Shares specified for purchase; provided, however, that payment of the Option Price may be deferred and paid from the proceeds of sale through a bank or broker on a date satisfactory to the Company of some or all of the shares to which such exercise relates. (c) The Option Price shall be payable (i) in cash or by check acceptable to the Company or by wire transfer of immediately available funds, (ii) by the actual or constructive transfer to the Company of Common Shares owned by Optionee for at least six months having a Market Value per Share at the time of exercise equal to the total Option Price, or (iii) by a combination of such methods of payment. (d) The Company's obligation to deliver Option Shares to Optionee is subject to and conditioned upon Optionee satisfying all tax obligations associated with Optionee's exercise of the Option Right. The Company and its Subsidiaries, as applicable, shall be entitled to deduct from any payment otherwise due to Optionee the amount necessary to satisfy all such taxes. (e) Upon full payment of the Option Price and satisfaction of all applicable tax obligations, and subject to the applicable terms and conditions of the Plan and the terms and conditions of this Agreement, the Company will cause certificates for the Option Shares purchased hereunder to be delivered to Optionee. 7. Termination. (a) The Option Right shall terminate on the earliest of the following dates (such date, the "Termination Date"): (i) 90 days after Optionee's employment with the Company or a Subsidiary is terminated for any reason other than permanent disability (as determined by the Board) or death; provided, however, that Optionee's Option Right shall terminate immediately if Optionee is terminated for cause. For purposes of the foregoing, termination for cause shall [mean the involuntary termination of Optionee's employment initiated by Optionee's employer for any of the disciplinary reasons set forth in the employee handbook of Optionee's employer] [be as defined in Optionee's employment agreement] as in effect at the time of termination. (ii) One year after Optionee becomes permanently disabled (as determined by the Board) or dies, if Optionee dies or becomes permanently disabled while an employee of the Company or Subsidiary; or (iii) The Date of Expiration. (b) Subject to Section 5(c), during the 90-day period referred to in Section 7(a)(i) above and the one-year period referred to in Section 7(a)(ii) above, the Option Right may be exercised only to the extent that, at the time that Optionee ceases to be an employee of the Company or a Subsidiary, it is exercisable pursuant to Section 5 hereof. (c) For the purposes of this Agreement, the continuous employment of Optionee with the Company or a Subsidiary shall not be deemed to have been interrupted, and Optionee shall not be deemed to have ceased to be an employee of the Company or Subsidiary by reason of (i) the transfer of Optionee's employment among the Company and its Subsidiaries, (ii) an approved leave of absence of not more than 90 days, or (iii) the period of any leave of absence required to be granted by the Company under any law, rule, regulation or contract applicable to Optionee's employment with the Company or any Subsidiary. 8. Share Certificates. All certificates evidencing Option Shares purchased pursuant hereto, and any certificates for Common Shares issued as dividends on, in exchange of, or as replacements for, certificates evidencing Option Shares which, in the opinion of counsel for the Company, are subject to similar legal requirements, shall have endorsed thereon before issuance such restrictive or other legends as the Company (upon advice of counsel) may deem necessary or advisable. The Company and any transfer agent shall not be required to register or record the transfer of any such shares unless and until the Company or its transfer agent shall have received from Optionee's counsel an opinion, in a form satisfactory to the Company, that any such transfer will not be in violation of any applicable law, rule or regulation. Optionee agrees not to sell, assign, pledge or otherwise dispose of any Option Shares or any Common Shares that are subject to restrictions on transfer described in this Section 8 without the Company first receiving such an opinion. 9. Transfer. The Option Right may not be transferred by Optionee except by will or the laws of descent and distribution and may not be exercised during the lifetime of Optionee except by Optionee or Optionee's guardian or legal representative acting on behalf of Optionee in a fiduciary capacity under state law and court supervision. 10. Compliance with Law. The Company shall make reasonable efforts to comply with all applicable federal or state securities laws; provided, however, that notwithstanding any other provision of this Agreement, the Option Right shall not be exercisable if the exercise and issuance of the Option Shares would result in a violation of any such laws. 11. Employment Rights. This Agreement shall not confer on Optionee any right with respect to the continuance of employment or other service with the Company or any Subsidiary. No provision of this Agreement shall limit in any way whatsoever any right that the Company or a Subsidiary may otherwise have to terminate the employment of Optionee at any time. 12. Communications. All notices, demands and other communications required or permitted hereunder or designated to be given with respect to the rights or interests covered by this Agreement shall be deemed to have been properly given or delivered when delivered personally or sent by certified or registered mail, return receipt requested, U.S. mail or reputable overnight carrier, with full postage prepaid and addressed to the parties as follows: If to the Company, at: the Company's principal executive office, addressed to the attention of the Secretary If to Optionee, at: Optionee's address provided by Optionee on the last page hereof Either the Company or Optionee may change the above designated address by written notice to the other specifying such new address. 13. Interpretation. The interpretation and construction of this Agreement by the Board shall be final and conclusive. No member of the Board shall be liable for any such action or determination made in good faith. 14. Amendments. The Plan may be amended, suspended or terminated and this Agreement may be amended by the Board for purposes of satisfying changes in the law or for any other lawful purposes, provided that (i) no such action shall adversely affect Optionee's rights under this Agreement without Optionee's consent, and (ii) all such amendments shall be in writing. 15. Integration. The Option Right is granted pursuant to the Plan. Notwithstanding anything in this Agreement to the contrary, this Agreement is subject to all of the terms and conditions of the Plan, a copy of which has been made available to the Optionee and is available upon request to the Secretary at the address specified in Section 12 and which is incorporated herein by reference. As such, this Agreement and the Plan embody the entire agreement and understanding of the Company and Optionee and supersede any prior understandings or agreements, whether written or oral, with respect to the Option Right. 16. Severance. In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof and the remaining provisions hereof shall continue to be valid and fully enforceable. 17. Governing Law. This Agreement is made under, and shall be construed in accordance with, the laws of the State of Texas, without regard to the conflict of laws principles thereof. 18. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, this Agreement is executed by a duly authorized representative of the Company on the day and year first above written. AMERISAFE, INC. By: ____________________________________________ Name: __________________________________________ Title: _________________________________________ The undersigned Optionee hereby acknowledges receipt of an executed original of this Agreement and accepts the Option Right subject to the applicable terms and conditions of the Plan and the terms and conditions hereinabove set forth. Date: _____________________ ___________________________________________ Optionee OPTIONEE: Please complete/update the following information, as applicable. Name: ____________________________________________ Home Address: ____________________________________________ ____________________________________________ ____________________________________________ Social Security Number: ____________________________________________ EX-10.9 13 d27260exv10w9.txt FORM OF 2005 NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN Exhibit 10.9 AMERISAFE, INC. 2005 NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN 1. PURPOSE. The purpose of this 2005 Non-Employee Director Restricted Stock Plan is to attract and retain qualified individuals who are not employed by the Company to serve as Directors. 2. DEFINITIONS. As used in this Plan, (a) "Annual Grant" means a grant of Restricted Stock to a Non-Employee Director in accordance with Section 5 of this Plan. (b) "Annual Meeting" means the Company's annual meeting of shareholders. (c) "Award" means any award of an Initial Grant or Annual Grant under this Plan. (d) "Award Agreement" means a written agreement between the Company and a Non-Employee Director setting forth the terms, conditions and restrictions of the Award granted to the Non-Employee Director. (e) "Board" means the Board of Directors of the Company. (f) "Change in Control" shall have the meaning provided in Section 6 of this Plan. (g) "Common Shares" means the shares of common stock, par value $0.01 per share, of the Company or any security into which such Common Shares may be changed by reason of any transaction or event of the type referred to in Section 3(b) of this Plan. (h) "Company" means AMERISAFE, Inc., a Texas corporation. (i) "Date of Grant" means (i) with respect to an Initial Grant, the close of business on the date on which the Non-Employee Director is first elected or appointed to the Board, and (ii) with respect to an Annual Grant, the date on which the Annual Meeting in any calendar year is first convened. (j) "Director" means a member of the Board. (k) "Effective Date" means __________, 2005. (l) "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, as such law, rules and regulations may be amended from time to time. (m) "Incumbent Directors" means the individuals who, as of the Effective Date, are Directors of the Company and any individual becoming a Director subsequent to the date thereof whose election, nomination for election by the Company's shareholders, or appointment, was approved by a vote of at least two-thirds of the then Incumbent Directors (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for Director, without objection to such nomination); provided, however, that an individual shall not be an Incumbent Director if such individual's election or appointment to the Board occurs as a result of an actual or threatened election contest (as described in Rule 14a-12(c) of the Exchange Act) with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board. (n) "Initial Grant" means a grant of shares of Restricted Stock to a Non-Employee Director in accordance with Section 4 of this Plan. (o) "Market Value per Share" means, as of any particular date, (i) the closing sale price per Common Share on that date (or if there are no sales on that date, on the next preceding trading date during which a sale occurred) as reported on the Nasdaq National Market System, or if the Common Shares are not then-traded on the Nasdaq National Market System, the principal exchange on which the Common Shares are then trading, or (ii) if clause (i) does not apply, the fair value of the Common Shares as determined by the Board. (p) "Non-Employee Director" means each member of the Board from time to time who is not an employee of the Company or any of its Affiliates. (q) "Person" means any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act). (r) "Plan" means this 2005 Non-Employee Director Plan. (s) "Restricted Stock" means Common Shares as to which neither the substantial risk of forfeiture nor the prohibition on transfers referred to in Section 4 or Section 5 of this Plan has lapsed. (t) "Subsidiary" means a corporation, company or other entity (i) more than 50 percent of whose outstanding shares or other securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or other securities (as may be the case in a partnership, limited liability company, business trust or other legal entity), but more than 50 percent of whose ownership interest representing the right generally to make decisions for such entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company. (u) "Total Disability" means the permanent or total disability of a Non-Employee Director, as determined by the Board in good faith. 2 (v) "Voting Securities" means, at any time, (i) the securities entitled to vote generally in the election of Directors in the case of the Company, or (ii) the securities entitled to vote generally in the election of members of the board of directors or similar body in the case of another legal entity. 3. SHARES AVAILABLE UNDER THE PLAN. (a) Subject to adjustment as provided in Section 3(b) of this Plan, the number of Common Shares that may be issued or transferred as Restricted Stock and released from substantial risk of forfeiture thereof shall not exceed in the aggregate ______ Common Shares. Such shares may be authorized but unissued shares or treasury shares or a combination of the foregoing. (b) The number of shares available in Section 3(a) above shall be adjusted to account for shares relating to Awards that are forfeited. The number and type of shares available in Section 3(a) shall also automatically be adjusted to reflect (a) any stock split, combination of shares, recapitalization or other change in the capital structure of the Company, (b) any merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, or (c) any other corporate transaction or event having an effect similar to any of the foregoing. 4. INITIAL GRANTS (a) Without any further action of the Board, each person who is elected or appointed for the first time to be a Non-Employee Director shall automatically receive an Initial Grant determined by dividing $_______ (prorated as determined below in this Section 4(a)) by the Market Value per Share on the Date of Grant; provided, however, that the number of shares of Restricted Stock shall be rounded downward such that no fractional share shall be issued. If any such person is so elected or appointed other than at an Annual Meeting, the Initial Grant shall be prorated for the number of whole months that such Non-Employee Director will serve until the first anniversary of the immediately preceding Annual Meeting. (b) In lieu of the Initial Grant contemplated by Section 4(a), each person who is, or will become, a Non-Employee Director upon the consummation of the Company's initial public offering (the "IPO") of its Common Shares shall, without further action by the Board, automatically receive an Initial Grant determined by dividing $_______ (prorated as determined below in this Section 4(b)) by the initial price to the public in the IPO; provided, however, that the number of shares of Restricted Stock shall be rounded down such that no fractional share shall be issued. The Initial Grant to be made pursuant to this Section 4(b) shall be prorated for the number of whole months that such Non-Employee Director will serve from the consummation of the IPO to the first anniversary of May 31, 2005. 3 (c) Each Initial Grant shall constitute an immediate transfer of the ownership of shares of Restricted Stock to the Non-Employee Director, entitling such Non-Employee Director to voting, dividend and other ownership rights, but subject to the substantial risk of forfeiture and restrictions on transfer set forth in this Section 4. (d) Each Initial Grant shall provide that the shares of Restricted Stock covered by such Initial Grant shall be subject to a "substantial risk of forfeiture" until the first Annual Meeting after the Date of Grant. Each Initial Grant shall provide that the Non-Employee Director shall forfeit the shares of Restricted Stock covered by such Initial Grant if such Non-Employee Director terminates his or her service with the Company while such shares of Restricted Stock are subject to a substantial risk of forfeiture. Notwithstanding the foregoing, each such Initial Grant shall provide for the immediate lapse of such substantial risk of forfeiture in the event of (i) the Non-Employee Director's death or Total Disability, or (ii) upon a Change in Control. (e) Each Initial Grant shall require that any and all dividends or other distributions (other than cash dividends) declared or otherwise distributed thereon be subject to the same restrictions as the underlying Initial Grant. (f) Each Initial Grant shall provide that during the period for which such substantial risk of forfeiture has not lapsed, the shares of Restricted Stock shall not be sold or otherwise transferred, other than by will or the laws of descent and distribution. (g) Each Initial Grant shall be evidenced by an Award Agreement, which shall contain such terms and provisions not inconsistent with this Plan as the Board may approve. Unless otherwise directed by the Board, all certificates representing shares of Restricted Stock shall be held in custody by the Company until all restrictions thereon shall have lapsed, together with a stock power or powers executed by the Non-Employee Director in whose name such certificates are registered, endorsed in blank. 5. ANNUAL GRANTS (a) Commencing with the Annual Meeting in 2006, each Non-Employee Director who is then elected as a Non-Employee Director shall, without any further action of the Board, automatically receive an Annual Grant determined by dividing $_______ by the Market Value per Share on the Date of Grant; provided, however, that the number of shares of Restricted Stock shall be rounded downward such that no fractional share shall be issued. (b) Each Annual Grant shall constitute an immediate transfer of the ownership of shares of Restricted Stock to the Non-Employee Director, entitling such Non-Employee Director to voting, dividend and other ownership rights, but subject to 4 the substantial risk of forfeiture and restrictions on transfer set forth in this Section 5. (c) Each Annual Grant shall provide that the shares of Restricted Stock covered by such Annual Grant shall be subject to a "substantial risk of forfeiture" until the first Annual Meeting after the Date of Grant. Each Annual Grant shall provide that the Non-Employee Director shall forfeit the shares of Restricted Stock covered by such Annual Grant if such Non-Employee Director terminates his or her service with the Company while such shares of Restricted Stock are subject to a substantial risk of forfeiture. Notwithstanding the foregoing, each such Annual Grant shall provide for the immediate lapse of such substantial risk of forfeiture in the event of (i) the Non-Employee Director's death or Total Disability, or (ii) upon a Change in Control. (d) Each Annual Grant shall provide that during the period for which such substantial risk of forfeiture has not lapsed, the shares of Restricted Stock shall not be sold or otherwise transferred, other than by will or the laws of descent and distribution. (e) Each Annual Grant shall require that any and all dividends or other distributions (other than cash dividends) declared or otherwise distributed thereon be subject to the same restrictions as the underlying Annual Grant. (f) Each Annual Grant shall be evidenced by an Award Agreement, which shall contain such terms and provisions not inconsistent with this Plan as the Board may approve. Unless otherwise directed by the Board, all certificates representing Restricted Stock shall be held in custody by the Company until all restrictions thereon shall have lapsed, together with a stock power or powers executed by the Non-Employee Director in whose name such certificates are registered, endorsed in blank. 6. CHANGE IN CONTROL. For purposes of this Plan, except as may be otherwise defined in an Award Agreement, a "Change in Control" shall mean the occurrence of any of the following events: (a) the acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of the then outstanding Voting Securities of the Company; provided, however, that for purposes of this Section 6(a), the following acquisitions shall not constitute a Change in Control: (A) any acquisition by the Company or a Subsidiary of Voting Securities, (B) any acquisition of Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary or (C) any acquisition of Voting Securities by any Person pursuant to a Business Combination that complies with clauses (A), (B) and (C) of Section 6(c) below; (b) a majority of the Board ceases to be comprised of Incumbent Directors; 5 (c) consummation of a reorganization, merger or consolidation, a sale or other disposition of all or substantially all of the assets of the Company or other transaction (each, a "Business Combination"), unless, in each case, immediately following the Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners of Voting Securities immediately prior to the Business Combination beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding Voting Securities of the entity resulting from the Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries), (B) no Person (other than the Company, such entity resulting from the Business Combination, or any employee benefit plan (or related trust) sponsored or maintained by the Company, any Subsidiary or such entity resulting from the Business Combination) beneficially owns, directly or indirectly, 35% or more of the combined voting power of the then outstanding Voting Securities of the entity resulting from the Business Combination; provided, however, that no Person will be treated for purposes of this Section 6(c) as beneficially owning 35% or more of the Voting Securities of the entity resulting from the Business Combination solely as a result of the Voting Securities held in the Company prior to consummation of the Business Combination and (C) at least a majority of the members of the board of directors of the entity resulting from the Business Combination were Incumbent Directors at the time of the execution of the initial agreement or of the action of the Board providing for the Business Combination; or (d) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company, except pursuant to a Business Combination that complies with clauses (A), (B) and (C) of Section 6(c) hereof. Notwithstanding anything to the contrary contained in this Section 6, a Person who holds 35% or more of the Voting Securities of the Company on the Effective Date will not be deemed to have acquired 35% or more of the Voting Securities of the Company for purposes of Section 6(a) of this Plan (and as a result, such circumstance shall not constitute a Change in Control) unless after the Effective Date such person acquires, in one or more transactions, additional Voting Securities of the Company representing 1% or more of the then outstanding Voting Securities of the Company it being understood that an increase in the percentage of Voting Securities held by a Person as a result of the Company's repurchase of Voting Securities of the Company is not an acquisition of Voting Securities by such Person. 7. FRACTIONAL SHARES. The Company shall not issue any fractional Common Shares pursuant to this Plan. 8. ADMINISTRATION OF THE PLAN. (a) This Plan shall be administered by the Board, which may from time to time delegate all or any part of its authority under this Plan to a committee of the Board (or a subcommittee thereof). To the extent of any such delegation, 6 references in this Plan to the Board shall be deemed to be references to such committee or subcommittee. (b) The interpretation and construction by the Board of any provision of this Plan or of any Award Agreement, and any determination by the Board pursuant to any provision of this Plan or of any such Award Agreement, shall be final and conclusive. No member of the Board shall be liable for any such action or determination made in good faith. 9. AMENDMENT AND TERMINATION OF PLAN. The Board may from time to time and at any time amend or terminate the Plan in whole or in part; provided, however, that any amendment (i) which must be approved by the shareholders of the Company in order to comply with applicable law or the rules of the principal exchange on which the Common Shares are traded or quoted, or (ii) which would increase the benefits accruing to Non-Employee Directors, increase the aggregate number of Common Shares that may be issued under the Plan or materially modify the eligibility requirements for participating in the Plan, shall not be effective unless and until the shareholders of the Company have approved such amendment. Notwithstanding anything to the contrary set forth in this Plan, following the IPO in the event the common stock of the Company is no longer listed for trading with a national securities exchange or the Nasdaq National Market System, then all future grants under this Plan shall be suspended until the Board shall take further action with respect thereto. 10. GOVERNING LAW. All issues concerning construction, validity and interpretation of this Plan and all Awards granted hereunder shall be governed by the law of the State of Texas, without regard to such state's conflict of laws rules. 11. GENERAL PROVISIONS. (a) Nothing in the Plan shall be deemed to create any obligation on the part of the Board to nominate any Director for reelection by the Company's shareholders or to limit the rights of the shareholders to remove any Director. (b) All notices under this Plan shall be in writing, and if to the Company, shall be delivered to the Secretary of the Company or mailed to its principal executive office addressed to the attention of the Secretary; and if to a Non-Employee Director, shall be delivered personally or mailed to the Non-Employee Director at the address appearing on the records of the Company. Such addresses may be changed at any time by written notice to the other party. 7 EX-10.10 14 d27260exv10w10.txt FORM OF RESTRICTED STOCK AWARD AGREEMENT Exhibit 10.10 AMERISAFE, INC. 2005 NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN RESTRICTED STOCK AWARD AGREEMENT THIS RESTRICTED STOCK AWARD AGREEMENT (this "Agreement"), dated as of __________, is entered into between AMERISAFE, INC., a Texas corporation (the "Company"), and ____________________ ("Grantee"). Capitalized terms used herein but not defined shall have the meanings assigned to those terms in the AMERISAFE, Inc. 2005 Non-Employee Director Restricted Stock Plan (the "Plan"). W I T N E S S E T H: A. Grantee is a Non-Employee Director; B. Pursuant to the terms of the Plan, on ____________, [the date Grantee was first elected or appointed to the Board] [the date of the Annual Meeting] ("Date of Grant"), Grantee was automatically granted shares ("Restricted Stock") of the Company's stock, par value $0.01 per share ("Common Shares"); NOW, THEREFORE, in consideration of these premises and the covenants and agreements set forth in this Agreement, the Company and Grantee agree as follows: 1. Grant of Restricted Stock. The Company hereby grants to Grantee, effective as of the Date of Grant, _____ shares of Restricted Stock. Certificates evidencing shares of Restricted Stock, and any certificates for Common Shares issued as dividends on, in exchange of, or as replacements for, certificates evidencing shares of Restricted Stock, shall bear legends referring to the restrictions set forth herein and any other restrictive legends as the Company (upon advice of counsel) may deem necessary or advisable. Until such time as all restrictions have lapsed and the shares of Restricted Stock have become nonforfeitable, the Company shall retain the certificates evidencing the same. 2. Restrictions on Transfer. The shares of Restricted Stock may not be transferred, sold, pledged, exchanged, assigned or otherwise encumbered or disposed of by Grantee unless and until they have become nonrestricted and nonforfeitable in accordance with Section 3 hereof; provided, however, that Grantee's interest in the shares of Restricted Stock may be transferred by will or the laws of descent and distribution. Any purported transfer, encumbrance or other disposition of the shares of Restricted Stock that is in violation of this Section 2 shall be null and void, and the other party to any such purported transaction shall not obtain any rights to or interest in the shares of Restricted Stock. 3. Lapse of Restrictions. (a) The shares of Restricted Stock shall become nonrestricted and nonforfeitable on the date of the first Annual Meeting after the Date of Grant, unless earlier forfeited in accordance with Section 4. (b) Notwithstanding the provisions of Section 3(a) above, all shares of Restricted Stock shall become immediately nonrestricted and nonforfeitable upon the occurrence of a Change in Control, as defined in the Plan. (c) Notwithstanding the provisions of Section 3(a) above, all shares of Restricted Stock shall become immediately nonrestricted and nonforfeitable if Grantee's service on the Board terminates because Grantee becomes permanently disabled (as determined by the Board) or dies. 4. Forfeiture of Restricted Stock. (a) Any of the shares of Restricted Stock that remain forfeitable in accordance with Section 3 hereof shall be forfeited if Grantee's service on the Board ceases for any reason other than Grantee's permanent disability (as determined by the Board in its sole discretion) or death prior to such shares becoming nonforfeitable. (b) In the event of a forfeiture, the certificate(s) representing shares of Restricted Stock that have been forfeited shall be cancelled. 5. Dividend, Voting and Other Rights. Grantee shall have all of the rights of a shareholder with respect to the shares of Restricted Stock, including the right to vote the shares of Restricted Stock and receive any cash dividends that may be paid thereon; provided, however, that any non-cash dividend or other distribution, including any additional Common Shares that Grantee may become entitled to receive pursuant to a share dividend or other securities as a result of a merger or reorganization in which the Company is the surviving corporation or any other change in the capital structure of the Company shall be subject to the same restrictions as the shares of Restricted Stock and otherwise pursuant to the terms of this Agreement. 6. Communications. All notices, demands and other communications required or permitted hereunder or designated to be given with respect to the rights or interests covered by this Agreement shall be deemed to have been properly given or delivered when delivered personally or sent by certified or registered mail, return receipt requested, U.S. mail or reputable overnight carrier, with full postage prepaid and addressed to the parties as follows: If to the Company, at: the Company's principal executive office, addressed to the attention of the Secretary If to Grantee, at: Grantee's address provided by Grantee on the last page hereof Either the Company or Grantee may change the above designated address by written notice to the other specifying such new address. 7. Interpretation. The interpretation and construction of this Agreement by the Board shall be final and conclusive. No member of the Board shall be liable for any such action or determination made in good faith. 2 8. Amendments. The Plan may be amended, suspended or terminated and this Agreement may be amended or canceled by the Board for purposes of satisfying changes in the law or for any other lawful purposes, provided that (i) no such action shall adversely affect Grantee's rights under this Agreement without Grantee's consent, and (ii) all such amendments shall be in writing. 9. Integration. The shares of Restricted Stock are granted pursuant to the Plan. Notwithstanding anything in this Agreement to the contrary, this Agreement is subject to all of the terms and conditions of the Plan, a copy of which has been made available to Grantee and is available upon request to the Secretary at the address specified in Section 6 hereof and which is incorporated herein by reference. As such, this Agreement and the Plan embody the entire agreement and understanding of the Company and Grantee and supersede any prior understandings or agreements, whether written or oral, with respect to the shares of Restricted Stock. 10. Severance. In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof and the remaining provisions hereof shall continue to be valid and fully enforceable. 11. Governing Law. This Agreement is made under, and shall be construed in accordance with, the laws of the State of Texas, without regard to conflict of laws principles thereof. 12. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 3 IN WITNESS WHEREOF, this Agreement is executed by a duly authorized representative of the Company on the day and year first above written. AMERISAFE, INC. By: ______________________________________ Name: ____________________________________ Title: ___________________________________ The undersigned Grantee acknowledges receipt of an executed original of this Agreement and accepts the shares of Restricted Stock subject to the applicable terms and conditions of the Plan and the terms and conditions hereinabove set forth. Date: _______________________ _____________________________ Grantee GRANTEE: Please complete/update the following information. Name: ____________________________________________ Home Address: ____________________________________________ ____________________________________________ ____________________________________________ Social Security Number: ____________________________________________ 4 EX-10.11 15 d27260exv10w11.txt FORM OF DIRECTOR AND OFFICER INDEMNIFICATION AGREEMENT Exhibit 10.11 AMERISAFE, INC. INDEMNIFICATION AGREEMENT This Indemnification Agreement (this "AGREEMENT") is made and entered into as of the ______ day of ________________ 2005, by and between AMERISAFE, Inc., a Texas corporation (the "CORPORATION"), and ________________ ("INDEMNITEE"). RECITALS A. It is critically important to the Corporation and its shareholders that the Corporation be able to attract and retain the most capable persons reasonably available to serve as directors and officers of the Corporation. B. In recognition of the need for corporations to be able to induce capable and responsible persons to accept positions in corporate management, Texas law authorizes (and in some instances requires) corporations to indemnify their directors and officers, and further authorizes corporations to purchase and maintain insurance for the benefit of their directors and officers. C. Recent federal legislation and rules adopted by the Securities and Exchange Commission and the national securities exchanges have imposed additional disclosure and corporate governance obligations on directors and officers of public companies and have exposed such directors and officers to new and substantially broadened civil liabilities. D. These legislative and regulatory initiatives have also exposed directors and officers of public companies to a significantly greater risk of criminal proceedings, with attendant defense costs and potential criminal fines and penalties. E. Indemnitee is a director and/or officer of the Corporation and his/her willingness to serve in such capacity is predicated, in substantial part, upon the Corporation's willingness to indemnify him/her in accordance with the principles reflected above, to the full extent permitted by the laws of the State of Texas, and upon the other undertakings set forth in this Agreement. F. Therefore, in recognition of the need to provide Indemnitee with substantial protection against personal liability, in order to procure Indemnitee's continued service as a director and/or officer of the Corporation and to enhance Indemnitee's ability to serve the Corporation in an effective manner, and in order to provide such protection pursuant to express contract rights (intended to be enforceable irrespective of, among other things, any amendment to the Corporation's Second Amended and Restated Articles of Incorporation (the "ARTICLES") or Second Amended and Restated Bylaws (the "BYLAWS") or any change in the composition of the Corporation's Board of Directors (the "BOARD")), the Corporation wishes to provide in this Agreement for the indemnification of and the advancement of Expenses (as defined in Article I) to Indemnitee as set forth in this Agreement and for the continued coverage of Indemnitee under the Corporation's directors' and officers' liability insurance policies. G. In light of the considerations referred to in the preceding recitals, it is the Corporation's intention and desire that the provisions of this Agreement be construed liberally, subject to their express terms, to maximize the protections to be provided to Indemnitee hereunder. NOW, THEREFORE, in order to induce Indemnitee to continue to serve in his/her present capacity, the Corporation and Indemnitee hereby agree as follows: ARTICLE I CERTAIN DEFINITIONS As used herein, the following words and terms shall have the following respective meanings (whether singular or plural): "CLAIM" means an actual or threatened claim or request for relief. "CORPORATE STATUS" means the status of a person as a current or former director or officer of the Corporation or, at the request of the Corporation, as a current or former director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic corporation, employee benefit plan, other enterprise or other entity. "DISINTERESTED DIRECTOR" means a director of the Corporation who is not and was not a party to the Proceeding or Claim in respect of which indemnification is sought by Indemnitee. "EXPENSES" means all attorneys' fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating or being or preparing to be a witness in a Proceeding. "INCUMBENT DIRECTORS" means the individuals who, as of the date hereof, are directors of the Corporation and any individual becoming a director subsequent to the date hereof whose election, nomination for election by the Corporation's shareholders, or appointment, was approved by a vote of at least two-thirds of the then-Incumbent Directors (either by a specific vote or by approval of the proxy statement of the Corporation in which such person is named as a nominee for director, without objection to such nomination); provided, however, that an individual shall not be an Incumbent Director if such individual's election or appointment to the Board occurs as a result of an actual or threatened election contest (as described in Rule 14a-12(c) under the Securities Exchange Act of 1934, as amended) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board. "INDEPENDENT COUNSEL" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Corporation or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other named (or, as to a 2 threatened matter, reasonably likely to be named) party in the Proceeding or Claim giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, Independent Counsel shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Corporation or Indemnitee in an action to determine Indemnitee's rights under this Agreement. "OFFICIAL CAPACITY" means (a) when used with respect to a director, the office of director in the Corporation, and (b) when used with respect to a person other than a director, the elective or appointive office in the Corporation held by the officer or the employment or agency relationship undertaken by the employee or agent on behalf of the Corporation, but neither clause (a) nor (b) includes service for any other foreign or domestic corporation or any employee benefit plan, other enterprise or other entity. "PROCEEDING" means any threatened, pending or completed action, suit or other proceeding, whether civil, criminal, administrative, arbitrative or investigative (except one initiated by Indemnitee pursuant to Article V of this Agreement to enforce his/her rights under this Agreement), any appeal in such an action, suit or proceeding, and any inquiry or investigation that could lead to such an action, suit or proceeding. ARTICLE II INDEMNIFICATION Section 2.1 General. The Corporation shall indemnify, and advance Expenses to, Indemnitee to the full extent permitted by applicable law in effect on the date hereof and to such greater extent as applicable law may thereafter from time to time permit. The rights of Indemnitee provided under the preceding sentence shall include, but shall not be limited to, the right to be indemnified and to have Expenses advanced in all Proceedings to the full extent permitted by Article 2.02-1 of the Texas Business Corporation Act (the "TBCA") (or any successor provision). The provisions set forth in this Agreement are provided in addition to and as a means of furtherance and implementation of, and not in limitation of, the obligations expressed in this Article II. Section 2.2 Additional Indemnity of the Corporation. Indemnitee shall be entitled to indemnification pursuant to this Section 2.2 if, by reason of his/her Corporate Status, he/she is, or is threatened to be made, a party to any Proceeding (except to the extent limited by Section 2.3). Pursuant to this Section 2.2, Indemnitee shall be indemnified against judgments, penalties (including excise and similar taxes), fines, settlements and reasonable Expenses actually incurred by him/her or on his/her behalf in connection with such Proceeding or any Claim therein, if (a) he/she conducted himself/herself in good faith, (b) he/she reasonably believed: (i) in the case of conduct in his/her Official Capacity, that his/her conduct was in the Corporation's best interests; and (ii) in all other cases, that his/her conduct was at least not opposed to the Corporation's best interests, and (c) in the case of any criminal Proceeding, had no reasonable cause to believe his/her conduct was unlawful. Nothing in this Section 2.2 shall limit the benefits of Section 2.1 or any other Section hereunder. 3 Section 2.3 Limitation on Indemnity. The indemnification otherwise available to Indemnitee under Section 2.2 shall be limited to the extent set forth in this Section 2.3. In the event that Indemnitee is found liable to the Corporation or is found liable on the basis that personal benefit was improperly received by Indemnitee, whether or not the benefit resulted from an action taken in Indemnitee's Official Capacity, Indemnitee shall, with respect to the Claim in the Proceeding in which such finding is made, be indemnified only against reasonable Expenses actually incurred by him/her in connection with that Claim. Notwithstanding the foregoing, no indemnification against such Expenses shall be made in respect of any Claim in such Proceeding as to which Indemnitee shall have been adjudged to be liable for willful or intentional misconduct in the performance of his/her duty to the Corporation; provided, however, that, if applicable law so permits, indemnification against such Expenses shall nevertheless be made by the Corporation in such event if and only to the extent that the court in which such Proceeding shall have been brought or is pending, shall determine. ARTICLE III EXPENSES Section 3.1 Expenses of a Party Who Is Wholly or Partly Successful. Indemnitee shall be indemnified against all reasonable Expenses incurred by him/her in connection with any Proceeding to which Indemnitee is a party by reason of his/her Corporate Status and in which Indemnitee is wholly successful, on the merits or otherwise, in the defense of such Proceeding. In the event that Indemnitee is not wholly successful, on the merits or otherwise, in a Proceeding but is successful, on the merits or otherwise, as to any Claim in such Proceeding, the Corporation shall indemnify Indemnitee against all reasonable Expenses incurred by him/her or on his/her behalf relating to each such Claim. For purposes of this Section 3.1 and without limitation, the termination of a Claim in a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such Claim. Section 3.2 Expenses of a Witness. To the extent that Indemnitee is, by reason of his/her Corporate Status, a witness or otherwise participates in any Proceeding at a time when he/she is not named a defendant or respondent in the Proceeding, he/she shall be indemnified against all Expenses incurred by him/her or on his/her behalf in connection therewith. Section 3.3 Advancement of Expenses. The Corporation shall pay all reasonable Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding or Claim, whether brought by the Corporation or otherwise, in advance of any determination respecting entitlement to indemnification pursuant to Article IV hereof within ten business days after the receipt by the Corporation of a written request from Indemnitee setting forth a written affirmation of his/her good faith belief that he/she has met the standard of conduct necessary for indemnification under applicable law, confirming his/her obligation under the last sentence of this Section 3.3 and requesting such payment or payments from time to time, whether prior to or after final disposition of such Proceeding or Claim. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee. Indemnitee hereby undertakes and agrees that he/she will repay the Corporation for any Expenses so advanced to the extent that it shall ultimately be determined by a court in a final adjudication from which there is no further right of appeal, that Indemnitee is not entitled to be indemnified against such Expenses. 4 ARTICLE IV PROCEDURE FOR DETERMINATION OF RIGHT TO INDEMNIFICATION Section 4.1 Request for Indemnification. To obtain indemnification under this Agreement, Indemnitee shall submit to the Corporation a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification for a Proceeding or Claim. The Secretary or an Assistant Secretary of the Corporation shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification. If, at the time of the receipt of such request, the Corporation has directors' and officers' liability insurance in effect under which coverage for such Proceeding or Claim is potentially available, the Corporation shall give prompt written notice of such Proceeding or Claim to the applicable insurers in accordance with the procedures set forth in the applicable policies. The Corporation shall provide to Indemnitee a copy of such notice delivered to the applicable insurers, and copies of all subsequent correspondence between the Corporation and such insurers regarding the Proceeding or Claim, in each case substantially concurrently with the delivery or receipt thereof by the Corporation. The failure by Indemnitee to timely notify the Corporation of any Proceeding or Claim shall not relieve the Corporation from any liability hereunder unless, and only to the extent that, the Corporation did not otherwise learn of such Proceeding or Claim and such failure results in forfeiture by the Corporation of substantial defenses, rights or insurance coverage. Section 4.2 Determination of Right to Indemnification. (a) To the extent that Indemnitee shall have been wholly successful, on the merits or otherwise, in defense of any Proceeding or Claim or in defense of any issue or matter therein, including without limitation dismissal without prejudice, Indemnitee shall be indemnified against judgments, penalties (including excise and similar taxes), fines, settlements and reasonable Expenses actually incurred by him/her or on his/her behalf in connection with any such Proceeding or Claim or any issue or matter therein in accordance with Article II and no Standard of Conduct Determination (as defined in Section 4.2(b)) shall be required. (b) Upon written request by Indemnitee for indemnification pursuant to Section 4.1 hereof, a determination of whether Indemnitee has satisfied any applicable standard of conduct under Texas law that is a legally required condition precedent to indemnification of Indemnitee hereunder with respect to Indemnitee's entitlement thereto (a "STANDARD OF CONDUCT DETERMINATION") shall be made in the specific case in accordance with Article 2.02-1 of the TBCA (or any successor provision). Indemnitee will cooperate with the person or persons making such Standard of Conduct Determination, including providing to such person or persons, upon reasonable advance request, any documentation or information that is not privileged or otherwise protected from disclosure and that is reasonably available to Indemnitee and reasonably necessary to such determination. The Corporation shall indemnify and hold harmless Indemnitee against and, if requested by Indemnitee, shall reimburse Indemnitee for, or advance to Indemnitee, within five business days of such request, any and all costs and expenses (including attorneys' and experts' fees and expenses) incurred by Indemnitee in so cooperating with the person or persons making such Standard of Conduct Determination. 5 (c) The Corporation shall use its reasonable best efforts to cause any Standard of Conduct Determination required under Section 4.2(b) to be made as promptly as practicable. If (i) the person or persons empowered or selected under this Section 4.2 to make the Standard of Conduct Determination shall not have made a determination within 30 days after the later of (A) receipt by the Corporation of written notice from Indemnitee advising the Corporation of the final disposition of the applicable Proceeding or Claim (the date of such receipt being the "NOTIFICATION DATE") and (B) the selection of special legal counsel, if such determination is to be made by special legal counsel, that is permitted under the provisions of Section 4.2(e) to make such determination, and (ii) Indemnitee shall have fulfilled his/her obligations set forth in the second sentence of Section 4.2(b), then Indemnitee shall be deemed to have satisfied the applicable standard of conduct; provided that such 30-day period may be extended for a reasonable time, not to exceed an additional 30 days, if the person or persons making such determination in good faith requires such additional time for obtaining or evaluating documentation and/or information relating thereto; and provided, further, that the 30-day limitation set forth in this Section 4.2(c) shall not apply and such period shall be extended as necessary if within 30 days after receipt by the Corporation of the request for indemnification under Section 4.1 the Board has resolved to submit such determination to the shareholders for their consideration at an annual meeting thereof to be held within 90 calendar days after such receipt and such determination is made thereat, or a special meeting of shareholders is called within 30 calendar days after such receipt for the purpose of making such determination, such meeting is held for such purpose within 60 calendar days after having been so called and such determination is made thereat. (d) If (i) Indemnitee shall be entitled to indemnification hereunder pursuant to Section 4.2(a), (ii) no determination of whether Indemnitee has satisfied any applicable standard of conduct under Texas law is a legally required condition precedent to indemnification of Indemnitee hereunder, or (iii) Indemnitee has been determined or deemed pursuant to Section 4.2(b) or (c) to have satisfied any applicable standard of conduct under Texas law that is a legally required condition precedent to indemnification of Indemnitee hereunder, then the Corporation shall pay to Indemnitee, within five business days after the later of (x) the Notification Date in respect of the applicable Proceeding or Claim and (y) the earliest date on which the applicable criterion specified in clause (i), (ii) or (iii) above shall have been satisfied, all reasonable Expenses incurred by him/her in connection with the applicable Proceeding or Claim. (e) If a Standard of Conduct Determination is to be made by special legal counsel pursuant to Article 2.02-1 of the TBCA (or any successor provision), such special legal counsel must be Independent Counsel (as defined in Article I hereof) and the Corporation shall give written notice to Indemnitee advising him/her of the identity of the special legal counsel so selected. Indemnitee may, within five business days after receiving written notice of selection from the Corporation, deliver to the Corporation a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the special legal counsel so selected does not satisfy the criteria set forth in the definition of "Independent Counsel" in Article 1, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person or firm so selected shall act as special legal counsel. If such written objection is properly and timely made and substantiated, (i) the special legal counsel so selected may not serve as special legal counsel unless and until such objection is 6 withdrawn or a court has determined that such objection is without merit, and (ii) the Corporation may, at its option, select an alternative special legal counsel and give written notice to Indemnitee advising him/her of the identity of the alternative special legal counsel so selected, in which case the provisions of the two immediately preceding sentences and clause (i) of this sentence shall apply to such subsequent selection and notice. If applicable, the provisions of clause (ii) of the immediately preceding sentence shall apply to successive alternative selections. If no special legal counsel that is permitted under the foregoing provisions of this Section 4.2(e) to make the Standard of Conduct Determination shall have been selected within 30 days after the Corporation gives its initial notice pursuant to the first sentence of this Section 4.2(e), Indemnitee may petition the courts of the State of Texas for resolution of any objection which shall have been made by Indemnitee to the Corporation's selection of special legal counsel and/or for the appointment as special legal counsel of a person or firm selected by the Court or by such other person as the Court shall designate, and the person or firm with respect to whom all objections are so resolved or the person or firm so appointed will act as special legal counsel. In all events, the Corporation shall pay all of the reasonable fees and expenses of the special legal counsel incurred in connection with the special legal counsel's determination pursuant to Section 4.2(b). Section 4.3 No Other Presumption. The termination of any Proceeding or of any Claim by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) by itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did meet the requirements for indemnification under Section 2.2. Indemnitee shall be deemed to have been found liable in respect of any Claim only after he/she shall have been so adjudged by a court of competent jurisdiction after exhaustion of all appeals therefrom. ARTICLE V CERTAIN REMEDIES OF INDEMNITEE Section 5.1 Indemnitee Entitled to Adjudication in an Appropriate Court. In the event (a) a determination is made pursuant to Article IV that Indemnitee is not entitled to indemnification under this Agreement, or (b) there has been any failure by the Corporation to make timely payment or advancement of any amounts due hereunder, Indemnitee shall be entitled to commence an action seeking an adjudication in an appropriate court of the State of Texas, or in any other court of competent jurisdiction, of his/her entitlement to such indemnification or advancement of Expenses. Indemnitee shall commence such action seeking an adjudication within 180 days following the date on which Indemnitee first has the right to commence such action pursuant to this Section 5.1, or such right shall expire. The Corporation agrees not to oppose Indemnitee's right to seek any such adjudication. Section 5.2 Adverse Determination Not to Affect any Judicial Proceeding. In the event that a determination shall have been made pursuant to Article IV that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Article V shall be conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of such initial adverse determination. In any judicial proceeding commenced pursuant to this Article V, the Corporation shall have the burden of proving, by clear 7 and convincing evidence, that Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be. Section 5.3 Corporation Bound by Determination Favorable to Indemnitee in any Judicial Proceeding. If a determination shall have been made or deemed to have been made pursuant to Article IV that Indemnitee is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding commenced pursuant to this Article V, absent a knowing misstatement by Indemnitee of a material fact, or a knowing omission of a material fact necessary to make a statement by Indemnitee not materially misleading, in connection with the request for indemnification. Section 5.4 Corporation Bound by this Agreement. The Corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to this Article V that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Corporation is bound by all the provisions of this Agreement. Section 5.5 Indemnitee Entitled to Expenses of Judicial Proceeding. In the event that Indemnitee seeks a judicial adjudication of his/her rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Corporation, and shall be indemnified by the Corporation against, any and all reasonable expenses (of the types described in the definition of Expenses in Article I) incurred by him/her in such judicial adjudication but only if he/she prevails therein. If it shall be determined in said judicial adjudication that Indemnitee is entitled to receive part but not all of the indemnification or advancement of expenses or other benefit sought, the expenses incurred by Indemnitee in connection with such judicial adjudication shall be reasonably prorated in good faith by counsel for Indemnitee. Section 5.6 No Diminishment of Rights. The Corporation shall not adopt any amendment to the Articles or Bylaws the effect of which would be to deny, diminish or encumber Indemnitee's rights to indemnity pursuant to the Articles, Bylaws, the TBCA or any other applicable law as applied to any act or failure to act occurring in whole or in part prior to the date (the "EFFECTIVE DATE") upon which the amendment was approved by the Board or the shareholders of the Corporation, as the case may be. In the event that the Corporation shall adopt any amendment to the Articles or Bylaws the effect of which is to so deny, diminish or encumber Indemnitee's rights to indemnity, such amendment shall apply only to acts or failures to act occurring entirely after the Effective Date thereof. ARTICLE VI MISCELLANEOUS Section 6.1 Non-Exclusivity. The rights of Indemnitee to receive indemnification and advancement of Expenses under this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Articles or Bylaws, any other agreement, vote of shareholders or a resolution of directors of the Corporation, or otherwise. No amendment or alteration of the Articles or Bylaws or any provision thereof shall adversely affect Indemnitee's rights hereunder and such rights shall be in 8 addition to any rights Indemnitee may have under the Articles, Bylaws, the TBCA or otherwise. To the extent that there is a change in the TBCA (whether by statute or judicial decision) which allows greater indemnification by agreement than would be afforded currently under the Articles or Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by virtue of this Agreement the greater benefit so afforded by such change. Section 6.2 Insurance and Subrogation. (a) For the duration of Indemnitee's service as a director and/or officer of the Corporation, and thereafter for so long as Indemnitee shall be subject to any pending or possible Proceeding or Claim, the Corporation shall use commercially reasonable efforts (taking into account the scope and amount of coverage available relative to the cost thereof) to cause to be maintained in effect policies of directors' and officers' liability insurance providing coverage for directors and/or officers of the Corporation. The Corporation shall provide Indemnitee with a copy of all directors' and officers' liability insurance applications, binders, policies, declarations, endorsements and other related materials. Without limiting the generality or effect of the two immediately preceding sentences, the Corporation shall not discontinue or significantly reduce the scope or amount of coverage from one policy period to the next (i) without the prior approval thereof by a majority vote of the Incumbent Directors, even if less than a quorum, or (ii) if at the time that any such discontinuation or significant reduction in the scope or amount of coverage is proposed there are no Incumbent Directors, without the prior written consent of Indemnitee (which consent shall not be unreasonably withheld or delayed). In all policies of directors' and officers' liability insurance obtained by the Corporation, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits, subject to the same limitations, as are accorded to the Corporation's directors and officers most favorably insured by such policy. The Corporation may, but shall not be required to, create a trust fund, grant a security interest or use other means, including without limitation a letter of credit, to ensure the payment of such amounts as may be necessary to satisfy its obligations to indemnify and advance Expenses pursuant to this Agreement. (b) In the event of any payment by the Corporation under this Agreement, the Corporation shall be subrogated to the extent of such payment to all of the related rights of recovery of Indemnitee against other persons or entities (other than Indemnitee's successors). Indemnitee shall execute all papers reasonably required to evidence such rights (all of Indemnitee's reasonable Expenses related thereto to be reimbursed by or, at the option of Indemnitee, advanced by the Corporation. (c) The Corporation shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise. Section 6.3 Defense of Claims. The Corporation shall be entitled to participate in the defense of any Proceeding or Claim or to assume the defense thereof, with counsel reasonably satisfactory to Indemnitee; provided that if Indemnitee believes, after consultation with counsel selected by Indemnitee, that (a) the use of counsel chosen by the Corporation to represent Indemnitee would present such counsel with an actual or potential conflict, (b) the named parties 9 in any such Proceeding or Claim (including any impleaded parties) include both the Corporation and Indemnitee and Indemnitee shall conclude, based on the advice of counsel, that there may be one or more legal defenses available to him/her that are different from or in addition to those available to the Corporation, or (c) any such representation by such counsel would be precluded under the applicable standards of professional conduct then prevailing, then Indemnitee shall be entitled to retain separate counsel (but not more than one law firm plus, if applicable, local counsel in respect of any particular Proceeding or Claim) at the Corporation's expense. The Corporation shall not be liable to Indemnitee under this Agreement for any amounts paid in settlement of any Proceeding or Claim effected without the Corporation's prior written consent. The Corporation shall not, without the prior written consent of Indemnitee, effect any settlement of any Proceeding or Claim to which Indemnitee is, or could have been, a party unless such settlement solely involves the payment of money and includes a complete and unconditional release of Indemnitee from all liability on any claims that are the subject matter of such Proceeding or Claim. Neither the Corporation nor Indemnitee shall unreasonably withhold its consent to any proposed settlement; provided, that Indemnitee may withhold consent to any settlement that does not provide a complete and unconditional release of Indemnitee. Section 6.4 Exculpation of Directors. If Indemnitee is or was a director of the Corporation, he/she shall not in that capacity be liable to the Corporation or its shareholders for monetary damages for an act or omission in Indemnitee's capacity as a director, except that Indemnitee's liability shall not be eliminated or limited for: (a) a breach of Indemnitee's duty of loyalty to the Corporation or its shareholders, (b) an act or omission not in good faith that constitutes a breach of duty of Indemnitee to the Corporation or an act or omission that involves intentional misconduct or a knowing violation of the law, (c) a transaction from which Indemnitee received an improper benefit, whether or not the benefit resulted from an action taken within the scope of Indemnitee's office, or (d) an act or omission for which the liability of Indemnitee is expressly provided for by statute. Section 6.5 Duration of Agreement. This Agreement shall continue for so long as Indemnitee serves as a director or officer of the Corporation or, at the request of the Corporation, as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic corporation, employee benefit plan, other enterprise or other entity, and thereafter shall survive until and terminate upon the later to occur of (a) the final termination of all pending Proceedings in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Article V relating thereto, and (b) the expiration of all statutes of limitation applicable to possible Claims arising out of Indemnitee's Corporate Status. Section 6.6 Successors and Binding Agreement. (a) The Corporation shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business or assets of the Corporation, by agreement in form and substance reasonably satisfactory to Indemnitee and his/her counsel, expressly to assume and agree to perform this Agreement in the same manner and to the same extent the Corporation would be required to perform if no such succession had taken place. This Agreement shall be binding upon and inure to the benefit of the Corporation and any successor to the Corporation, including without 10 limitation any person acquiring directly or indirectly all or substantially all of the business or assets of the Corporation whether by purchase, merger, consolidation, reorganization or otherwise (and such successor will thereafter be deemed the "CORPORATION" for purposes of this Agreement), but shall not otherwise be assignable or delegatable by the Corporation. (b) This Agreement shall inure to the benefit of and be enforceable by Indemnitee's personal or legal representatives, executors, administrators, heirs, distributees, legatees and other successors. (c) This Agreement is personal in nature and neither of the parties hereto shall, without the consent of the other, assign or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Sections 6.6(a) and 6.6(b). Without limiting the generality or effect of the foregoing, Indemnitee's right to receive payments hereunder shall not be assignable, whether by pledge, creation of a security interest or otherwise, other than by a transfer by Indemnitee's will or by the laws of descent and distribution, and, in the event of any attempted assignment or transfer contrary to this Section 6.6(c), the Corporation shall have no liability to pay any amount so attempted to be assigned or transferred. Section 6.7 Legal Fees and Expenses. It is the intent of the Corporation that Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation, enforcement or defense of Indemnitee's rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to Indemnitee hereunder. Accordingly, without limiting the generality or effect of any other provision hereof, if it should appear to Indemnitee that the Corporation has failed to comply with any of its obligations under this Agreement or in the event that the Corporation or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover from, Indemnitee the benefits provided or intended to be provided to Indemnitee hereunder, the Corporation irrevocably authorizes Indemnitee from time to time to retain counsel of Indemnitee's choice, at the expense of the Corporation as hereafter provided, to advise and represent Indemnitee in connection with any such interpretation, enforcement or defense, including without limitation the initiation or defense of any litigation or other legal action, whether by or against the Corporation or any director, officer, shareholder or other person affiliated with the Corporation, in any jurisdiction. Notwithstanding any existing or prior attorney-client relationship between the Corporation and such counsel, the Corporation irrevocably consents to Indemnitee's entering into an attorney-client relationship with such counsel, and in that connection the Corporation and Indemnitee agree that a confidential relationship shall exist between Indemnitee and such counsel. Without respect to whether Indemnitee prevails, in whole or in part, in connection with any of the foregoing, the Corporation will pay and be solely financially responsible for any and all attorneys' and related fees and expenses incurred by Indemnitee in connection with any of the foregoing. Section 6.8 Notice by Each Party. Indemnitee agrees to promptly notify the Corporation in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document or communication relating to any Proceeding or Claim for which Indemnitee may be entitled to indemnification or advancement of Expenses hereunder. The Corporation agrees to promptly notify Indemnitee in writing, as to the pendency 11 of any Proceeding or Claim which may involve a claim against Indemnitee for which Indemnitee may be entitled to indemnification or advancement of Expenses hereunder. Section 6.9 Amendment. This Agreement may not be modified or amended except by a written instrument executed by or on behalf of each of the parties hereto. Section 6.10 Waivers. The observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) by the party entitled to enforce such term only by a writing signed by the party against which such waiver is to be asserted. Unless otherwise expressly provided herein, no delay on the part of any party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party hereto of any right, power or privilege hereunder operate as a waiver of any other right, power or privilege hereunder nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. Section 6.11 Entire Agreement. This Agreement and the documents expressly referred to herein constitute the entire agreement between the parties hereto with respect to matters covered hereby, and any other prior or contemporaneous oral or written understandings or agreements with respect to the matters covered hereby are expressly superseded by this Agreement. Section 6.12 Severability. If any provision of this Agreement or the application of such provision to any person or circumstance, shall be judicially declared to be invalid, unenforceable or void, such decision will not have the effect of invalidating or voiding the remainder of this Agreement or affect the application of such provision to other persons or circumstances, and the parties hereto agree that the part or parts of this Agreement so held to be invalid, unenforceable or void will be deemed to have been stricken herefrom and the remainder of this Agreement will have the same force and effectiveness as if such part or parts had never been included herein; provided, however, that the parties shall negotiate in good faith with respect to an equitable modification of the provision or application thereof declared to be invalid, unenforceable or void. Any such finding of invalidity or unenforceability shall not prevent the enforcement of such provision in any other jurisdiction to the maximum extent permitted by applicable law. Section 6.13 Notices. Unless otherwise expressly provided herein, all notices, requests, demands, consents, waivers, instructions, approvals and other communications hereunder shall be in writing and shall be deemed to have been duly given if personally delivered to or mailed, certified mail return receipt requested, first-class postage paid, addressed as follows: (i) if to the Corporation, AMERISAFE, Inc., 2301 Highway 190 West, DeRidder, Louisiana 70634, Attn: Secretary, and (ii) if to Indemnitee, at the address specified on the signature page of this Agreement, or to such other address or to such other individuals as any party shall have last designated by notice to the other parties. All notices and other communications given to any party in accordance with the provisions of this Agreement shall be deemed to have been given when delivered or sent to the intended recipient thereof in accordance with the provisions of this Section 6.13. 12 Section 6.14 Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas without regard to the principles of conflict of laws. Section 6.15 Headings. The Article and Section headings in this Agreement are for convenience of reference only, and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof. Section 6.16 Counterparts. This Agreement may be executed in two counterparts, each of which shall be deemed to be an original and both of which together shall be deemed to be one and the same instrument. 13 IN WITNESS WHEREOF, this Agreement has been duly executed and delivered to be effective as of the date first above written. AMERISAFE, INC. By: ______________________________________ Name: Title: INDEMNITEE __________________________________________ [Name] Indemnitee Notice Address: __________________________________________ __________________________________________ __________________________________________ 14 EX-10.12 16 d27260exv10w12.txt FIRST CASUALTY EXCESS OF LOSS REINSURANCE CONTRACT Exhibit 10.12 FIRST CASUALTY EXCESS OF LOSS REINSURANCE CONTRACT EFFECTIVE: JANUARY 1, 2005 issued to American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group TABLE OF CONTENTS

ARTICLE PAGE I Classes of Business Reinsured 1 II Commencement and Termination 1 III Territory (BRMA 51A) 3 IV Exclusions 3 V Special Acceptances 7 VI Retention and Limit 7 VII Definitions 8 VIII Annuities at Company's Option 10 IX Claims 11 X Commutation 11 XI Special Commutation 12 XII Salvage and Subrogation 13 XIII Reinsurance Premium 14 XIV Late Payments 14 XV Offset (BRMA 36A) 15 XVI Access to Records (BRMA 1D) 16 XVII Liability of the Reinsurer 16 XVIII Net Retained Lines (BRMA 32E) 16 XIX Errors and Omissions (BRMA 14F) 16 XX Taxes (BRMA 50B) 16 XXI Reserves and Letters of Credit 17 XXII Insolvency 18 XXIII Arbitration (BRMA 6J) 19 XXIV Service of Suit (BRMA 49C) 20 XXV Entire Agreement 20 XXVI Governing Law (BRMA 71B) 20 XXVII Agency Agreement 21 XXVIII Intermediary (BRMA 23A) 21

FIRST CASUALTY EXCESS OF LOSS REINSURANCE CONTRACT EFFECTIVE: JANUARY 1, 2005 issued to American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group (hereinafter referred to collectively as the "Company") by The Subscribing Reinsurer(s) Executing the Interests and Liabilities Agreement(s) Attached Hereto (hereinafter referred to as the "Reinsurer") ARTICLE I - CLASSES OF BUSINESS REINSURED By this Contract the Reinsurer agrees to reinsure the excess liability which may accrue to the Company under its policies, contracts and binders of insurance or reinsurance (hereinafter called "policies") in force at the effective date hereof or issued or renewed on or after that date, and classified by the Company as Workers' Compensation, Employers Liability, including coverage provided under the U.S. Longshore and Harbor Workers' Compensation Act and the Jones Act, and General Liability business, subject to the terms, conditions and limitations hereinafter set forth. ARTICLE II - COMMENCEMENT AND TERMINATION A. This Contract shall become effective at 12:01 a.m., Local Standard Time, January 1, 2005, with respect to losses arising out of occurrences commencing at or after that time and date, and shall continue in force thereafter until terminated. B. Either party may terminate this Contract on any December 31 by giving the other party not less than 90 days prior notice by certified or registered mail. C. Notwithstanding the provisions of paragraph B above, the Company may terminate a Subscribing Reinsurer's percentage share in this Contract in the event any of the following Page 1 circumstances occur, as clarified by public announcement as respects subparagraphs 1 through 7 below or upon discovery as respects subparagraph 8 below. Within 30 days of such public announcement or discovery, the Company shall give the Subscribing Reinsurer notice, via certified mail, of its intent to terminate the Subscribing Reinsurer's percentage share under the Contract. The effective date of termination shall be applied to 12:01 a.m., Local Standard Time, on the date specified by the Company, subject to one day of prior notice, unless mutually agreed otherwise: 1. The Subscribing Reinsurer's policyholders' surplus at the beginning of any contract year has been reduced by more than 20.0% of the amount of surplus 12 months prior to that date; or 2. The Subscribing Reinsurer's policyholders' surplus at any time during any contract year has been reduced by more than 20.0% of the amount of surplus at the date of the Subscribing Reinsurer's most recent financial statement filed with regulatory authorities and available to the public as of the beginning of the contract year; or 3. The Subscribing Reinsurer's A.M. Best's rating has been assigned or downgraded below A- and/or Standard & Poor's rating has been assigned or downgraded below BBB+; or 4. The Subscribing Reinsurer has become merged with, acquired by or controlled by any other company, corporation or individual(s) not controlling the Subscribing Reinsurer's operations previously; or 5. A State Insurance Department or other legal authority has ordered the Subscribing Reinsurer to cease writing business; or 6. The Subscribing Reinsurer has become insolvent or has been placed into liquidation or receivership (whether voluntary or involuntary) or proceedings have been instituted against the Subscribing Reinsurer for the appointment of a receiver, liquidator, rehabilitator, conservator or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations; or 7. The Subscribing Reinsurer has reinsured its entire liability under the Contract without the Company's prior written consent; or 8. The Subscribing Reinsurer has ceased assuming new and renewal treaty reinsurance business. D. Unless the Company elects that the Reinsurer have no liability for losses arising out of occurrences commencing after the effective date of termination, and so notifies the Reinsurer prior to or as promptly as possible after the effective date of termination, reinsurance hereunder on business in force on the effective date of termination shall remain in full force and effect until expiration, cancellation or next premium anniversary of such business, whichever first occurs, but in no event beyond 12 months plus odd time (not exceeding 18 months in all) following the effective date of termination. Page 2 ARTICLE III - TERRITORY (BRMA 51A) The territorial limits of this Contract shall be identical with those of the Company's policies. ARTICLE IV - EXCLUSIONS A. This Contract does not apply to and specifically excludes the following: 1. Lines of business not identified in Article I. 2. All excess of loss reinsurance assumed by the Company. 3. Reinsurance assumed by the Company under obligatory reinsurance agreements, except: a. Agency reinsurance where the policies involved are to be reunderwritten in accordance with the underwriting standards of the Company and reissued as Company policies at the next anniversary or expiration date; and b. Intercompany reinsurance between any of the reinsured companies under this Contract. 4. Business written by the Company on a co-indemnity basis where the Company is not the controlling carrier. 5. Business written to apply in excess of a deductible of more than $25,000, and business issued to apply specifically in excess over underlying insurance. However, if the Company is required, by any state regulation, to provide a deductible of more than $25,000, this exclusion shall not apply. 6. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause - Liability - Reinsurance (U.S.A.)" attached to and forming part of this Contract. 7. As regards interests which at time of loss or damage are on shore, no liability shall attach hereto in respect of any loss or damage which is occasioned by war, invasion, hostilities, acts of foreign enemies, civil war, rebellion, insurrection, military or usurped power, or martial law or confiscation by order of any government or public authority. This War Exclusion Clause shall not, however, apply to interests which at time of loss or damage are within the territorial limits of the United States of America (comprising the Fifty States of the Union, the District of Columbia, and including bridges between the United States of America and Mexico provided they are under United States ownership), Canada, St. Pierre and Miquelon, provided such interests are insured under policies containing a standard war or hostilities or warlike operations exclusion clause. 8. 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. 9. All liability of the Company arising by contract, operation of law, or otherwise, from its participation or membership, whether voluntary or involuntary, in any insolvency fund. Page 3 "Insolvency fund" includes any guaranty fund, insolvency fund, plan, pool, association, fund or other arrangement, however denominated, established or governed, which provides for any assessment of or payment or assumption by the Company of part or 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. 10. Workers' Compensation where the principal exposures, as defined by the governing class code, include: a. Operation of aircraft but only if the annual estimated policy premium is $250,000 or more; b. Railroad, subway, or street railway operations; c. Operation or navigation of vessels or barges; d. Manufacture, production, or refining of gas, natural or artificial fuel, or other liquefied petroleum fuel, but only if the annual estimated policy premium is $250,000 or more; e. Manufacturing, assembly, packing, or processing of fireworks, fuses, nitroglycerine, magnesium, pyroxylin, ammunition, or explosives. This exclusion does not apply to the assembly, packing, or processing of explosives when the estimated annual premium is under $250,000; f. Wrecking or demolition of structures but only if the annual estimated policy premium is $250,000 or more; g. Underground mining. 11. As respects Workers' Compensation and Employers' Liability only, unless otherwise excluded as set forth above, the reinsurance provided under this Contract shall not apply to any loss, cost or expense arising out of or related to, either directly or indirectly, any "terrorist activity," as defined herein, but this exclusion shall only apply when the activity includes, involves, or is associated with the use of any biological, chemical, radioactive, or nuclear agent, material, device or weapon, or when the predominant business of the policyholder as defined by the governing class code is: a. The operation of: airports and aircraft; flight schools; bridges, dams, tunnels, or locks; department stores; shopping malls; chain retail stores; casinos and casino hotels; cruise lines; railroads; ports/public transit authorities; security services; stadiums; convention/exhibition centers; or theme/amusement parks. b. The manufacture and distribution of: automobiles; chemicals, petrochemicals, pharmaceuticals; utilities (electric, gas, water, and sewer); major defense/aerospace products; or high-tech equipment, but only if the policyholder employs more than 20 personnel at the location of a terrorist activity at the time of its occurrence. Page 4 c. The management or operation of the following type of structures, but only if greater than 25 stories in height: apartments/condominiums/co-ops; hotels/motels; or office buildings. d. Businesses primarily engaged in the entertainment, media, or transportation industry limited to the following: major media providers (NBC, FOX, ABC, CBS, etc.); television and motion picture studios; Broadway theaters; major internet companies (AOL, Yahoo, etc.); professional sports teams; major telecommunications companies (AT&T, Worldcom/MCI, etc.); national truck rental companies (Ryder, Penske, UHaul, etc.); or major national motor freight common carriers (J.B. Hunt, Red Arrow, etc.). e. Policyholders primarily located in, or predominantly doing business as: hospitals; universities; nuclear facilities; financial institutions; or governmental buildings and national landmarks. "Terrorist activity" shall mean any deliberate, unlawful act that: a. Is declared by any authorized government official to be or to involve terrorism, terrorist activity or acts of terrorism; or b. Includes, involves, or is associated with the use or threatened use of force, violence or harm against any person, tangible or intangible property, the environment, or any natural resources, where the act or threatened act is intended, in whole or in part, to: i. Promote or further any political, ideological, philosophical, racial, ethnic, social or religious cause or objective of the perpetrator or any organization, association or group affiliated with the perpetrator; or ii. Influence, disrupt or interfere with any government related operations, activities or policies; or iii. Intimidate, coerce or frighten the general public or any segment of the general public; or iv. Disrupt or interfere with a national economy or any segment of a national economy; or c. Includes, involves, or is associated with, in whole or in part, any of the following activities, or the threat thereof: i. Hijacking or sabotage of any form of transportation or conveyance, including but not limited to spacecraft, satellite, aircraft, train, vessel, or motor vehicle; ii. Hostage taking or kidnapping; iii. The use of any bomb, incendiary device, explosive or firearm; iv. The interference with or disruption of basic public or commercial services and systems, including but not limited to the following services or systems: Page 5 electricity, natural gas, power, postal, communications, telecommunications, information, public transportation, water, fuel, sewer or waste disposal; v. The injuring or assassination of any elected or appointed government official or any government employee; vi. The seizure, blockage, interference with, disruption of, or damage to any government buildings, institutions, functions, events, tangible or intangible property or other assets; or vii. The seizure, blockage, interference with, disruption of, or damage to tunnels, roads, streets, highways, or other places of public transportation or conveyance. d. Any of the activities listed in subparagraph c, above, shall be considered terrorist activity except where the Company can demonstrate to the Reinsurer that the foregoing activities or threats thereof were motivated solely by personal objectives of the perpetrator that are unrelated, in whole or in part, to any intention to: i. Promote or further any political, ideological, philosophical, racial, ethnic, social or religious cause or objective of the perpetrator or any organization, association or group affiliated with the perpetrator; ii. Influence, disrupt or interfere with any government-related operations, activities or policies; iii. Intimidate, coerce or frighten the general public or any segment of the general public; or iv. Disrupt or interfere with a national economy or any segment of a national economy. 12. As respects General Liability policies, exposures, other than those identified below, as included in the General Liability section of the Company's Commercial Lines Manual: a. Class 97111 - Logging; b. Class 58873 - Sawmill; c. Class 59984 - Woodyard and Drivers; d. Class 95410 - Grading of Land; e. Class 45819 - Lumber Yard; f. Class 10073 - Repair Shops and Drivers; g. Class 43822 - Timber Cruiser; h. Class 99793 - Truckman Not Otherwise Classified; Page 6 i. Class 91591 - Contractors - Subcontracted Work Other Than Construction; j. Class 49452 - Vacant Land. B. Any exclusion set forth in subparagraphs 10 and/or 12 of paragraph A shall be waived automatically when, in the opinion of the Company, the exposure excluded therein is incidental to the principal exposure on the risk in question. C. If the Company is bound, without the knowledge and contrary to the instructions of the Company's supervisory underwriting personnel, on any business falling within the scope of one or more of the exclusions set forth in subparagraphs 10 and/or 12 of paragraph A, the exclusion shall be suspended with respect to such business until the Company has the first opportunity to cancel the policy in compliance with governmental requirements. D. If the Company is required to accept an assigned risk which conflicts with one or more of the exclusions set forth in subparagraph 10 of paragraph A, reinsurance shall apply, but only for the difference between the Company's retention and the minimum limit required by the applicable state statute, and in no event shall the Reinsurer's liability exceed the limit set forth in Article VI. ARTICLE V - SPECIAL ACCEPTANCES From time to time the Company may request a special acceptance of reinsurance falling outside the scope of the provisions set forth in this Contract. If each Subscribing Reinsurer whose share in the interests and liabilities of the Reinsurer is 25.0% or greater agrees to a special acceptance, such special acceptance shall be binding on all Subscribing Reinsurers with respect to their respective shares. If such agreement is not achieved, such special acceptance shall be made to this Contract only with respect to the interests and liabilities of each Subscribing Reinsurer who agrees to the special acceptance. In the event a reinsurer becomes a party to this Contract subsequent to one or more special acceptances hereunder, the new reinsurer shall automatically accept such special acceptance(s) as being covered hereunder. ARTICLE VI - RETENTION AND LIMIT A. The Company shall retain and be liable for the first $1,000,000 of ultimate net loss arising out of each occurrence. The Reinsurer shall then be liable (subject to the provisions of paragraph B below) for the amount by which such ultimate net loss exceeds the Company's retention, but the liability of the Reinsurer shall not exceed $4,000,000 as respects any one occurrence. B. Notwithstanding the provisions of paragraph A above, no claim shall be made under this Contract during any contract year unless and until cumulative subject excess losses paid from losses arising out of occurrences commencing during the contract year (being losses which would be recoverable from the Reinsurer under paragraph A above were it not for the provisions of this paragraph) exceed an annual aggregate retention of 2.250% of net earned premium. The Company shall retain and be liable for such annual aggregate retention in addition to its initial loss retention stipulated in paragraph A above. Page 7 C. As respects any loss or losses arising out of terrorist activity, the liability of the Reinsurer shall not exceed $4,000,000 each contract year. Terrorism losses shall have priority when calculating the annual aggregate retention. D. The Company shall be permitted to carry quota share and excess reinsurance, recoveries under which shall inure solely to the benefit of the Company and be entirely disregarded in applying all of the provisions of this Contract. E. The Company shall be permitted to carry excess of loss reinsurance applying to Workers' Compensation risks in the State of Minnesota, recoveries under which shall inure to the benefit of this Contract. Such coverage shall be provided through the Minnesota Workers' Compensation Reinsurance Association. It is understood that the liability of the Reinsurer for Minnesota Workers' Compensation risks is not released. In the event the Company accrues liability that is not provided by any inuring reinsurance, for whatever reason, the Reinsurer agrees to reinsure such excess liability. ARTICLE VII - DEFINITIONS A. "Ultimate net loss" as used herein is defined as the sum or sums (including loss in excess of policy limits, extra contractual obligations and any loss adjustment expense, as hereinafter defined) paid or payable by the Company in settlement of claims and in satisfaction of judgments rendered on account of such claims, after deduction of all salvage, all recoveries and all claims on inuring insurance or reinsurance, whether collectible or not. Nothing herein shall be construed to mean that losses under this Contract are not recoverable until the Company's ultimate net loss has been ascertained. B. "Loss in excess of policy limits" and "extra contractual obligations" as used herein shall be defined as follows: 1. "Loss in excess of policy limits" shall mean 90.0% of any amount paid or payable by the Company in excess of its policy limits, but otherwise within the terms of its policy, such loss in excess of the Company's policy limits having been incurred because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of an action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action. 2. "Extra contractual obligations" shall mean 90.0% of any punitive, exemplary, compensatory or consequential damages paid or payable by the Company, not covered by any other provision of this Contract and which arise from the handling of any claim on business subject to this Contract, such liabilities arising because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of any action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action. An extra contractual obligation shall be deemed, in all Page 8 circumstances, to have occurred on the same date as the loss covered or alleged to be covered under the policy. If any provision of this Article shall be rendered illegal or unenforceable by the laws, regulations or public policy of any state, such provision shall be considered void in such state, but this shall not affect the validity or enforceability of any other provision of this Contract or the enforceability of such provision in any other jurisdiction. Notwithstanding anything stated herein, this Contract shall not apply to any loss in excess of policy limits or any extra contractual obligation incurred by the Company as a result of any fraudulent and/or criminal act by any officer or director of the Company acting individually or collectively or in collusion with any individual or corporation or any other organization or party involved in the presentation, defense or settlement of any claim covered hereunder. C. "Occurrence" as used herein is defined as an accident or occurrence or a series of accidents or occurrences arising out of or caused by one event, except that: 1. As respects General Liability policies where the Company's limit of liability for Products and Completed Operations coverages is determined on the basis of the insured's aggregate losses during a policy period, all such losses proceeding from or traceable to the same causative agency shall, at the Company's option, be deemed to have been caused by one occurrence commencing at the beginning of the policy period, it being understood and agreed that each renewal or annual anniversary date of the policy involved shall be deemed the beginning of a new policy period; 2. Each occupational disease case or cumulative trauma case contracted by an employee of an insured shall be deemed to have been caused by a separate occurrence, commencing on: a. The date of disability for which compensation is payable if the case is compensable under the Workers' Compensation Law; b. The date disability due to the disease actually began if the case is not compensable under the Workers' Compensation Law; c. The date of cessation of employment if claim is made after employment has ceased. 3. Notwithstanding the provisions of subparagraph 2 above, as respects losses resulting from occupational disease or cumulative trauma suffered by employees of an insured for which the employer is liable, as a result of a sudden and accidental event not exceeding 72 hours in duration, all such losses shall be considered one occurrence and may be combined with losses classified as other than occupational disease or cumulative trauma which arise out of the same event and the combination of such losses shall be considered as one occurrence within the meaning hereof. D. "Occupational or industrial disease" is any abnormal condition that fulfills all of the following conditions: Page 9 1. It is not traceable to a definite compensable accident occurring during the employee's past or present employment. 2. It has been caused by exposure to a disease producing agent or agents present in the workers' occupational environment. 3. It has resulted in disability or death. E. "Cumulative trauma" is an injury that fulfills all of the following conditions: 1. It is not traceable to a definite compensable accident occurring during the employee's past or present employment. 2. It has occurred from and has been aggravated by a repetitive employment related activity. 3. It has resulted in disability or death. F. "Loss adjustment expense" as used herein shall mean expenses allocable to the investigation, defense and/or settlement of specific claims, including litigation expenses, interest on judgments, declaratory judgment expenses or other legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto, and salaries and expenses of salaried adjusters associated with claims covered under policies of the Company reinsured hereunder but not including office expenses or salaries of the Company's regular employees. G. "Contract year" as used in this Contract shall mean the period from January 1, 2005 to December 31, 2005, both days inclusive, and each respective 12-month period thereafter that this Contract continues in force. However, if this Contract is terminated, the final contract year shall be from the beginning of the then current contract year through the date of termination if this Contract is terminated on a "cutoff" basis, or the end of the runoff period if this Contract is terminated on a "runoff" basis. ARTICLE VIII - ANNUITIES AT COMPANY'S OPTION A. Whenever the Company is required, or elects, to purchase an annuity or to negotiate a structured settlement, either in satisfaction of a judgment or in an out-of-court settlement or otherwise, the cost of the annuity or the structured settlement, as the case may be, shall be deemed part of the Company's ultimate net loss. B. The terms "annuity" or "structured settlement" shall be understood to mean any insurance policy, lump sum payment, agreement or device of whatever nature resulting in the payment of a lump sum by the Company in settlement of any or all future liabilities which may attach to it as a result of an occurrence. C. In the event the Company purchases an annuity which inures in whole or in part to the benefit of the Reinsurer, it is understood that the liability of the Reinsurer is not released thereby. In the event the Company is required to provide benefits not provided by the annuity for whatever reason, the Reinsurer shall pay its proportional share of any loss. Page 10 ARTICLE IX - CLAIMS A. Whenever a claim is reserved by the Company for an amount greater than 50.0% of its retention hereunder and/or whenever a claim appears likely to result in a claim under this Contract, the Company shall notify the Reinsurer. Further, the Company shall notify the Reinsurer whenever a claim involves a fatality, major limb amputation, spinal cord damage, brain damage, blindness or extensive burns, regardless of liability, if the policy limits or statutory benefits applicable to the claim are greater than the Company's retention hereunder. The Reinsurer shall have the right to participate, at its own expense, in the defense of any claim or suit or proceeding involving this reinsurance. B. All claim settlements made by the Company, provided they are within the terms of this Contract (including but not limited to ex-gratia payments), shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for which it may be liable upon receipt of satisfactory evidence of the amount paid by the Company. ARTICLE X - COMMUTATION A. The Company and the Reinsurer may mutually agree to commute any contract year. B. Unless otherwise mutually agreed, the calculation for the commutation shall be calculated in accordance with the following formula: 1. The Reinsurer's net premium earned (i.e., the gross earned reinsurance premium less the ceding commission paid) for the contract year; less 2. The Reinsurer's paid losses and loss adjustment expense on losses arising out of occurrences commencing during the contract year; less 3. The Reinsurer's margin at 25.0% of the net earned premium (i.e., the gross earned reinsurance premium less the ceding commission paid) for the contract year; equals 4. The Company's net profit. C. Payment to the Company of the calculation will result in a full and final commutation of all known and unknown losses and shall constitute a complete and final release of the Reinsurer and the Company in respect of any and all liabilities on business covered under this Contract during the contract year commuted. D. Should the calculation be zero or negative, no payment shall be made and the Company shall have the option to provide a full and final commutation of all known and unknown losses, which shall constitute a complete and final release of the Reinsurer and the Company with respect to any and all liabilities on business covered under this Contract during the contract year commuted. Page 11 ARTICLE XI - SPECIAL COMMUTATION A. In the event a Subscribing Reinsurer meets the following conditions, the Company may require a commutation of that portion of any excess loss hereunder represented by any outstanding claim or claims, including any related loss adjustment expense. 1. The Subscribing Reinsurer's A.M. Best's rating has been assigned or downgraded below A- (inclusive of "Not Rated" ratings) and/or Standard & Poor's rating has been assigned or downgraded below BBB+ (inclusive of "Not Rated" ratings); or 2. The Subscribing Reinsurer has ceased assuming new and renewal property and casualty treaty reinsurance business. "Outstanding claim or claims" shall be defined as known or unknown claims, including any billed yet unpaid claims. However, unless otherwise mutually agreed, this paragraph shall not apply unless the outstanding claim or claims is for an amount not less than $5,000. Such commutation shall be in accordance with Article II. Unless mutually agreed or subject to Article II, the commutation will take place for a subject period being the inception of the contract year through the date of termination. The Subscribing Reinsurer shall have no liability for losses arising out of occurrences after the date of termination. B. If the Company elects to require commutation as provided in paragraph A above, the Company shall submit a Statement of Valuation of the outstanding claim or claims as of the last day of the month immediately preceding the month in which the Company elects to require commutation, as determined by the Company. Such Statement of Valuation shall include the elements considered reasonable to establish the excess loss and shall set forth or attach the information relied upon by the Company and the methodology employed to calculate the excess loss. The Subscribing Reinsurer shall then pay the amount requested within 30 calendar days of receipt of such Statement of Valuation, unless the Subscribing Reinsurer needs additional information from the Company to assess the Company's Statement of Valuation or contests such amount. C. If the Subscribing Reinsurer needs additional information from the Company to assess the Company's Statement of Valuation or contests the amount requested, the Subscribing Reinsurer shall so notify the Company within 15 calendar days of receipt of the Company's Statement of Valuation. The Company shall supply any reasonably requested information to the Subscribing Reinsurer within 15 calendar days of receipt of the notification. Within 30 calendar days of the date of the notification or of the receipt of the information, whichever is later, the Subscribing Reinsurer shall provide the Company with its Statement of Valuation of the outstanding claim or claims as of the last day of the month immediately preceding the month in which the Company elects to require commutation, as determined by the Subscribing Reinsurer. Such Statement of Valuation shall include the elements considered reasonable to establish the excess loss and shall set forth or attach the information relied upon by the Subscribing Reinsurer and the methodology employed to calculate the excess loss. D. In the event the Subscribing Reinsurer's Statement of Valuation of the outstanding claim or claims is viewed as unacceptable to the Company, the Company may either abandon the commutation effort, or may seek to settle any difference by using an independent actuary agreed to by the parties. Page 12 E. If the parties cannot agree on an acceptable independent actuary within 15 calendar days of the date of the Subscribing Reinsurer's Statement of Valuation, then each party shall appoint an actuary as party arbitrators for the limited and sole purpose of selecting an independent actuary. If the actuaries cannot agree on an acceptable independent actuary within 15 calendar days of the date of the Subscribing Reinsurer's Statement of Valuation, the Company shall supply the Subscribing Reinsurer with a list of at least three proposed independent actuaries, and the Subscribing Reinsurer shall select the independent actuary from that list. F. Upon selection of the independent actuary, both parties shall present their respective written submissions to the independent actuary. The independent actuary may, at his or her discretion, request additional information. The independent actuary shall issue his or her decision within 45 calendar days after the written submissions have been filed and any additional information has been provided. G. The decision of the independent actuary shall be final and binding. The expense of the independent actuary shall be equally divided between the two parties. For the purposes of this Article, unless mutually agreed otherwise, an "independent actuary" shall be an actuary who satisfies each of the following criteria: 1. Is regularly engaged in the valuation of claims resulting from lines of business subject to this Contract; and 2. Is either a Fellow of the Casualty Actuarial Society or of the American Academy of Actuaries; and 3. Is disinterested and impartial regarding this commutation. H. Notwithstanding paragraph A, B and C above, in the event that the Subscribing Reinsurer no longer meets the conditions set forth in subparagraph 1 or 2 in paragraph A above, this commutation may continue on a mutually agreed basis. I. Payment by the Subscribing Reinsurer of the amount requested in accordance with paragraph B, C or F above, shall release the Subscribing Reinsurer from all further liability for outstanding claim or claims, known or unknown, under this Contract, which shall release the Company from all further liability for payments of salvage or subrogation amounts, known or unknown, to the Subscribing Reinsurer under this Contract. J. In the event of any conflict between this Article and any other Article of this Contract, the terms of this Article shall control. K. This Article shall survive the termination of this Contract. ARTICLE XII - SALVAGE AND SUBROGATION The Reinsurer shall be credited with salvage (i.e., reimbursement obtained or recovery made by the Company, less the actual cost, excluding salaries of officials and employees of the Company and sums paid to attorneys as retainer, of obtaining such reimbursement or making such recovery) or subrogation on account of claims and settlements involving reinsurance hereunder. Salvage or subrogation thereon shall always be used to reimburse the excess carriers in the reverse order of their priority according to their participation before being used in Page 13 any way to reimburse the Company for its primary loss. The Company hereby agrees to enforce its rights to salvage or subrogation where it is economically reasonable in the judgment of the Company, relating to any loss, a part of which loss was sustained by the Reinsurer, and to prosecute all claims arising out of such rights. ARTICLE XIII - REINSURANCE PREMIUM A. As premium for the reinsurance provided hereunder during each contract year, the Company shall pay the Reinsurer 5.900% of its net earned premium. B. Within 30 days after the end of each month, the Company shall report its net earned premium for the month. The premium due the Reinsurer, at the rate shown in paragraph A, shall be paid by the Company with its report. In the event this Contract is terminated in accordance with paragraph C of Article II, no payments shall be due as respects each Subscribing Reinsurer after the effective date of termination. C. Within 60 days after the end of each contract year (or within 60 days after the effective date of termination if this Contract is terminated on a "runoff" basis), the Company shall provide a report to the Reinsurer setting forth the premium due hereunder for the contract year, computed in accordance with paragraph A, and any additional premium due the Reinsurer shall be remitted promptly. D. "Net earned premium" as used herein is defined as the Company's gross earned premium collected on the classes of business subject to this Contract, less only the earned portion of premiums, if any, ceded by the Company for reinsurance which inures to the benefit of this Contract and less dividends incurred. ARTICLE XIV - LATE PAYMENTS A. The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Contract. B. In the event any premium, loss or other payment due either party is not received by the intermediary named in Article XXVIII (hereinafter referred to as the "Intermediary") by the payment due date, the party to whom payment is due, may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest penalty on the amount past due calculated for each such payment on the last business day of each month as follows: 1. The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times 2. 1/365ths of the sum of 400 basis points plus the six-month United States Treasury Bill rate as quoted in The Wall Street Journal on the first business day of the month for which the calculation is made; times 3. The amount past due, including accrued interest. It is agreed that interest shall accumulate until payment of the original amount due plus interest penalties have been received by the Intermediary. Page 14 C. The establishment of the due date shall, for purposes of this Article, be determined as follows: 1. As respects the payment of routine deposits and premiums due the Reinsurer, the due date shall be as provided for in the applicable section of this Contract. In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days after the date of transmittal by the Intermediary of the initial billing for each such payment. 2. Any claim or loss payment due the Company hereunder shall be deemed due 45 business days after the proof of loss or demand for payment is transmitted to the Reinsurer. If such loss or claim payment is not received within the 45 days, interest will accrue on the payment or amount overdue in accordance with paragraph B above, from the date the proof of loss or demand for payment was transmitted to the Reinsurer. 3. As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs 1 and 2 of paragraph C above, the due date shall be as provided for in the applicable section of this Contract. In the event a due date is not specifically stated for a given payment, it shall be deemed due 10 business days following transmittal of written notification that the provisions of this Article have been invoked. For purposes of interest calculations only, amounts due hereunder shall be deemed paid upon receipt by the Intermediary. D. Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from contesting the validity of any claim, or from participating in the defense of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any arbitration or other proceeding in accordance with the provisions of this Contract. If the debtor party prevails in an arbitration or other proceeding, then any interest penalties due hereunder on the amount in dispute shall be null and void. If the debtor party loses in such proceeding, then the interest penalty on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings. If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article. E. Interest penalties arising out of the application of this Article that are $100 or less from any party shall be waived unless there is a pattern of late payments consisting of three or more items over the course of any 12-month period. ARTICLE XV - OFFSET (BRMA 36A) The Company and the Reinsurer may offset any balance or amount due from one party to the other under this Contract or any other contract heretofore or hereafter entered into between the Company and the Reinsurer, whether acting as assuming reinsurer or ceding company. This provision shall not be affected by the insolvency of either party to this Contract. Page 15 ARTICLE XVI - ACCESS TO RECORDS (BRMA 1D) The Reinsurer or its designated representatives shall have access at any reasonable time to all records of the Company which pertain in any way to this reinsurance. ARTICLE XVII - LIABILITY OF THE REINSURER A. The liability of the Reinsurer shall follow that of the Company in every case and be subject in all respects to all the general and specific stipulations, clauses, waivers and modifications of the Company's policies and any endorsements thereon. B. Nothing herein shall in any manner create any obligations or establish any rights against the Reinsurer in favor of any third party or any persons not parties to this Contract. ARTICLE XVIII - NET RETAINED LINES (BRMA 32E) A. This Contract applies only to that portion of any policy which the Company retains net for its own account (prior to deduction of any underlying reinsurance specifically permitted in this Contract), and in calculating the amount of any loss hereunder and also in computing the amount or amounts in excess of which this Contract attaches, only loss or losses in respect of that portion of any policy which the Company retains net for its own account shall be included. B. The amount of the Reinsurer's liability hereunder in respect of any loss or losses shall not be increased by reason of the inability of the Company to collect from any other reinsurer(s), whether specific or general, any amounts which may have become due from such reinsurer(s), whether such inability arises from the insolvency of such other reinsurer(s) or otherwise. ARTICLE XIX - ERRORS AND OMISSIONS (BRMA 14F) Inadvertent delays, errors or omissions made in connection with this Contract or any transaction hereunder shall not relieve either party from any liability which would have attached had such delay, error or omission not occurred, provided always that such error or omission is rectified as soon as possible after discovery. ARTICLE XX - TAXES (BRMA 50B) In consideration of the terms under which this Contract is issued, the Company will not claim a deduction in respect of the premium hereon when making tax returns, other than income or profits tax returns, to any state or territory of the United States of America or the District of Columbia. Page 16 ARTICLE XXI - RESERVES AND LETTERS OF CREDIT (Applies only to a reinsurer which does not qualify for full credit with any insurance regulatory authority having jurisdiction over the Company's reserves, which is or becomes rated "B++" or lower by A.M. Best (inclusive of "Not Rated" ratings) and/or Standard & Poor's rating is or becomes "BBB+" or lower (inclusive of "Not Rated" ratings).) A. As regards policies or bonds issued by the Company coming within the scope of this Contract, the Company agrees that when it shall file with the insurance regulatory authority or set up on its books reserves for losses covered hereunder which it shall be required by law to set up, it will forward to the Reinsurer a statement showing the proportion of such reserves which is applicable to the Reinsurer. The Reinsurer hereby agrees to fund such reserves in respect of known outstanding losses that have been reported to the Reinsurer and allocated loss adjustment expense relating thereto, losses and allocated loss adjustment expense paid by the Company but not recovered from the Reinsurer, plus reserves for losses incurred but not reported, as shown in the statement prepared by the Company (hereinafter referred to as "Reinsurer's Obligations") by funds withheld, cash advances or a Letter of Credit. The Reinsurer shall have the option of determining the method of funding provided it is acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves with regards to unauthorized reinsurers; or, should the Reinsurer be downgraded, the method of funding shall be mutually agreed. B. When funding by a Letter of Credit, the Reinsurer agrees to apply for and secure timely delivery to the Company of a clean, irrevocable and unconditional Letter of Credit issued by a bank meeting the NAIC Securities Valuation Office credit standards for issuers of Letters of Credit and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves in an amount equal to the Reinsurer's proportion of said reserves. Such Letter of Credit shall be issued for a period of not less than one year, and shall contain an "evergreen" clause, which automatically extends the term for one year from its date of expiration or any future expiration date unless thirty (30) days (sixty (60) days where required by insurance regulatory authorities) prior to any expiration date the issuing bank shall notify the Company by certified or registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. C. The Reinsurer and Company agree that the Letters of Credit provided by the Reinsurer pursuant to the provisions of this Contract may be drawn upon at any time, notwithstanding any other provision of this Contract, and be utilized by the Company or any successor, by operation of law, of the Company including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Company for the following purposes, unless otherwise provided for in a separate Trust Agreement: 1. To reimburse the Company for the Reinsurer's Obligations, the payment of which is due under the terms of this Contract and which has not been otherwise paid; 2. To make refund of any sum which is in excess of the actual amount required to pay the Reinsurer's Obligations under this Contract, if so requested by the Reinsurer; 3. To fund an account with the Company for the Reinsurer's Obligations. Such cash deposit shall be held in an interest bearing account separate from the Company's Page 17 other assets, and interest thereon not in excess of the prime rate shall accrue to the benefit of the Reinsurer; 4. To pay the Reinsurer's share of any other amounts the Company claims are due under this Contract. D. In the event the amount drawn by the Company on any Letter of Credit is in excess of the actual amount required for subparagraphs 1 or 3, or in the case of subparagraph 4, the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn. All of the foregoing shall be applied without diminution because of insolvency on the part of the Company or the Reinsurer. E. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company. F. At annual intervals, or more frequently as agreed but never more frequently than quarterly, the Company shall prepare a specific statement of the Reinsurer's Obligations, for the sole purpose of amending the Letter of Credit, in the following manner: 1. If the statement shows that the Reinsurer's Obligations exceed the balance of credit as of the statement date, the Reinsurer shall, within thirty (30) days after receipt of notice of such excess, secure delivery to the Company of an amendment to the Letter of Credit increasing the amount of credit by the amount of such difference. 2. If, however, the statement shows that the Reinsurer's Obligations are less than the balance of credit as of the statement date, the Company shall, within thirty (30) days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit reducing the amount of credit available by the amount of such excess credit. G. This Article shall not apply to a reinsurer which satisfies both of the following: 1. Qualifies for full credit with any insurance regulatory authority having jurisdiction over the Company's reserves; and 2. Is rated "A+" or better by A.M. Best at the beginning of any contract year. ARTICLE XXII - INSOLVENCY A. In the event of the insolvency of one or more of the reinsured companies, this reinsurance shall be payable directly to the company or to its liquidator, receiver, conservator or statutory successor on the basis of the liability of the company without diminution because of the insolvency of the company or because the liquidator, receiver, conservator or statutory successor of the company has failed to pay all or a portion of any claim. It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the company shall give written notice to the Reinsurer of the pendency of a claim against the company indicating the policy or bond reinsured which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the Page 18 conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that it may deem available to the company or its liquidator, receiver, conservator or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the Court, against the company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit which may accrue to the company solely as a result of the defense undertaken by the Reinsurer. B. Where two or more reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this Contract as though such expense had been incurred by the company. C. It is further understood and agreed that, in the event of the insolvency of one or more of the reinsured companies, the reinsurance under this Contract shall be payable directly by the Reinsurer to the company or to its liquidator, receiver or statutory successor, except as provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract specifically provides another payee of such reinsurance in the event of the insolvency of the company or (2) where the Reinsurer with the consent of the direct insured or insureds has assumed such policy obligations of the company as direct obligations of the Reinsurer to the payees under such policies and in substitution for the obligations of the company to such payees. ARTICLE XXIII - ARBITRATION (BRMA 6J) A. As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Contract, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration. One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters. In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration. If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by drawing lots. B. Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire. The Arbiters shall consider this Contract as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law. The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties. Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction. C. If more than one reinsurer is involved in the same dispute, all such reinsurers shall constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the reinsurers constituting one party, provided, however, Page 19 that nothing herein shall impair the rights of such reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the reinsurers participating under the terms of this Contract from several to joint. D. Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration. In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties. E. Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Contract, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the state in which the Company has its principal office. ARTICLE XXIV - SERVICE OF SUIT (BRMA 49C) (Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not authorized in any State, Territory or District of the United States where authorization is required by insurance regulatory authorities) A. It is agreed that in the event the Reinsurer fails to pay any amount claimed to be due hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of a court of competent jurisdiction within the United States. Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States. B. Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby designates the party named in its Interests and Liabilities Agreement, or if no party is named therein, the Superintendent, Commissioner or Director of Insurance or other officer specified for that purpose in the statute, or his successor or successors in office, as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the Company or any beneficiary hereunder arising out of this Contract. ARTICLE XXV - ENTIRE AGREEMENT This written Contract constitutes the entire agreement between the parties hereto with respect to the business being reinsured hereunder, and there are no understandings between the parties hereto other than as expressed in this Contract. Any change or modification to this Contract will be made by amendment to this Contract and signed by the parties. ARTICLE XXVI - GOVERNING LAW (BRMA 71B) This Contract shall be governed by and construed in accordance with the laws of the State of Louisiana. Page 20 ARTICLE XXVII - AGENCY AGREEMENT If more than one reinsured company is named as a party to this Contract, the first named company shall be deemed the agent of the other reinsured companies for purposes of sending or receiving notices required by the terms and conditions of this Contract, and for purposes of remitting or receiving any monies due any party. ARTICLE XXVIII - INTERMEDIARY (BRMA 23A) Benfield Inc. is hereby recognized as the Intermediary negotiating this Contract for all business hereunder. All communications (including but not limited to notices, statements, premium, return premium, commissions, taxes, losses, loss adjustment expense, salvages and loss settlements) relating thereto shall be transmitted to the Company or the Reinsurer through Benfield Inc. Payments by the Company to the Intermediary shall be deemed to constitute payment to the Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed to constitute payment to the Company only to the extent that such payments are actually received by the Company. IN WITNESS WHEREOF, the Company by its duly authorized representative has executed this Contract as of the date undermentioned at: DeRidder, LA this 20th day of April in the year 2005. /s/ Allan E. Farr ----------------------------------------------- American Interstate Insurance Company American Interstate Insurance Company of Texas Silver Oak Casualty, Inc. Page 21 NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE (U.S.A.) (Approved by Lloyd's Underwriters' Fire and Non-Marine Association) (1) This reinsurance does not cover any loss or liability accruing to the Reassured as a member of, or subscriber to, any association of insurers or reinsurers formed for the purpose of covering nuclear energy risks or as a direct or indirect reinsurer of any such member, subscriber or association. (2) Without in any way restricting the operation of paragraph (1) of this Clause it is understood and agreed that for all purposes of this reinsurance all the original policies of the Reassured (new, renewal and replacement) of the classes specified in Clause II of this paragraph (2) from the time specified in Clause III in this paragraph (2) shall be deemed to include the following provision (specified as the Limited Exclusion Provision): LIMITED EXCLUSION PROVISION.* I. It is agreed that the policy does not apply under any liability coverage, to (injury, sickness, disease, death or destruction (bodily injury or property damage with respect to which an insured under the policy is also an insured under a nuclear energy liability policy issued by Nuclear Energy Liability Insurance Association, Mutual Atomic Energy Liability Underwriters or Nuclear Insurance Association of Canada, or would be an insured under any such policy but for its termination upon exhaustion of its limit of liability. II. Family Automobile Policies (liability only), Special Automobile Policies (private passenger automobiles, liability only), Farmers Comprehensive Personal Liability Policies (liability only), Comprehensive Personal Liability Policies (liability only) or policies of a similar nature; and the liability portion of combination forms related to the four classes of policies stated above, such as the Comprehensive Dwelling Policy and the applicable types of Homeowners Policies. III. The inception dates and thereafter of all original policies as described in II above, whether new, renewal or replacement, being policies which either (a) become effective on or after 1st May, 1960, or (b) become effective before that date and contain the Limited Exclusion Provision set out above; provided this paragraph (2) shall not be applicable to Family Automobile Policies, Special Automobile Policies, or policies or combination policies of a similar nature, issued by the Reassured on New York risks, until 90 days following approval of the Limited Exclusion Provision by the Governmental Authority having jurisdiction thereof. (3) Except for those classes of policies specified in Clause II of paragraph (2) and without in any way restricting the operation of paragraph (1) of this Clause, it is understood and agreed that for all purposes of this reinsurance the original liability policies of the Reassured (new, renewal and replacement) affording the following coverages: Owners, Landlords and Tenants Liability, Contractual Liability, Elevator Liability, Owners or Contractors (including railroad) Protective Liability, Manufacturers and Contractors Liability, Product Liability, Professional and Malpractice Liability, Storekeepers Liability, Garage Liability, Automobile Liability (including Massachusetts Motor Vehicle or Garage Liability) shall be deemed to include, with respect to such coverages, from the time specified in Clause V of this paragraph (3), the following provision (specified as the Broad Exclusion Provision): BROAD EXCLUSION PROVISION.* It is agreed that the policy does not apply: I. Under any Liability Coverage to (injury, sickness, disease, death or destruction (bodily injury or property damage (a) with respect to which an insured under the policy is also an insured under a nuclear energy liability policy issued by Nuclear Energy Liability Insurance Association, Mutual Atomic Energy Liability Underwriters or Nuclear Insurance Association of Canada, or would be an insured under any such policy but for its termination upon exhaustion of its limit of liability; or (b) resulting from the hazardous properties of nuclear material and with respect to which (1) any person or organization is required to maintain financial protection pursuant to the Atomic Energy Act of 1954, or any law amendatory thereof, or (2) the insured is, or had this policy not been issued would be, entitled to indemnity from the United States of America, or any agency thereof, under any agreement entered into by the United States of America, or any agency thereof, with any person or organization. Page 1 Of 2 II. Under any Medical Payments Coverage, or under any Supplementary Payments Provision relating to (immediate medical or surgical relief (first aid, to expenses incurred with respect to (bodily injury, sickness, disease or death (bodily injury resulting from the hazardous properties of nuclear material and arising out of the operation of a nuclear facility by any person or organization. III. Under any Liability Coverage to (injury, sickness, disease, death or destruction (bodily injury or property damage resulting from the hazardous properties of nuclear material, if (a) the nuclear material (1) is at any nuclear facility owned by, or operated by or on behalf of, an insured or (2) has been discharged or dispersed therefrom; (b) the nuclear material is contained in spent fuel or waste at any time possessed, handled, used, processed, stored, transported or disposed of by or on behalf of an insured; or (c) the (injury, sickness, disease, death or destruction (bodily injury or property damage arises out of the furnishing by an insured of services, materials, parts or equipment in connection with the planning, construction, maintenance, operation or use of any nuclear facility, but if such facility is located within the United States of America, its territories, or possessions or Canada, this exclusion (c) applies only to (injury to or destruction of property at such nuclear facility (property damage to such nuclear facility and any property thereat. IV. As used in this endorsement: "hazardous properties" include radioactive, toxic or explosive properties; "nuclear material" means source material, special nuclear material or byproduct material; "source material", "special nuclear material", and "byproduct material" have the meanings given them in the Atomic Energy Act of 1954 or in any law amendatory thereof; "spent fuel" means any fuel element or fuel component, solid or liquid, which has been used or exposed to radiation in a nuclear reactor; "waste" means any waste material (1) containing byproduct material and (2) resulting from the operation by any person or organization of any nuclear facility included within the definition of nuclear facility under paragraph (a) or (b) thereof; "nuclear facility" means (a) any nuclear reactor, (b) any equipment or device designed or used for (1) separating the isotopes of uranium or plutonium, (2) processing or utilizing spent fuel, or (3) handling processing or packaging waste, (c) any equipment or device used for the processing, fabricating or alloying of special nuclear material if at any time the total amount of such material in the custody of the insured at the premises where such equipment or device is located consists of or contains more than 25 grams of plutonium or uranium 233 or any combination thereof, or more than 250 grams of uranium 235, (d) any structure, basin, excavation, premises or place prepared or used for the storage or disposal of waste, and includes the site on which any of the foregoing is located, all operations conducted on such site and all premises used for such operations; "nuclear reactor" means any apparatus designed or used to sustain nuclear fission in a self-supporting chain reaction or to contain a critical mass of fissionable material; (With respect to injury to or destruction of property, the word "injury" or "destruction," ("property damage" includes all forms of radioactive contamination of property, (includes all forms of radioactive contamination of property. V. The inception dates and thereafter of all original policies affording coverages specified in this paragraph (3), whether new, renewal or replacement, being policies which become effective on or after 1st May, 1960, provided this paragraph (3) shall not be applicable to (i) Garage and Automobile Policies issued by the Reassured on New York risks, or (ii) statutory liability insurance required under Chapter 90, General Laws of Massachusetts, until 90 days following approval of the Broad Exclusion Provision by the Governmental Authority having jurisdiction thereof. (4) Without in any way restricting the operation of paragraph (1) of this Clause, it is understood and agreed that paragraphs (2) and (3) above are not applicable to original liability policies of the Reassured in Canada and that with respect to such policies this Clause shall be deemed to include the Nuclear Energy Liability Exclusion Provisions adopted by the Canadian Underwriters' Association or the Independent Insurance Conference of Canada. - ---------------- *NOTE. The words printed in italics in the Limited Exclusion Provision and in the Broad Exclusion Provision shall apply only in relation to original liability policies which include a Limited Exclusion Provision or a Broad Exclusion Provision containing those words. 21/9/67 N.M.A. 1590 Page 2 of 2 FIRST CASUALTY EXCESS OF LOSS REINSURANCE CONTRACT EFFECTIVE: JANUARY 1, 2005 issued to American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group

REINSURERS PARTICIPATIONS Partner Reinsurance Company 25.0% THROUGH BENFIELD LIMITED Lloyd's Underwriters and Companies Per Signing Schedule(s) 35.0 TOTAL 60.0% part of 100% share in the interests and liabilities of the "Reinsurer"

INTERESTS AND LIABILITIES AGREEMENT entered into by and between American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group and Partner Reinsurance Company of the U.S. New York, New York (hereinafter referred to as the "Subscribing Reinsurer") IT IS HEREBY AGREED that the Subscribing Reinsurer shall have a 25.0% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract entitled: FIRST CASUALTY EXCESS OF LOSS REINSURANCE CONTRACT EFFECTIVE: JANUARY 1, 2005 IT IS FURTHER AGREED that this Agreement shall become effective at 12:01 a.m., Local Standard Time, January 1, 2005, and shall continue in force until terminated in accordance with the provisions of the attached Contract. IT IS ALSO AGREED, effective at 12:01 a.m., Local Standard Time, January 1, 2005, that the following shall apply to the Subscribing Reinsurer's share in the attached Contract, in lieu of the provisions of paragraph C of Article II - Commencement and Termination - of the Contract: "C. Notwithstanding the provisions of paragraph B above, the Company may terminate a Subscribing Reinsurer's percentage share in this Contract in the event any of the following circumstances occur, as clarified by public announcement as respects subparagraphs 1 through 7 below or upon discovery as respects subparagraph 8 below. Within 30 days of such public announcement or discovery, the Company shall give the Subscribing Reinsurer notice, via certified mail, of its intent to terminate the Subscribing Reinsurer's percentage share under the Contract. The effective date of special termination shall not be sooner than one day after the Company provides the Subscribing Reinsurer notice of its election to specially terminate, unless mutually agreed otherwise:" Page 1 of 2 IT IS ALSO AGREED that the Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers. IN WITNESS WHEREOF, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates undermentioned at: DeRidder, LA, this 28th day of June in the year 2005. /s/ Allan E. Farr --------------------------------------------------- American Interstate Insurance Company American Interstate Insurance Company of Texas Silver Oak Casualty, Inc. Greenwich, Connecticut, this 21st day of March in the year 2005. /s/ Giuseppe Ruggieri --------------------------------------------------- Partner Reinsurance Company of the U.S. Page 2 of 2 INTERESTS AND LIABILITIES AGREEMENT of Certain Underwriting Members of Lloyd's shown in the Signing Schedule attached hereto (hereinafter referred to as the "Subscribing Reinsurer") with respect to the FIRST CASUALTY EXCESS OF LOSS REINSURANCE CONTRACT EFFECTIVE: JANUARY 1, 2005 issued to and duly executed by American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group The Subscribing Reinsurer hereby accepts a 5.0% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above. This Agreement shall become effective at 12:01 a.m., Local Standard Time, January 1, 2005, and shall continue in force until terminated in accordance with the provisions of the attached Contract. The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers. In any action, suit or proceeding to enforce the Subscribing Reinsurer's obligations under the attached Contract, service of process may be made upon Mendes & Mount, 750 Seventh Avenue, New York, New York 10019. Signed for and on behalf of the Subscribing Reinsurer in the Signing Schedule attached hereto. INTERESTS AND LIABILITIES AGREEMENT of Certain Insurance Companies shown in the Signing Schedule(s) attached hereto (hereinafter referred to as the "Subscribing Reinsurer") with respect to the FIRST CASUALTY EXCESS OF LOSS REINSURANCE CONTRACT EFFECTIVE: JANUARY 1, 2005 issued to and duly executed by American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group The Subscribing Reinsurer hereby accepts a 30.0% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above. This Agreement shall become effective at 12:01 a.m., Local Standard Time, January 1, 2005, and shall continue in force until terminated in accordance with the provisions of the attached Contract. The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers. In any action, suit or proceeding to enforce the Subscribing Reinsurer's obligations under the attached Contract, service of process may be made upon Mendes & Mount, 750 Seventh Avenue, New York, New York 10019. Signed for and on behalf of the Subscribing Reinsurer in the Signing Schedule(s) attached hereto. FIRST CASUALTY EXCESS OF LOSS REINSURANCE CONTRACT (AS RESPECTS HANNOVER TERMS) EFFECTIVE: JANUARY 1, 2005 issued to American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group TABLE OF CONTENTS

ARTICLE PAGE I Classes of Business Reinsured 1 II Commencement and Termination 1 III Territory (BRMA 51A) 3 IV Exclusions 3 V Special Acceptances 7 VI Retention and Limit 7 VII Definitions 8 VIII Annuities at Company's Option 10 IX Claims 11 X Commutation 11 XI Special Commutation 12 XII Salvage and Subrogation 13 XIII Reinsurance Premium 14 XIV Late Payments 14 XV Offset (BRMA 36A) 16 XVI Access to Records (BRMA 1D) 16 XVII Liability of the Reinsurer 16 XVIII Net Retained Lines (BRMA 32E) 16 XIX Errors and Omissions (BRMA 14F) 16 XX Taxes (BRMA 50B) 17 XXI Reserves and Letters of Credit 17 XXII Insolvency 18 XXIII Arbitration (BRMA 6J) 19 XXIV Service of Suit (BRMA 49C) 20 XXV Entire Agreement 20 XXVI Agency Agreement 20 XXVII Intermediary (BRMA 23A) 21

FIRST CASUALTY EXCESS OF LOSS REINSURANCE CONTRACT (AS RESPECTS HANNOVER TERMS) EFFECTIVE: JANUARY 1, 2005 issued to American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group (hereinafter referred to collectively as the "Company") by The Subscribing Reinsurer(s) Executing the Interests and Liabilities Agreement(s) Attached Hereto (hereinafter referred to as the "Reinsurer") ARTICLE I - CLASSES OF BUSINESS REINSURED By this Contract the Reinsurer agrees to reinsure the excess liability which may accrue to the Company under its policies, contracts and binders of insurance or reinsurance (hereinafter called "policies") in force at the effective date hereof or issued or renewed on or after that date, and classified by the Company as Workers' Compensation, Employers Liability, including coverage provided under the U.S. Longshore and Harbor Workers' Compensation Act and the Jones Act, and General Liability business, subject to the terms, conditions and limitations hereinafter set forth. ARTICLE II - COMMENCEMENT AND TERMINATION A. This Contract shall become effective at 12:01 a.m., Local Standard Time, January 1, 2005, with respect to losses arising out of occurrences commencing at or after that time and date, and shall continue in force thereafter until terminated. B. Either party may terminate this Contract on any December 31 by giving the other party not less than 90 days prior notice by certified or registered mail. Page 1 C. Notwithstanding the provisions of paragraph B above, the Company may terminate a Subscribing Reinsurer's percentage share in this Contract in the event any of the following circumstances occur, as clarified by public announcement as respects subparagraphs 1 through 7 below or upon discovery as respects subparagraph 8 below. Within 30 days of such public announcement or discovery, the Company shall give the Subscribing Reinsurer notice, via certified mail, of its intent to terminate the Subscribing Reinsurer's percentage share under the Contract. The effective date of termination shall be retroactively applied to 12:01 a.m., Local Standard Time, on the first day of the month preceding the month of the date of the applicable public announcement or discovery, unless mutually agreed otherwise: 1. The Subscribing Reinsurer's policyholders' surplus at the beginning of any contract year has been reduced by more than 20.0% of the amount of surplus 12 months prior to that date; or 2. The Subscribing Reinsurer's policyholders' surplus at any time during any contract year has been reduced by more than 20.0% of the amount of surplus at the date of the Subscribing Reinsurer's most recent financial statement filed with regulatory authorities and available to the public as of the beginning of the contract year; or 3. The Subscribing Reinsurer's A.M. Best's rating has been assigned or downgraded below A- and/or Standard & Poor's rating has been assigned or downgraded below BBB+; or 4. The Subscribing Reinsurer has become merged with, acquired by or controlled by any other company, corporation or individual(s) not controlling the Subscribing Reinsurer's operations previously; or 5. A State Insurance Department or other legal authority has ordered the Subscribing Reinsurer to cease writing business; or 6. The Subscribing Reinsurer has become insolvent or has been placed into liquidation or receivership (whether voluntary or involuntary) or proceedings have been instituted against the Subscribing Reinsurer for the appointment of a receiver, liquidator, rehabilitator, conservator or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations; or 7. The Subscribing Reinsurer has reinsured its entire liability under the Contract without the Company's prior written consent; or 8. The Subscribing Reinsurer has ceased assuming new and renewal treaty reinsurance business. D. Unless the Company elects that the Reinsurer have no liability for losses arising out of occurrences commencing after the effective date of termination, and so notifies the Reinsurer prior to or as promptly as possible after the effective date of termination, reinsurance hereunder on business in force on the effective date of termination shall remain in full force and effect until expiration, cancellation or next premium anniversary of such business, whichever first occurs, but in no event beyond 12 months plus odd time (not exceeding 18 months in all) following the effective date of termination. Page 2 ARTICLE III - TERRITORY (BRMA 51A) The territorial limits of this Contract shall be identical with those of the Company's policies. ARTICLE IV - EXCLUSIONS A. This Contract does not apply to and specifically excludes the following: 1. Lines of business not identified in Article I. 2. All excess of loss reinsurance assumed by the Company. 3. Reinsurance assumed by the Company under obligatory reinsurance agreements, except: a. Agency reinsurance where the policies involved are to be reunderwritten in accordance with the underwriting standards of the Company and reissued as Company policies at the next anniversary or expiration date; and b. Intercompany reinsurance between any of the reinsured companies under this Contract. 4. Business written by the Company on a co-indemnity basis where the Company is not the controlling carrier. 5. Business written to apply in excess of a deductible of more than $25,000, and business issued to apply specifically in excess over underlying insurance. However, if the Company is required, by any state regulation, to provide a deductible of more than $25,000, this exclusion shall not apply. 6. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause - Liability - Reinsurance (U.S.A.)" attached to and forming part of this Contract. 7. As regards interests which at time of loss or damage are on shore, no liability shall attach hereto in respect of any loss or damage which is occasioned by war, invasion, hostilities, acts of foreign enemies, civil war, rebellion, insurrection, military or usurped power, or martial law or confiscation by order of any government or public authority. This War Exclusion Clause shall not, however, apply to interests which at time of loss or damage are within the territorial limits of the United States of America (comprising the Fifty States of the Union, the District of Columbia, and including bridges between the United States of America and Mexico provided they are under United States ownership), Canada, St. Pierre and Miquelon, provided such interests are insured under policies containing a standard war or hostilities or warlike operations exclusion clause. 8. 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. Page 3 9. All liability of the Company arising by contract, operation of 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, however denominated, established or governed, which provides for any assessment of or payment or assumption by the Company of part or 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. 10. Workers' Compensation where the principal exposures, as defined by the governing class code, include: a. Operation of aircraft but only if the annual estimated policy premium is $250,000 or more; b. Railroad, subway, or street railway operations; c. Operation or navigation of vessels or barges; d. Manufacture, production, or refining of gas, natural or artificial fuel, or other liquefied petroleum fuel, but only if the annual estimated policy premium is $250,000 or more; e. Manufacturing, assembly, packing, or processing of fireworks, fuses, nitroglycerine, magnesium, pyroxylin, ammunition, or explosives. This exclusion does not apply to the assembly, packing, or processing of explosives when the estimated annual premium is under $250,000; f. Wrecking or demolition of structures but only if the annual estimated policy premium is $250,000 or more; g. Underground mining. 11. As respects Workers' Compensation and Employers' Liability only, unless otherwise excluded as set forth above, the reinsurance provided under this Contract shall not apply to any loss, cost or expense arising out of or related to, either directly or indirectly, any "terrorist activity," as defined herein, but this exclusion shall only apply when the activity includes, involves, or is associated with the use of any biological, chemical, radioactive, or nuclear agent, material, device or weapon, or when the predominant business of the policyholder as defined by the governing class code is: a. The operation of: airports and aircraft; flight schools; bridges, dams, tunnels, or locks; department stores; shopping malls; chain retail stores; casinos and casino hotels; cruise lines; railroads; ports/public transit authorities; security services; stadiums; convention/exhibition centers; or theme/amusement parks. b. The manufacture and distribution of: automobiles; chemicals, petrochemicals, pharmaceuticals; utilities (electric, gas, water, and sewer); major defense/aerospace products; or high-tech equipment, but only if the policyholder Page 4 employs more than 20 personnel at the location of a terrorist activity at the time of its occurrence. c. The management or operation of the following type of structures, but only if greater than 25 stories in height: apartments/condominiums/co-ops; hotels/motels; or office buildings. d. Businesses primarily engaged in the entertainment, media, or transportation industry limited to the following: major media providers (NBC, FOX, ABC, CBS, etc.); television and motion picture studios; Broadway theaters; major internet companies (AOL, Yahoo, etc.); professional sports teams; major telecommunications companies (AT&T, Worldcom/MCI, etc.); national truck rental companies (Ryder, Penske, UHaul, etc.); or major national motor freight common carriers (J.B. Hunt, Red Arrow, etc.). e. Policyholders primarily located in, or predominantly doing business as: hospitals; universities; nuclear facilities; financial institutions; or governmental buildings and national landmarks. "Terrorist activity" shall mean any deliberate, unlawful act that: a. Is declared by any authorized government official to be or to involve terrorism, terrorist activity or acts of terrorism; or b. Includes, involves, or is associated with the use or threatened use of force, violence or harm against any person, tangible or intangible property, the environment, or any natural resources, where the act or threatened act is intended, in whole or in part, to: i. Promote or further any political, ideological, philosophical, racial, ethnic, social or religious cause or objective of the perpetrator or any organization, association or group affiliated with the perpetrator; or ii. Influence, disrupt or interfere with any government related operations, activities or policies; or iii. Intimidate, coerce or frighten the general public or any segment of the general public; or iv. Disrupt or interfere with a national economy or any segment of a national economy; or c. Includes, involves, or is associated with, in whole or in part, any of the following activities, or the threat thereof: i. Hijacking or sabotage of any form of transportation or conveyance, including but not limited to spacecraft, satellite, aircraft, train, vessel, or motor vehicle; ii. Hostage taking or kidnapping; iii. The use of any bomb, incendiary device, explosive or firearm; Page 5 iv. The interference with or disruption of basic public or commercial services and systems, including but not limited to the following services or systems: electricity, natural gas, power, postal, communications, telecommunications, information, public transportation, water, fuel, sewer or waste disposal; v. The injuring or assassination of any elected or appointed government official or any government employee; vi. The seizure, blockage, interference with, disruption of, or damage to any government buildings, institutions, functions, events, tangible or intangible property or other assets; or vii. The seizure, blockage, interference with, disruption of, or damage to tunnels, roads, streets, highways, or other places of public transportation or conveyance. d. Any of the activities listed in subparagraph c, above, shall be considered terrorist activity except where the Company can demonstrate to the Reinsurer that the foregoing activities or threats thereof were motivated solely by personal objectives of the perpetrator that are unrelated, in whole or in part, to any intention to: i. Promote or further any political, ideological, philosophical, racial, ethnic, social or religious cause or objective of the perpetrator or any organization, association or group affiliated with the perpetrator; ii. Influence, disrupt or interfere with any government-related operations, activities or policies; iii. Intimidate, coerce or frighten the general public or any segment of the general public; or iv. Disrupt or interfere with a national economy or any segment of a national economy. 12. As respects General Liability policies, exposures, other than those identified below, as included in the General Liability section of the Company's Commercial Lines Manual: a. Class 97111 - Logging; b. Class 58873 - Sawmill; c. Class 59984 - Woodyard and Drivers; d. Class 95410 - Grading of Land; e. Class 45819 - Lumber Yard; f. Class 10073 - Repair Shops and Drivers; Page 6 g. Class 43822 - Timber Cruiser; h. Class 99793 - Truckman Not Otherwise Classified; i. Class 91591 - Contractors - Subcontracted Work Other Than Construction; j. Class 49452 - Vacant Land. B. Any exclusion set forth in subparagraphs 10 and/or 12 of paragraph A shall be waived automatically when, in the opinion of the Company, the exposure excluded therein is incidental to the principal exposure on the risk in question. C. If the Company is bound, without the knowledge and contrary to the instructions of the Company's supervisory underwriting personnel, on any business falling within the scope of one or more of the exclusions set forth in subparagraphs 10 and/or 12 of paragraph A, the exclusion shall be suspended with respect to such business until the Company has the first opportunity to cancel the policy in compliance with governmental requirements. D. If the Company is required to accept an assigned risk which conflicts with one or more of the exclusions set forth in subparagraph 10 of paragraph A, reinsurance shall apply, but only for the difference between the Company's retention and the minimum limit required by the applicable state statute, and in no event shall the Reinsurer's liability exceed the limit set forth in Article VI. ARTICLE V - SPECIAL ACCEPTANCES From time to time the Company may request a special acceptance of reinsurance falling outside the scope of the provisions set forth in this Contract. If each Subscribing Reinsurer whose share in the interests and liabilities of the Reinsurer is 25.0% or greater agrees to a special acceptance, such special acceptance shall be binding on all Subscribing Reinsurers with respect to their respective shares. If such agreement is not achieved, such special acceptance shall be made to this Contract only with respect to the interests and liabilities of each Subscribing Reinsurer who agrees to the special acceptance. In the event a reinsurer becomes a party to this Contract subsequent to one or more special acceptances hereunder, the new reinsurer shall automatically accept such special acceptance(s) as being covered hereunder. ARTICLE VI - RETENTION AND LIMIT A. The Company shall retain and be liable for the first $1,000,000 of ultimate net loss arising out of each occurrence. The Reinsurer shall then be liable (subject to the provisions of paragraph B below) for the amount by which such ultimate net loss exceeds the Company's retention, but the liability of the Reinsurer shall not exceed $4,000,000 as respects any one occurrence. B. Notwithstanding the provisions of paragraph A above, no claim shall be made under this Contract during any contract year unless and until cumulative subject excess losses paid from losses arising out of occurrences commencing during the contract year (being losses which would be recoverable from the Reinsurer under paragraph A above were it not for the provisions of this paragraph) exceed an annual aggregate retention of 2.250% of net Page 7 earned premium. The Company shall retain and be liable for such annual aggregate retention in addition to its initial loss retention stipulated in paragraph A above. C. As respects any loss or losses arising out of terrorist activity, the liability of the Reinsurer shall not exceed $4,000,000 each contract year. Terrorism losses shall have priority when calculating the annual aggregate retention. D. The Company shall be permitted to carry quota share and excess reinsurance, recoveries under which shall inure solely to the benefit of the Company and be entirely disregarded in applying all of the provisions of this Contract. E. The Company shall purchase or be deemed to have purchased inuring excess facultative reinsurance to limit its ultimate net loss under any one coverage, any one policy (exclusive of loss in excess of policy limits or extra contractual obligations) to $2,000,000 each occurrence as respects General Liability and Employers Liability business subject hereto. F. The Company shall be permitted to carry excess of loss reinsurance applying to Workers' Compensation risks in the State of Minnesota, recoveries under which shall inure to the benefit of this Contract. Such coverage shall be provided through the Minnesota Workers' Compensation Reinsurance Association. It is understood that the liability of the Reinsurer for Minnesota Workers' Compensation risks is not released. In the event the Company accrues liability that is not provided by any inuring reinsurance, for whatever reason, the Reinsurer agrees to reinsure such excess liability. ARTICLE VII - DEFINITIONS A. "Ultimate net loss" as used herein is defined as the sum or sums (including loss in excess of policy limits, extra contractual obligations and any loss adjustment expense, as hereinafter defined) paid or payable by the Company in settlement of claims and in satisfaction of judgments rendered on account of such claims, after deduction of all salvage, all recoveries and all claims on inuring insurance or reinsurance, whether collectible or not. Nothing herein shall be construed to mean that losses under this Contract are not recoverable until the Company's ultimate net loss has been ascertained. B. "Loss in excess of policy limits" and "extra contractual obligations" as used herein shall be defined as follows: 1. "Loss in excess of policy limits" shall mean 90.0% of any amount paid or payable by the Company in excess of its policy limits, but otherwise within the terms of its policy, such loss in excess of the Company's policy limits having been incurred because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of an action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action. Page 8 2. "Extra contractual obligations" shall mean 90.0% of any punitive, exemplary, compensatory or consequential damages paid or payable by the Company, not covered by any other provision of this Contract and which arise from the handling of any claim on business subject to this Contract, such liabilities arising because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of any action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action. An extra contractual obligation shall be deemed, in all circumstances, to have occurred on the same date as the loss covered or alleged to be covered under the policy. If any provision of this Article shall be rendered illegal or unenforceable by the laws, regulations or public policy of any state, such provision shall be considered void in such state, but this shall not affect the validity or enforceability of any other provision of this Contract or the enforceability of such provision in any other jurisdiction. Notwithstanding anything stated herein, this Contract shall not apply to any loss in excess of policy limits or any extra contractual obligation incurred by the Company as a result of any fraudulent and/or criminal act by any officer or director of the Company acting individually or collectively or in collusion with any individual or corporation or any other organization or party involved in the presentation, defense or settlement of any claim covered hereunder. C. "Occurrence" as used herein is defined as an accident or occurrence or a series of accidents or occurrences arising out of or caused by one event, except that: 1. As respects General Liability policies where the Company's limit of liability for Products and Completed Operations coverages is determined on the basis of the insured's aggregate losses during a policy period, all such losses proceeding from or traceable to the same causative agency shall, at the Company's option, be deemed to have been caused by one occurrence commencing at the beginning of the policy period, it being understood and agreed that each renewal or annual anniversary date of the policy involved shall be deemed the beginning of a new policy period; 2. Each occupational disease case or cumulative trauma case contracted by an employee of an insured shall be deemed to have been caused by a separate occurrence, commencing on: a. The date of disability for which compensation is payable if the case is compensable under the Workers' Compensation Law; b. The date disability due to the disease actually began if the case is not compensable under the Workers' Compensation Law; c. The date of cessation of employment if claim is made after employment has ceased. 3. Notwithstanding the provisions of subparagraph 2 above, as respects losses resulting from occupational disease or cumulative trauma suffered by employees of an insured for which the employer is liable, as a result of a sudden and accidental event not Page 9 exceeding 72 hours in duration, all such losses shall be considered one occurrence and may be combined with losses classified as other than occupational disease or cumulative trauma which arise out of the same event and the combination of such losses shall be considered as one occurrence within the meaning hereof. D. "Occupational or industrial disease" is any abnormal condition that fulfills all of the following conditions: 1. It is not traceable to a definite compensable accident occurring during the employee's past or present employment. 2. It has been caused by exposure to a disease producing agent or agents present in the workers' occupational environment. 3. It has resulted in disability or death. E. "Cumulative trauma" is an injury that fulfills all of the following conditions: 1. It is not traceable to a definite compensable accident occurring during the employee's past or present employment. 2. It has occurred from and has been aggravated by a repetitive employment related activity. 3. It has resulted in disability or death. F. "Loss adjustment expense" as used herein shall mean expenses allocable to the investigation, defense and/or settlement of specific claims, including litigation expenses, interest on judgments, declaratory judgment expenses or other legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto, and salaries and expenses of salaried adjusters associated with claims covered under policies of the Company reinsured hereunder but not including office expenses or salaries of the Company's regular employees. G. "Contract year" as used in this Contract shall mean the period from January 1, 2005 to December 31, 2005, both days inclusive, and each respective 12-month period thereafter that this Contract continues in force. However, if this Contract is terminated, the final contract year shall be from the beginning of the then current contract year through the date of termination if this Contract is terminated on a "cutoff" basis, or the end of the runoff period if this Contract is terminated on a "runoff" basis. ARTICLE VIII - ANNUITIES AT COMPANY'S OPTION A. Whenever the Company is required, or elects, to purchase an annuity or to negotiate a structured settlement, either in satisfaction of a judgment or in an out-of-court settlement or otherwise, the cost of the annuity or the structured settlement, as the case may be, shall be deemed part of the Company's ultimate net loss. B. The terms "annuity" or "structured settlement" shall be understood to mean any insurance policy, lump sum payment, agreement or device of whatever nature resulting in the Page 10 payment of a lump sum by the Company in settlement of any or all future liabilities which may attach to it as a result of an occurrence. C. In the event the Company purchases an annuity which inures in whole or in part to the benefit of the Reinsurer, it is understood that the liability of the Reinsurer is not released thereby. In the event the Company is required to provide benefits not provided by the annuity for whatever reason, the Reinsurer shall pay its proportional share of any loss. ARTICLE IX - CLAIMS A. Whenever a claim is reserved by the Company for an amount greater than 50.0% of its retention hereunder and/or whenever a claim appears likely to result in a claim under this Contract, the Company shall notify the Reinsurer. Further, the Company shall notify the Reinsurer whenever a claim involves a fatality, major limb amputation, spinal cord damage, brain damage, blindness or extensive burns, regardless of liability, if the policy limits or statutory benefits applicable to the claim are greater than the Company's retention hereunder. The Reinsurer shall have the right to participate, at its own expense, in the defense of any claim or suit or proceeding involving this reinsurance. B. All claim settlements made by the Company, provided they are within the terms of this Contract (including but not limited to ex-gratia payments), shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for which it may be liable upon receipt of satisfactory evidence of the amount paid by the Company. ARTICLE X - COMMUTATION A. As mutually agreed, the Company may commute the contract year. B. Unless otherwise mutually agreed, the calculation for the commutation shall be calculated in accordance with the following formula: 1. The Reinsurer's net premium earned (i.e., the gross earned reinsurance premium less the ceding commission paid) for the contract year; less 2. The Reinsurer's paid losses and loss adjustment expense on losses arising out of occurrences commencing during the contract year; less 3. The Reinsurer's margin at 25.0% of the net earned premium (i.e., the gross earned reinsurance premium less the ceding commission paid) for the contract year; equals 4. The Company's net profit. C. Payment to the Company of the calculation will result in a full and final commutation of all known and unknown losses and shall constitute a complete and final release of the Reinsurer and the Company in respect of any and all liabilities on business covered under this Contract during the contract year commuted. D. Should the calculation be zero or negative, no payment shall be made and the Company shall have the option to provide a full and final commutation of all known and unknown Page 11 losses, which shall constitute a complete and final release of the Reinsurer and the Company with respect to any and all liabilities on business covered under this Contract during the contract year commuted. ARTICLE XI - SPECIAL COMMUTATION A. In the event a Subscribing Reinsurer meets the following conditions, the Company may require a commutation of that portion of any excess loss hereunder represented by any outstanding claim or claims, including any related loss adjustment expense. 1. The Subscribing Reinsurer's A.M. Best's rating has been assigned or downgraded below A- (inclusive of "Not Rated" ratings) and/or Standard & Poor's rating has been assigned or downgraded below BBB+ (inclusive of "Not Rated" ratings); or 2. The Subscribing Reinsurer has ceased assuming new and renewal property and casualty treaty reinsurance business. "Outstanding claim or claims" shall be defined as known or unknown claims, including any billed yet unpaid claims. However, unless otherwise mutually agreed, this paragraph shall not apply unless the outstanding claim or claims is for an amount not less than $5,000. B. If the Company elects to require commutation as provided in paragraph A above, the Company shall submit a Statement of Valuation of the outstanding claim or claims as of the last day of the month immediately preceding the month in which the Company elects to require commutation, as determined by the Company. Such Statement of Valuation shall include the elements considered reasonable to establish the excess loss and shall set forth or attach the information relied upon by the Company and the methodology employed to calculate the excess loss. The Subscribing Reinsurer shall then pay the amount requested within 30 calendar days of receipt of such Statement of Valuation, unless the Subscribing Reinsurer needs additional information from the Company to assess the Company's Statement of Valuation or contests such amount. C. If the Subscribing Reinsurer needs additional information from the Company to assess the Company's Statement of Valuation or contests the amount requested, the Subscribing Reinsurer shall so notify the Company within 15 calendar days of receipt of the Company's Statement of Valuation. The Company shall supply any reasonably requested information to the Subscribing Reinsurer within 15 calendar days of receipt of the notification. Within 30 calendar days of the date of the notification or of the receipt of the information, whichever is later, the Subscribing Reinsurer shall provide the Company with its Statement of Valuation of the outstanding claim or claims as of the last day of the month immediately preceding the month in which the Company elects to require commutation, as determined by the Subscribing Reinsurer. Such Statement of Valuation shall include the elements considered reasonable to establish the excess loss and shall set forth or attach the information relied upon by the Subscribing Reinsurer and the methodology employed to calculate the excess loss. D. In the event the Subscribing Reinsurer's Statement of Valuation of the outstanding claim or claims is viewed as unacceptable to the Company, the Company may either abandon the commutation effort, or may seek to settle any difference by using an independent actuary agreed to by the parties. Page 12 E. If the parties cannot agree on an acceptable independent actuary within 15 calendar days of the date of the Subscribing Reinsurer's Statement of Valuation, then each party shall appoint an actuary as party arbitrators for the limited and sole purpose of selecting an independent actuary. If the actuaries cannot agree on an acceptable independent actuary within 15 calendar days of the date of the Subscribing Reinsurer's Statement of Valuation, the Company shall supply the Subscribing Reinsurer with a list of at least three proposed independent actuaries, and the Subscribing Reinsurer shall select the independent actuary from that list. F. Upon selection of the independent actuary, both parties shall present their respective written submissions to the independent actuary. The independent actuary may, at his or her discretion, request additional information. The independent actuary shall issue his or her decision within 45 calendar days after the written submissions have been filed and any additional information has been provided. G. The decision of the independent actuary shall be final and binding. The expense of the independent actuary shall be equally divided between the two parties. For the purposes of this Article, unless mutually agreed otherwise, an "independent actuary" shall be an actuary who satisfies each of the following criteria: 1. Is regularly engaged in the valuation of claims resulting from lines of business subject to this Contract; and 2. Is either a Fellow of the Casualty Actuarial Society or of the American Academy of Actuaries; and 3. Is disinterested and impartial regarding this commutation. H. Notwithstanding paragraph A, B and C above, in the event that the Subscribing Reinsurer no longer meets the conditions set forth in subparagraph 1 or 2 in paragraph A above, this commutation may continue on a mutually agreed basis. I. Payment by the Subscribing Reinsurer of the amount requested in accordance with paragraph B, C or F above, shall release the Subscribing Reinsurer from all further liability for outstanding claim or claims, known or unknown, under this Contract, which shall release the Company from all further liability for payments of salvage or subrogation amounts, known or unknown, to the Subscribing Reinsurer under this Contract. J. In the event of any conflict between this Article and any other Article of this Contract, the terms of this Article shall control. K. This Article shall survive the termination of this Contract. ARTICLE XII - SALVAGE AND SUBROGATION The Reinsurer shall be credited with salvage (i.e., reimbursement obtained or recovery made by the Company, less the actual cost, excluding salaries of officials and employees of the Company and sums paid to attorneys as retainer, of obtaining such reimbursement or making such recovery) or subrogation on account of claims and settlements involving reinsurance Page 13 hereunder. Salvage or subrogation thereon shall always be used to reimburse the excess carriers in the reverse order of their priority according to their participation before being used in any way to reimburse the Company for its primary loss. The Company hereby agrees to enforce its rights to salvage or subrogation where it is economically reasonable in the judgment of the Company, relating to any loss, a part of which loss was sustained by the Reinsurer, and to prosecute all claims arising out of such rights. ARTICLE XIII - REINSURANCE PREMIUM A. As premium for the reinsurance provided hereunder during each contract year, the Company shall pay the Reinsurer 8.429% (5.900% net) of its net earned premium. The Reinsurer shall allow the Company a 30.0% commission on all premiums ceded to the Reinsurer hereunder. The Company shall allow the Reinsurer return commission on return premiums at the same rate. B. Within 30 days after the end of each month, the Company shall report its net earned premium for the month. The premium due the Reinsurer, at the rate shown in paragraph A, shall be paid by the Company with its report. In the event this Contract is terminated in accordance with paragraph C of Article II, no payments shall be due as respects each Subscribing Reinsurer after the effective date of termination. C. Within 60 days after the end of each contract year (or within 60 days after the effective date of termination if this Contract is terminated on a "runoff" basis), the Company shall provide a report to the Reinsurer setting forth the premium due hereunder for the contract year, computed in accordance with paragraph A, and any additional premium due the Reinsurer shall be remitted promptly. D. "Net earned premium" as used herein is defined as the Company's gross earned premium collected on the classes of business subject to this Contract, less only the earned portion of premiums, if any, ceded by the Company for reinsurance which inures to the benefit of this Contract and less dividends incurred. ARTICLE XIV - LATE PAYMENTS A. The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Contract. B. In the event any premium, loss or other payment due either party is not received by the intermediary named in Article XXVII (hereinafter referred to as the "Intermediary") by the payment due date, the party to whom payment is due, may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest penalty on the amount past due calculated for each such payment on the last business day of each month as follows: 1. The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times Page 14 2. 1/365ths of the sum of 400 basis points plus the six-month United States Treasury Bill rate as quoted in The Wall Street Journal on the first business day of the month for which the calculation is made; times 3. The amount past due, including accrued interest. It is agreed that interest shall accumulate until payment of the original amount due plus interest penalties have been received by the Intermediary. C. The establishment of the due date shall, for purposes of this Article, be determined as follows: 1. As respects the payment of routine deposits and premiums due the Reinsurer, the due date shall be as provided for in the applicable section of this Contract. In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days after the date of transmittal by the Intermediary of the initial billing for each such payment. 2. Any claim or loss payment due the Company hereunder shall be deemed due 45 business days after the proof of loss or demand for payment is transmitted to the Reinsurer. If such loss or claim payment is not received within the 45 days, interest will accrue on the payment or amount overdue in accordance with paragraph B above, from the date the proof of loss or demand for payment was transmitted to the Reinsurer. 3. As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs 1 and 2 of paragraph C above, the due date shall be as provided for in the applicable section of this Contract. In the event a due date is not specifically stated for a given payment, it shall be deemed due 10 business days following transmittal of written notification that the provisions of this Article have been invoked. For purposes of interest calculations only, amounts due hereunder shall be deemed paid upon receipt by the Intermediary. D. Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from contesting the validity of any claim, or from participating in the defense of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any arbitration or other proceeding in accordance with the provisions of this Contract. If the debtor party prevails in an arbitration or other proceeding, then any interest penalties due hereunder on the amount in dispute shall be null and void. If the debtor party loses in such proceeding, then the interest penalty on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings. If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article. E. Interest penalties arising out of the application of this Article that are $100 or less from any party shall be waived unless there is a pattern of late payments consisting of three or more items over the course of any 12-month period. Page 15 ARTICLE XV - OFFSET (BRMA 36A) The Company and the Reinsurer may offset any balance or amount due from one party to the other under this Contract or any other contract heretofore or hereafter entered into between the Company and the Reinsurer, whether acting as assuming reinsurer or ceding company. This provision shall not be affected by the insolvency of either party to this Contract. ARTICLE XVI - ACCESS TO RECORDS (BRMA 1D) The Reinsurer or its designated representatives shall have access at any reasonable time to all records of the Company which pertain in any way to this reinsurance. ARTICLE XVII - LIABILITY OF THE REINSURER A. The liability of the Reinsurer shall follow that of the Company in every case and be subject in all respects to all the general and specific stipulations, clauses, waivers and modifications of the Company's policies and any endorsements thereon. B. Nothing herein shall in any manner create any obligations or establish any rights against the Reinsurer in favor of any third party or any persons not parties to this Contract. ARTICLE XVIII - NET RETAINED LINES (BRMA 32E) A. This Contract applies only to that portion of any policy which the Company retains net for its own account (prior to deduction of any underlying reinsurance specifically permitted in this Contract), and in calculating the amount of any loss hereunder and also in computing the amount or amounts in excess of which this Contract attaches, only loss or losses in respect of that portion of any policy which the Company retains net for its own account shall be included. B. The amount of the Reinsurer's liability hereunder in respect of any loss or losses shall not be increased by reason of the inability of the Company to collect from any other reinsurer(s), whether specific or general, any amounts which may have become due from such reinsurer(s), whether such inability arises from the insolvency of such other reinsurer(s) or otherwise. ARTICLE XIX - ERRORS AND OMISSIONS (BRMA 14F) Inadvertent delays, errors or omissions made in connection with this Contract or any transaction hereunder shall not relieve either party from any liability which would have attached had such delay, error or omission not occurred, provided always that such error or omission is rectified as soon as possible after discovery. Page 16 ARTICLE XX - TAXES (BRMA 50B) In consideration of the terms under which this Contract is issued, the Company will not claim a deduction in respect of the premium hereon when making tax returns, other than income or profits tax returns, to any state or territory of the United States of America or the District of Columbia. ARTICLE XXI - RESERVES AND LETTERS OF CREDIT (Applies only to a reinsurer which does not qualify for full credit with any insurance regulatory authority having jurisdiction over the Company's reserves, which is or becomes rated "B++" or lower by A.M. Best (inclusive of "Not Rated" ratings) and/or Standard & Poor's rating is or becomes "BBB+" or lower (inclusive of "Not Rated" ratings).) A. As regards policies or bonds issued by the Company coming within the scope of this Contract, the Company agrees that when it shall file with the insurance regulatory authority or set up on its books reserves for losses covered hereunder which it shall be required by law to set up, it will forward to the Reinsurer a statement showing the proportion of such reserves which is applicable to the Reinsurer. The Reinsurer hereby agrees to fund such reserves in respect of known outstanding losses that have been reported to the Reinsurer and allocated loss adjustment expense relating thereto, losses and allocated loss adjustment expense paid by the Company but not recovered from the Reinsurer, plus reserves for losses incurred but not reported, as shown in the statement prepared by the Company (hereinafter referred to as "Reinsurer's Obligations") by funds withheld, cash advances or a Letter of Credit. The Reinsurer shall have the option of determining the method of funding provided it is acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves with regards to unauthorized reinsurers; or, should the Reinsurer be downgraded, the method of funding shall be mutually agreed. B. When funding by a Letter of Credit, the Reinsurer agrees to apply for and secure timely delivery to the Company of a clean, irrevocable and unconditional Letter of Credit issued by a bank meeting the NAIC Securities Valuation Office credit standards for issuers of Letters of Credit and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves in an amount equal to the Reinsurer's proportion of said reserves. Such Letter of Credit shall be issued for a period of not less than one year, and shall contain an "evergreen" clause, which automatically extends the term for one year from its date of expiration or any future expiration date unless thirty (30) days (sixty (60) days where required by insurance regulatory authorities) prior to any expiration date the issuing bank shall notify the Company by certified or registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. C. The Reinsurer and Company agree that the Letters of Credit provided by the Reinsurer pursuant to the provisions of this Contract may be drawn upon at any time, notwithstanding any other provision of this Contract, and be utilized by the Company or any successor, by operation of law, of the Company including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Company for the following purposes, unless otherwise provided for in a separate Trust Agreement: Page 17 1. To reimburse the Company for the Reinsurer's Obligations, the payment of which is due under the terms of this Contract and which has not been otherwise paid; 2. To make refund of any sum which is in excess of the actual amount required to pay the Reinsurer's Obligations under this Contract, if so requested by the Reinsurer; 3. To fund an account with the Company for the Reinsurer's Obligations. Such cash deposit shall be held in an interest bearing account separate from the Company's other assets, and interest thereon not in excess of the prime rate shall accrue to the benefit of the Reinsurer; 4. To pay the Reinsurer's share of any other amounts the Company claims are due under this Contract. D. In the event the amount drawn by the Company on any Letter of Credit is in excess of the actual amount required for subparagraphs 1 or 3, or in the case of subparagraph 4, the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn. All of the foregoing shall be applied without diminution because of insolvency on the part of the Company or the Reinsurer. E. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company. F. At annual intervals, or more frequently as agreed but never more frequently than quarterly, the Company shall prepare a specific statement of the Reinsurer's Obligations, for the sole purpose of amending the Letter of Credit, in the following manner: 1. If the statement shows that the Reinsurer's Obligations exceed the balance of credit as of the statement date, the Reinsurer shall, within thirty (30) days after receipt of notice of such excess, secure delivery to the Company of an amendment to the Letter of Credit increasing the amount of credit by the amount of such difference. 2. If, however, the statement shows that the Reinsurer's Obligations are less than the balance of credit as of the statement date, the Company shall, within thirty (30) days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit reducing the amount of credit available by the amount of such excess credit. ARTICLE XXII - INSOLVENCY A. In the event of the insolvency of one or more of the reinsured companies, this reinsurance shall be payable directly to the company or to its liquidator, receiver, conservator or statutory successor on the basis of the liability of the company without diminution because of the insolvency of the company or because the liquidator, receiver, conservator or statutory successor of the company has failed to pay all or a portion of any claim. It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the company shall give written notice to the Reinsurer of the pendency of a claim against the company indicating the policy or bond reinsured which claim would involve a possible Page 18 liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that it may deem available to the company or its liquidator, receiver, conservator or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the Court, against the company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit which may accrue to the company solely as a result of the defense undertaken by the Reinsurer. B. Where two or more reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this Contract as though such expense had been incurred by the company. C. It is further understood and agreed that, in the event of the insolvency of one or more of the reinsured companies, the reinsurance under this Contract shall be payable directly by the Reinsurer to the company or to its liquidator, receiver or statutory successor, except as provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract specifically provides another payee of such reinsurance in the event of the insolvency of the company or (2) where the Reinsurer with the consent of the direct insured or insureds has assumed such policy obligations of the company as direct obligations of the Reinsurer to the payees under such policies and in substitution for the obligations of the company to such payees. ARTICLE XXIII - ARBITRATION (BRMA 6J) A. As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Contract, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration. One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters. In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration. If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by drawing lots. B. Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire. The Arbiters shall consider this Contract as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law. The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties. Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction. C. If more than one reinsurer is involved in the same dispute, all such reinsurers shall constitute and act as one party for purposes of this Article and communications shall be Page 19 made by the Company to each of the reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the reinsurers participating under the terms of this Contract from several to joint. D. Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration. In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties. E. Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Contract, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the state in which the Company has its principal office. ARTICLE XXIV - SERVICE OF SUIT (BRMA 49C) (Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not authorized in any State, Territory or District of the United States where authorization is required by insurance regulatory authorities) A. It is agreed that in the event the Reinsurer fails to pay any amount claimed to be due hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of a court of competent jurisdiction within the United States. Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States. B. Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby designates the party named in its Interests and Liabilities Agreement, or if no party is named therein, the Superintendent, Commissioner or Director of Insurance or other officer specified for that purpose in the statute, or his successor or successors in office, as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the Company or any beneficiary hereunder arising out of this Contract. ARTICLE XXV - ENTIRE AGREEMENT This written Contract constitutes the entire agreement between the parties hereto with respect to the business being reinsured hereunder, and there are no understandings between the parties hereto other than as expressed in this Contract. Any change or modification to this Contract will be made by amendment to this Contract and signed by the parties. ARTICLE XXVI - AGENCY AGREEMENT If more than one reinsured company is named as a party to this Contract, the first named company shall be deemed the agent of the other reinsured companies for purposes of sending Page 20 or receiving notices required by the terms and conditions of this Contract, and for purposes of remitting or receiving any monies due any party. ARTICLE XXVII - INTERMEDIARY (BRMA 23A) Benfield Inc. is hereby recognized as the Intermediary negotiating this Contract for all business hereunder. All communications (including but not limited to notices, statements, premium, return premium, commissions, taxes, losses, loss adjustment expense, salvages and loss settlements) relating thereto shall be transmitted to the Company or the Reinsurer through Benfield Inc. Payments by the Company to the Intermediary shall be deemed to constitute payment to the Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed to constitute payment to the Company only to the extent that such payments are actually received by the Company. IN WITNESS WHEREOF, the Company by its duly authorized representative has executed this Contract as of the date undermentioned at: DeRidder, LA, this 20th day of April in the year 2005. /s/ Allan E. Farr ---------------------------------------------- American Interstate Insurance Company American Interstate Insurance Company of Texas Silver Oak Casualty, Inc. Page 21 NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE (U.S.A.) (Approved by Lloyd's Underwriters' Fire and Non-Marine Association) (1) This reinsurance does not cover any loss or liability accruing to the Reassured as a member of, or subscriber to, any association of insurers or reinsurers formed for the purpose of covering nuclear energy risks or as a direct or indirect reinsurer of any such member, subscriber or association. (2) Without in any way restricting the operation of paragraph (1) of this Clause it is understood and agreed that for all purposes of this reinsurance all the original policies of the Reassured (new, renewal and replacement) of the classes specified in Clause II of this paragraph (2) from the time specified in Clause III in this paragraph (2) shall be deemed to include the following provision (specified as the Limited Exclusion Provision): LIMITED EXCLUSION PROVISION.* I. It is agreed that the policy does not apply under any liability coverage, to (injury, sickness, disease, death or destruction (bodily injury or property damage with respect to which an insured under the policy is also an insured under a nuclear energy liability policy issued by Nuclear Energy Liability Insurance Association, Mutual Atomic Energy Liability Underwriters or Nuclear Insurance Association of Canada, or would be an insured under any such policy but for its termination upon exhaustion of its limit of liability. II. Family Automobile Policies (liability only), Special Automobile Policies (private passenger automobiles, liability only), Farmers Comprehensive Personal Liability Policies (liability only), Comprehensive Personal Liability Policies (liability only) or policies of a similar nature; and the liability portion of combination forms related to the four classes of policies stated above, such as the Comprehensive Dwelling Policy and the applicable types of Homeowners Policies. III. The inception dates and thereafter of all original policies as described in II above, whether new, renewal or replacement, being policies which either (a) become effective on or after 1st May, 1960, or (b) become effective before that date and contain the Limited Exclusion Provision set out above; provided this paragraph (2) shall not be applicable to Family Automobile Policies, Special Automobile Policies, or policies or combination policies of a similar nature, issued by the Reassured on New York risks, until 90 days following approval of the Limited Exclusion Provision by the Governmental Authority having jurisdiction thereof. (3) Except for those classes of policies specified in Clause II of paragraph (2) and without in any way restricting the operation of paragraph (1) of this Clause, it is understood and agreed that for all purposes of this reinsurance the original liability policies of the Reassured (new, renewal and replacement) affording the following coverages: Owners, Landlords and Tenants Liability, Contractual Liability, Elevator Liability, Owners or Contractors (including railroad) Protective Liability, Manufacturers and Contractors Liability, Product Liability, Professional and Malpractice Liability, Storekeepers Liability, Garage Liability, Automobile Liability (including Massachusetts Motor Vehicle or Garage Liability) shall be deemed to include, with respect to such coverages, from the time specified in Clause V of this paragraph (3), the following provision (specified as the Broad Exclusion Provision): BROAD EXCLUSION PROVISION.* It is agreed that the policy does not apply: I. Under any Liability Coverage to (injury, sickness, disease, death or destruction (bodily injury or property damage (a) with respect to which an insured under the policy is also an insured under a nuclear energy liability policy issued by Nuclear Energy Liability Insurance Association, Mutual Atomic Energy Liability Underwriters or Nuclear Insurance Association of Canada, or would be an insured under any such policy but for its termination upon exhaustion of its limit of liability; or (b) resulting from the hazardous properties of nuclear material and with respect to which (1) any person or organization is required to maintain financial protection pursuant to the Atomic Energy Act of 1954, or any law amendatory thereof, or (2) the insured is, or had this policy not been issued would be, entitled to indemnity from the United States of America, or any agency thereof, under any agreement entered into by the United States of America, or any agency thereof, with any person or organization. Page 1 of 2 II. Under any Medical Payments Coverage, or under any Supplementary Payments Provision relating to (immediate medical or surgical relief (first aid, to expenses incurred with respect to (bodily injury, sickness, disease or death (bodily injury resulting from the hazardous properties of nuclear material and arising out of the operation of a nuclear facility by any person or organization. III. Under any Liability Coverage to (injury, sickness, disease, death or destruction (bodily injury or property damage resulting from the hazardous properties of nuclear material, if (a) the nuclear material (1) is at any nuclear facility owned by, or operated by or on behalf of, an insured or (2) has been discharged or dispersed therefrom; (b) the nuclear material is contained in spent fuel or waste at any time possessed, handled, used, processed, stored, transported or disposed of by or on behalf of an insured; or (c) the (injury, sickness, disease, death or destruction (bodily injury or property damage arises out of the furnishing by an insured of services, materials, parts or equipment in connection with the planning, construction, maintenance, operation or use of any nuclear facility, but if such facility is located within the United States of America, its territories, or possessions or Canada, this exclusion (c) applies only to (injury to or destruction of property at such nuclear facility (property damage to such nuclear facility and any property thereat. IV. As used in this endorsement: "hazardous properties" include radioactive, toxic or explosive properties; "nuclear material" means source material, special nuclear material or byproduct material; "source material", "special nuclear material", and "byproduct material" have the meanings given them in the Atomic Energy Act of 1954 or in any law amendatory thereof; "spent fuel" means any fuel element or fuel component, solid or liquid, which has been used or exposed to radiation in a nuclear reactor; "waste" means any waste material (1) containing byproduct material and (2) resulting from the operation by any person or organization of any nuclear facility included within the definition of nuclear facility under paragraph (a) or (b) thereof; "nuclear facility" means (a) any nuclear reactor, (b) any equipment or device designed or used for (1) separating the isotopes of uranium or plutonium, (2) processing or utilizing spent fuel, or (3) handling processing or packaging waste, (c) any equipment or device used for the processing, fabricating or alloying of special nuclear material if at any time the total amount of such material in the custody of the insured at the premises where such equipment or device is located consists of or contains more than 25 grams of plutonium or uranium 233 or any combination thereof, or more than 250 grams of uranium 235, (d) any structure, basin, excavation, premises or place prepared or used for the storage or disposal of waste, and includes the site on which any of the foregoing is located, all operations conducted on such site and all premises used for such operations; "nuclear reactor" means any apparatus designed or used to sustain nuclear fission in a self-supporting chain reaction or to contain a critical mass of fissionable material; (With respect to injury to or destruction of property, the word "injury" or "destruction," ("property damage" includes all forms of radioactive contamination of property, (includes all forms of radioactive contamination of property. V. The inception dates and thereafter of all original policies affording coverages specified in this paragraph (3), whether new, renewal or replacement, being policies which become effective on or after 1st May, 1960, provided this paragraph (3) shall not be applicable to (i) Garage and Automobile Policies issued by the Reassured on New York risks, or (ii) statutory liability insurance required under Chapter 90, General Laws of Massachusetts, until 90 days following approval of the Broad Exclusion Provision by the Governmental Authority having jurisdiction thereof. (4) Without in any way restricting the operation of paragraph (1) of this Clause, it is understood and agreed that paragraphs (2) and (3) above are not applicable to original liability policies of the Reassured in Canada and that with respect to such policies this Clause shall be deemed to include the Nuclear Energy Liability Exclusion Provisions adopted by the Canadian Underwriters' Association or the Independent Insurance Conference of Canada. - ------------------ *NOTE. The words printed in italics in the Limited Exclusion Provision and in the Broad Exclusion Provision shall apply only in relation to original liability policies which include a Limited Exclusion Provision or a Broad Exclusion Provision containing those words. Page 2 of 2 INTERESTS AND LIABILITIES AGREEMENT of Hannover Ruckversicherungs-Aktiengesellschaft Hannover, Germany (hereinafter referred to as the "Subscribing Reinsurer") with respect to the FIRST CASUALTY EXCESS OF LOSS REINSURANCE CONTRACT (AS RESPECTS HANNOVER TERMS) EFFECTIVE: JANUARY 1, 2005 issued to and duly executed by American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group The Subscribing Reinsurer hereby accepts a 30.0% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above. This Agreement shall become effective at 12:01 a.m., Local Standard Time, January 1, 2005, and shall continue in force until terminated in accordance with the provisions of the attached Contract. The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers. In any action, suit or proceeding to enforce the Subscribing Reinsurer's obligations under the attached Contract, service of process may be made upon Mendes & Mount, 750 Seventh Avenue, New York, New York 10019. IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date undermentioned at: Hannover, Germany, this 22nd day of March in the year 2005. /s/ M. Dill /s/ S. Eberhardt ------------------------------------------------ Hannover Ruckversicherungs-Aktiengesellschaft FIRST CASUALTY EXCESS OF LOSS REINSURANCE CONTRACT (AS RESPECTS HANNOVER TERMS) EFFECTIVE: JANUARY 1, 2005 issued to American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group REINSURERS PARTICIPATIONS Hannover Ruckversicherungs-Aktiengesellschaft 30.0% TOTAL 30.0% part of 100% share in the interests and liabilities of the "Reinsurer" EX-10.13 17 d27260exv10w13.txt SECOND CASUALTY EXCESS OF LOSS REINSURANCE CONTRACT Exhibit 10.13 SECOND CASUALTY EXCESS OF LOSS REINSURANCE CONTRACT EFFECTIVE: JANUARY 1, 2005 issued to American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group TABLE OF CONTENTS

ARTICLE PAGE I Classes of Business Reinsured 1 II Commencement and Termination 1 III Territory (BRMA 51A) 3 IV Exclusions 3 V Special Acceptances 7 VI Retention and Limit 7 VII Reinstatement 8 VIII Definitions 9 IX Annuities at Company's Option 11 X Claims 11 XI Sunset 12 XII Special Commutation 12 XIII Salvage and Subrogation 14 XIV Federal Terrorism Coverage 14 XV Reinsurance Premium 14 XVI Late Payments 15 XVII Offset (BRMA 36A) 16 XVIII Access to Records (BRMA 1D) 17 XIX Liability of the Reinsurer 17 XX Net Retained Lines (BRMA 32E) 17 XXI Errors and Omissions 17 XXII Taxes (BRMA 50B) 17 XXIII Reserves and Letters of Credit 18 XXIV Insolvency 19 XXV Arbitration (BRMA 6J) 20 XXVI Service of Suit (BRMA 49C) 21 XXVII Entire Agreement 21 XXVIII Governing Law (BRMA 71B) 21 XXIX Agency Agreement 22 XXX Intermediary (BRMA 23A) 22

SECOND CASUALTY EXCESS OF LOSS REINSURANCE CONTRACT EFFECTIVE: JANUARY 1, 2005 issued to American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group (hereinafter referred to collectively as the "Company") by The Subscribing Reinsurer(s) Executing the Interests and Liabilities Agreement(s) Attached Hereto (hereinafter referred to as the "Reinsurer") ARTICLE I - CLASSES OF BUSINESS REINSURED By this Contract the Reinsurer agrees to reinsure the excess liability which may accrue to the Company under its policies, contracts and binders of insurance or reinsurance (hereinafter called "policies") in force at the effective date hereof or issued or renewed on or after that date, and classified by the Company as Workers' Compensation, Employers Liability, including coverage provided under the U.S. Longshore and Harbor Workers' Compensation Act and the Jones Act, and General Liability business, subject to the terms, conditions and limitations hereinafter set forth. ARTICLE II - COMMENCEMENT AND TERMINATION A. This Contract shall become effective at 12:01 a.m., Local Standard Time, January 1, 2005, with respect to losses arising out of occurrences commencing at or after that time and date, and shall continue in force thereafter until terminated. B. Either party may terminate this Contract on any December 31 by giving the other party not less than 90 days prior notice by certified or registered mail. Page 1 C. Notwithstanding the provisions of paragraph B above, the Company may terminate a Subscribing Reinsurer's percentage share in this Contract by giving 90 days prior written notice to the Subscribing Reinsurer in the event any of the following circumstances occur, or as clarified by public announcement as respects subparagraphs 1 through 7 below or upon discovery as respects subparagraph 8 below, effective retroactively to the start of the calendar quarter preceding such circumstances: 1. The Subscribing Reinsurer's policyholders' surplus at the beginning of any contract year has been reduced by more than 20.0% of the amount of surplus 12 months prior to that date; or 2. The Subscribing Reinsurer's policyholders' surplus at any time during any contract year has been reduced by more than 20.0% of the amount of surplus at the date of the Subscribing Reinsurer's most recent financial statement filed with regulatory authorities and available to the public as of the beginning of the contract year; or 3. The Subscribing Reinsurer's A.M. Best's rating has been assigned or downgraded below A- (inclusive of "Not Rated" ratings) and/or Standard & Poor's rating has been assigned or downgraded below BBB+ (inclusive of "Not Rated" ratings); or 4. The Subscribing Reinsurer has become merged with, acquired by or controlled by any other company, corporation or individual(s) not controlling the Subscribing Reinsurer's operations previously; or 5. A State Insurance Department or other legal authority has ordered the Subscribing Reinsurer to cease writing business; or 6. The Subscribing Reinsurer has become insolvent or has been placed into liquidation or receivership (whether voluntary or involuntary) or proceedings have been instituted against the Subscribing Reinsurer for the appointment of a receiver, liquidator, rehabilitator, conservator or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations; or 7. The Subscribing Reinsurer has reinsured its entire liability under this Contract without the Company's prior written consent; or 8. The Subscribing Reinsurer has ceased assuming new and renewal treaty reinsurance business. D. Unless the Company elects that the Reinsurer have no liability for losses arising out of occurrences commencing after the effective date of termination, and so notifies the Reinsurer prior to or as promptly as possible after the effective date of termination, reinsurance hereunder on business in force on the effective date of termination shall remain in full force and effect until expiration, cancellation or next premium anniversary of such business, whichever first occurs, but in no event beyond 12 months plus odd time (not exceeding 18 months in all) following the effective date of termination. Page 2 ARTICLE III - TERRITORY (BRMA 51A) The territorial limits of this Contract shall be identical with those of the Company's policies. ARTICLE IV - EXCLUSIONS A. This Contract does not apply to and specifically excludes the following: 1. Lines of business not identified in Article I. 2. All excess of loss reinsurance assumed by the Company. 3. Reinsurance assumed by the Company under obligatory reinsurance agreements, except: a. Agency reinsurance where the policies involved are to be reunderwritten in accordance with the underwriting standards of the Company and reissued as Company policies at the next anniversary or expiration date; and b. Intercompany reinsurance between any of the reinsured companies under this Contract. 4. Business written by the Company on a co-indemnity basis where the Company is not the controlling carrier. 5. Business written to apply in excess of a deductible of more than $25,000, and business issued to apply specifically in excess over underlying insurance. However, if the Company is required, by any state regulation, to provide a deductible of more than $25,000, this exclusion shall not apply. 6. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause - Liability - Reinsurance (U.S.A.)" attached to and forming part of this Contract. 7. As regards interests which at time of loss or damage are on shore, no liability shall attach hereto in respect of any loss or damage which is occasioned by war, invasion, hostilities, acts of foreign enemies, civil war, rebellion, insurrection, military or usurped power, or martial law or confiscation by order of any government or public authority. This War Exclusion Clause shall not, however, apply to interests which at time of loss or damage are within the territorial limits of the United States of America (comprising the Fifty States of the Union, the District of Columbia, and including bridges between the United States of America and Mexico provided they are under United States ownership), Canada, St. Pierre and Miquelon, provided such interests are insured under policies containing a standard war or hostilities or warlike operations exclusion clause. 8. 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. Page 3 9. All liability of the Company arising by contract, operation of 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, however denominated, established or governed, which provides for any assessment of or payment or assumption by the Company of part or 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. 10. Workers' Compensation where the principal exposures, as defined by the governing class code, include: a. Operation of aircraft but only if the annual estimated policy premium is $250,000 or more; b. Railroad, subway, or street railway operations; c. Operation or navigation of vessels or barges; d. Manufacture, production, or refining of gas, natural or artificial fuel, or other liquefied petroleum fuel, but only if the annual estimated policy premium is $250,000 or more; e. Manufacturing, assembly, packing, or processing of fireworks, fuses, nitroglycerine, magnesium, pyroxylin, ammunition, or explosives. This exclusion does not apply to the assembly, packing, or processing of explosives when the estimated annual premium is under $250,000; f. Wrecking or demolition of structures but only if the annual estimated policy premium is $250,000 or more; g. Underground mining. 11. As respects Workers' Compensation and Employers' Liability only, unless otherwise excluded as set forth above, the reinsurance provided under this Contract shall not apply to any loss, cost or expense arising out of or related to, either directly or indirectly, any "terrorist activity," as defined herein, but this exclusion shall only apply when the activity includes, involves, or is associated with the use of any biological, chemical, radioactive, or nuclear agent, material, device or weapon, or when the predominant business of the policyholder as defined by the governing class code is: a. The operation of: airports and aircraft; flight schools; bridges, dams, tunnels, or locks; department stores; shopping malls; chain retail stores; casinos and casino hotels; cruise lines; railroads; ports/public transit authorities; security services; stadiums; convention/exhibition centers; or theme/amusement parks. b. The manufacture and distribution of: automobiles; chemicals, petrochemicals, pharmaceuticals; utilities (electric, gas, water, and sewer); major defense/aerospace products; or high-tech equipment, but only if the policyholder Page 4 employs more than 20 personnel at the location of a terrorist activity at the time of its occurrence. c. The management or operation of the following type of structures, but only if greater than 25 stories in height: apartments/condominiums/co-ops; hotels/motels; or office buildings. d. Businesses primarily engaged in the entertainment, media, or transportation industry limited to the following: major media providers (NBC, FOX, ABC, CBS, etc.); television and motion picture studios; Broadway theaters; major internet companies (AOL, Yahoo, etc.); professional sports teams; major telecommunications companies (AT&T, Worldcom/MCI, etc.); national truck rental companies (Ryder, Penske, UHaul, etc.); or major national motor freight common carriers (J.B. Hunt, Red Arrow, etc.). e. Policyholders primarily located in, or predominantly doing business as: hospitals; universities; nuclear facilities; financial institutions; or governmental buildings and national landmarks. "Terrorist activity" shall mean any deliberate, unlawful act that: a. Is declared by any authorized government official to be or to involve terrorism, terrorist activity or acts of terrorism; or b. Includes, involves, or is associated with the use or threatened use of force, violence or harm against any person, tangible or intangible property, the environment, or any natural resources, where the act or threatened act is intended, in whole or in part, to: i. Promote or further any political, ideological, philosophical, racial, ethnic, social or religious cause or objective of the perpetrator or any organization, association or group affiliated with the perpetrator; or ii. Influence, disrupt or interfere with any government related operations, activities or policies; or iii. Intimidate, coerce or frighten the general public or any segment of the general public; or iv. Disrupt or interfere with a national economy or any segment of a national economy; or c. Includes, involves, or is associated with, in whole or in part, any of the following activities, or the threat thereof: i. Hijacking or sabotage of any form of transportation or conveyance, including but not limited to spacecraft, satellite, aircraft, train, vessel, or motor vehicle; ii. Hostage taking or kidnapping; Page 5 iii. The use of any bomb, incendiary device, explosive or firearm; iv. The interference with or disruption of basic public or commercial services and systems, including but not limited to the following services or systems: electricity, natural gas, power, postal, communications, telecommunications, information, public transportation, water, fuel, sewer or waste disposal; v. The injuring or assassination of any elected or appointed government official or any government employee; vi. The seizure, blockage, interference with, disruption of, or damage to any government buildings, institutions, functions, events, tangible or intangible property or other assets; or vii. The seizure, blockage, interference with, disruption of, or damage to tunnels, roads, streets, highways, or other places of public transportation or conveyance. d. Any of the activities listed in subparagraph c, above, shall be considered terrorist activity except where the Company can demonstrate to the Reinsurer that the foregoing activities or threats thereof were motivated solely by personal objectives of the perpetrator that are unrelated, in whole or in part, to any intention to: i. Promote or further any political, ideological, philosophical, racial, ethnic, social or religious cause or objective of the perpetrator or any organization, association or group affiliated with the perpetrator; ii. Influence, disrupt or interfere with any government-related operations, activities or policies; iii. Intimidate, coerce or frighten the general public or any segment of the general public; or iv. Disrupt or interfere with a national economy or any segment of a national economy. 12. As respects General Liability policies, exposures, other than those identified below, as included in the General Liability section of the Company's Commercial Lines Manual: a. Class 97111 - Logging; b. Class 58873 - Sawmill; c. Class 59984 - Woodyard and Drivers; d. Class 95410 - Grading of Land; e. Class 45819 - Lumber Yard; Page 6 f. Class 10073 - Repair Shops and Drivers; g. Class 43822 - Timber Cruiser; h. Class 99793 - Truckman Not Otherwise Classified; i. Class 91591 - Contractors - Subcontracted Work Other Than Construction; j. Class 49452 - Vacant Land. B. Any exclusion set forth in subparagraphs 10 and/or 12 of paragraph A shall be waived automatically when, in the opinion of the Company, the exposure excluded therein is incidental to the principal exposure on the risk in question. C. If the Company is bound, without the knowledge and contrary to the instructions of the Company's supervisory underwriting personnel, on any business falling within the scope of one or more of the exclusions set forth in subparagraphs 10 and/or 12 of paragraph A, the exclusion shall be suspended with respect to such business until the Company has the first opportunity to cancel the policy in compliance with governmental requirements. D. If the Company is required to accept an assigned risk which conflicts with one or more of the exclusions set forth in subparagraph 10 of paragraph A, reinsurance shall apply, but only for the difference between the Company's retention and the minimum limit required by the applicable state statute, and in no event shall the Reinsurer's liability exceed the limit set forth in Article VI. ARTICLE V - SPECIAL ACCEPTANCES From time to time the Company may request a special acceptance of reinsurance falling outside the scope of the provisions set forth herein. As respects each layer of this Contract separately, if each Subscribing Reinsurer whose share in the interests and liabilities of the Reinsurer is 25.0% or greater agrees to a special acceptance, such special acceptance shall be binding on all Subscribing Reinsurers with respect to their respective shares of each such layer. In the event agreement is not achieved, such special acceptance shall be made to a layer or layers of this Contract only with respect to the interests and liabilities of each Subscribing Reinsurer on such layer or layers who agrees to such special acceptance. In the event a reinsurer becomes a party to this Contract subsequent to one or more special acceptances hereunder, the new reinsurer shall automatically accept such special acceptance(s) as being covered hereunder. ARTICLE VI - RETENTION AND LIMIT A. The Company shall retain and be liable for the first $5,000,000 of ultimate net loss, arising out of each occurrence. The Reinsurer shall then be liable for the amount by which such ultimate net loss exceeds the Company's retention, but the liability of the Reinsurer shall not exceed $5,000,000, as respects any one occurrence. Page 7 B. The Company shall be permitted to carry excess of loss and quota share reinsurance, recoveries under which shall inure solely to the benefit of the Company and be entirely disregarded in applying all of the provisions of this Contract. C. The Company shall be permitted to carry excess of loss reinsurance applying to Workers' Compensation risks in the State of Minnesota, recoveries under which shall inure to the benefit of this Contract. Such coverage shall be provided through the Minnesota Workers' Compensation Reinsurance Association. It is understood that the liability of the Reinsurer for Minnesota Workers' Compensation risks is not released. In the event the Company accrues liability that is not provided by any inuring reinsurance, for whatever reason, the Reinsurer agrees to reinsure such excess liability. D. In the event this Contract is terminated on a "runoff" basis, additional reinstatement coverage shall be negotiated on or prior to the effective date of termination. ARTICLE VII - REINSTATEMENT A. In the event all or any portion of the reinsurance hereunder is exhausted by loss, the amount so exhausted shall be reinstated immediately from the time the occurrence commences hereon. For each amount so reinstated the Company agrees to pay additional premium equal to the product of the following: 1. The percentage of the occurrence limit reinstated (based on the loss paid by the Reinsurer); times 2. The earned reinsurance premium for the contract year (exclusive of reinstatement premium). B. Whenever the Company requests payment by the Reinsurer of any loss hereunder, the Company shall submit a statement to the Reinsurer of reinstatement premium due the Reinsurer. If the earned reinsurance premium for the contract year has not been finally determined as of the date of any such statement, the calculation of reinstatement premium due shall be based on the annual deposit premium and shall be readjusted when the earned reinsurance premium for the contract year has been finally determined. Any reinstatement premium shown to be due the Reinsurer as reflected by any such statement (less prior payments, if any) shall be payable by the Company concurrently with payment by the Reinsurer of the requested loss. Any return reinstatement premium shown to be due the Company shall be remitted by the Reinsurer as promptly as possible after receipt and verification of the Company's statement. C. Notwithstanding anything stated herein, the liability of the Reinsurer hereunder shall not exceed $5,000,000 as respects loss or losses arising out of any one occurrence, nor shall it exceed $10,000,000 in all during the contract year. Page 8 ARTICLE VIII - DEFINITIONS A. "Ultimate net loss" as used herein is defined as the sum or sums (including loss in excess of policy limits, extra contractual obligations and any loss adjustment expense, as hereinafter defined) paid or payable by the Company in settlement of claims and in satisfaction of judgments rendered on account of such claims, after deduction of all salvage, all recoveries and all claims on inuring insurance or reinsurance, whether collectible or not. Nothing herein shall be construed to mean that losses under this Contract are not recoverable until the Company's ultimate net loss has been ascertained. B. "Loss in excess of policy limits" and "extra contractual obligations" as used herein shall be defined as follows: 1. "Loss in excess of policy limits" shall mean 90.0% of any amount paid or payable by the Company in excess of its policy limits, but otherwise within the terms of its policy, such loss in excess of the Company's policy limits having been incurred because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of an action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action. 2. "Extra contractual obligations" shall mean 90.0% of any punitive, exemplary, compensatory or consequential damages paid or payable by the Company, not covered by any other provision of this Contract and which arise from the handling of any claim on business subject to this Contract, such liabilities arising because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of any action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action. An extra contractual obligation shall be deemed, in all circumstances, to have occurred on the same date as the loss covered or alleged to be covered under the policy. If any provision of this Article shall be rendered illegal or unenforceable by the laws, regulations or public policy of any state, such provision shall be considered void in such state, but this shall not affect the validity or enforceability of any other provision of this Contract or the enforceability of such provision in any other jurisdiction. Notwithstanding anything stated herein, this Contract shall not apply to any loss in excess of policy limits or any extra contractual obligation incurred by the Company as a result of any fraudulent and/or criminal act by any officer or director of the Company acting individually or collectively or in collusion with any individual or corporation or any other organization or party involved in the presentation, defense or settlement of any claim covered hereunder. C. "Occurrence" as used herein is defined as an accident or occurrence or a series of accidents or occurrences arising out of or caused by one event, except that: Page 9 1. As respects General Liability policies where the Company's limit of liability for Products and Completed Operations coverages is determined on the basis of the insured's aggregate losses during a policy period, all such losses proceeding from or traceable to the same causative agency shall, at the Company's option, be deemed to have been caused by one occurrence commencing at the beginning of the policy period, it being understood and agreed that each renewal or annual anniversary date of the policy involved shall be deemed the beginning of a new policy period; 2. Each occupational disease case or cumulative trauma case contracted by an employee of an insured shall be deemed to have been caused by a separate occurrence commencing on: a. The date of disability for which compensation is payable if the case is compensable under the Workers' Compensation Law; b. The date disability due to the disease actually began if the case is not compensable under the Workers' Compensation Law; c. The date of cessation of employment if claim is made after employment has ceased. 3. Notwithstanding the provisions of subparagraph 2 above, as respects losses resulting from occupational disease or cumulative trauma suffered by employees of an insured for which the employer is liable, as a result of a sudden and accidental event not exceeding 72 hours in duration, all such losses shall be considered one occurrence and may be combined with losses classified as other than occupational disease or cumulative trauma which arise out of the same event and the combination of such losses shall be considered as one occurrence within the meaning hereof. D. "Occupational disease" or industrial disease is any abnormal condition that fulfills all of the following conditions: 1. It is not traceable to a definite compensable accident occurring during the employee's past or present employment. 2. It has been caused by exposure to a disease producing agent or agents present in the workers' occupational environment. 3. It has resulted in disability or death. E. "Cumulative trauma" is an injury that fulfills all of the following conditions: 1. It is not traceable to a definite compensable accident occurring during the employee's past or present employment. 2. It has occurred from and has been aggravated by a repetitive employment related activity. 3. It has resulted in disability or death. Page 10 F. "Loss adjustment expense" as used herein shall mean expenses allocable to the investigation, defense and/or settlement of specific claims, including litigation expenses, interest on judgments, declaratory judgment expenses or other legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto, and salaries and expenses of salaried adjusters associated with claims covered under policies of the Company reinsured hereunder but not including office expenses or salaries of the Company's regular employees. G. "Contract year" as used in this Contract shall mean the period from January 1, 2005 to December 31, 2005, both days inclusive, and each respective 12-month period thereafter that this Contract continues in force. However, if this Contract is terminated on a "cutoff" basis, the final contract year shall be from the beginning of the then current contract year through the effective date of termination. If this Contract is terminated on a "runoff" basis, the period from the effective date of termination through the end of the "runoff" period shall be a separate contract year and referred to as the "runoff contract year." ARTICLE IX - ANNUITIES AT COMPANY'S OPTION A. Whenever the Company is required, or elects, to purchase an annuity or to negotiate a structured settlement, either in satisfaction of a judgment or in an out-of-court settlement or otherwise, the cost of the annuity or the structured settlement, as the case may be, shall be deemed part of the Company's ultimate net loss. B. The terms "annuity" or "structured settlement" shall be understood to mean any insurance policy, lump sum payment, agreement or device of whatever nature resulting in the payment of a lump sum by the Company in settlement of any or all future liabilities which may attach to it as a result of an occurrence. C. In the event the Company purchases an annuity which inures in whole or in part to the benefit of the Reinsurer, it is understood that the liability of the Reinsurer is not released thereby. In the event the Company is required to provide benefits not provided by the annuity for whatever reason, the Reinsurer shall pay its proportional share of any loss. ARTICLE X - CLAIMS A. Whenever a claim is reserved by the Company for an amount greater than 50.0% of its retention hereunder and/or whenever a claim appears likely to result in a claim under this Contract, the Company shall notify the Reinsurer. Further, the Company shall notify the Reinsurer whenever a claim involves a fatality, major limb amputation, spinal cord damage, brain damage, blindness or extensive burns, regardless of liability, if the policy limits or statutory benefits applicable to the claim are greater than the Company's retention hereunder. The Reinsurer shall have the right to participate, at its own expense, in the defense of any claim or suit or proceeding involving this reinsurance. B. All claim settlements made by the Company, provided they are within the terms of this Contract (including but not limited to ex-gratia payments), shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for which it may be liable upon receipt of satisfactory evidence of the amount paid by the Company. Page 11 ARTICLE XI - SUNSET Ten years after the effective date of termination of this Contract (or after the end of the runoff period, if applicable), the Company shall advise the Reinsurer of any outstanding claims and/or occurrences (each hereinafter referred to as a "claim") arising during any contract year, which have not been finally settled and which may cause a recovery under this Contract. Unless mutually agreed, no liability shall attach hereunder for any claim not reported to the Reinsurer within 90 days following the 10-year period. ARTICLE XII - SPECIAL COMMUTATION A. In the event a Subscribing Reinsurer meets the following conditions, the Company may require a commutation of that portion of any excess loss hereunder represented by any outstanding claim or claims, including any related loss adjustment expense. 1. The Subscribing Reinsurer's A.M. Best's rating has been assigned or downgraded below A- (inclusive of "Not Rated" ratings) and/or Standard & Poor's rating has been assigned or downgraded below BBB+ (inclusive of "Not Rated" ratings); or 2. The Subscribing Reinsurer has ceased assuming new and renewal property and casualty treaty reinsurance business. "Outstanding claim or claims" shall be defined as known or unknown claims, including any billed yet unpaid claims. However, unless otherwise mutually agreed, this paragraph shall not apply unless the outstanding claim or claims is for an amount not less than $5,000. B. If the Company elects to require commutation as provided in paragraph A above, the Company shall submit a Statement of Valuation of the outstanding claim or claims as of the last day of the month immediately preceding the month in which the Company elects to require commutation, as determined by the Company. Such Statement of Valuation shall include the elements considered reasonable to establish the excess loss and shall set forth or attach the information relied upon by the Company and the methodology employed to calculate the excess loss. The Subscribing Reinsurer shall then pay the amount requested within 30 calendar days of receipt of such Statement of Valuation, unless the Subscribing Reinsurer needs additional information from the Company to assess the Company's Statement of Valuation or contests such amount. C. If the Subscribing Reinsurer needs additional information from the Company to assess the Company's Statement of Valuation or contests the amount requested, the Subscribing Reinsurer shall so notify the Company within 15 calendar days of receipt of the Company's Statement of Valuation. The Company shall supply any reasonably requested information to the Subscribing Reinsurer within 15 calendar days of receipt of the notification. Within 30 calendar days of the date of the notification or of the receipt of the information, whichever is later, the Subscribing Reinsurer shall provide the Company with its Statement of Valuation of the outstanding claim or claims as of the last day of the month immediately preceding the month in which the Company elects to require commutation, as determined by the Subscribing Reinsurer. Such Statement of Valuation shall include the elements Page 12 considered reasonable to establish the excess loss and shall set forth or attach the information relied upon by the Subscribing Reinsurer and the methodology employed to calculate the excess loss. D. In the event the Subscribing Reinsurer's Statement of Valuation of the outstanding claim or claims is viewed as unacceptable to the Company, the Company may either abandon the commutation effort, or may seek to settle any difference by using an independent actuary agreed to by the parties. E. If the parties cannot agree on an acceptable independent actuary within 15 calendar days of the date of the Subscribing Reinsurer's Statement of Valuation, then each party shall appoint an actuary as party arbitrators for the limited and sole purpose of selecting an independent actuary. If the actuaries cannot agree on an acceptable independent actuary within 15 calendar days of the date of the Subscribing Reinsurer's Statement of Valuation, the Company shall supply the Subscribing Reinsurer with a list of at least three proposed independent actuaries, and the Subscribing Reinsurer shall select the independent actuary from that list. F. Upon selection of the independent actuary, both parties shall present their respective written submissions to the independent actuary. The independent actuary may, at his or her discretion, request additional information. The independent actuary shall issue his or her decision within 45 calendar days after the written submissions have been filed and any additional information has been provided. G. The decision of the independent actuary shall be final and binding. The expense of the independent actuary shall be equally divided between the two parties. For the purposes of this Article, unless mutually agreed otherwise, an "independent actuary" shall be an actuary who satisfies each of the following criteria: 1. Is regularly engaged in the valuation of claims resulting from lines of business subject to this Contract; and 2. Is either a Fellow of the Casualty Actuarial Society or of the American Academy of Actuaries; and 3. Is disinterested and impartial regarding this commutation. H. Notwithstanding paragraph A, B and C above, in the event that the Subscribing Reinsurer no longer meets the conditions set forth in subparagraph 1 or 2 in paragraph A above, this commutation may continue on a mutually agreed basis. I. Payment by the Subscribing Reinsurer of the amount requested in accordance with paragraph B, C or F above, shall release the Subscribing Reinsurer from all further liability for outstanding claim or claims, known or unknown, under this Contract, which shall release the Company from all further liability for payments of salvage or subrogation amounts, known or unknown, to the Subscribing Reinsurer under this Contract. J. In the event of any conflict between this Article and any other Article of this Contract, the terms of this Article shall control. Page 13 K. This Article shall survive the termination of this Contract. ARTICLE XIII - SALVAGE AND SUBROGATION The Reinsurer shall be credited with salvage (i.e., reimbursement obtained or recovery made by the Company, less the actual cost, excluding salaries of officials and employees of the Company and sums paid to attorneys as retainer, of obtaining such reimbursement or making such recovery) or subrogation on account of claims and settlements involving reinsurance hereunder. Salvage or subrogation thereon shall always be used to reimburse the excess carriers in the reverse order of their priority according to their participation before being used in any way to reimburse the Company for its primary loss. The Company hereby agrees to enforce its rights to salvage or subrogation where it is economically reasonable in the judgment of the Company, relating to any loss, a part of which loss was sustained by the Reinsurer, and to prosecute all claims arising out of such rights. ARTICLE XIV - FEDERAL TERRORISM COVERAGE A. Except as provided in paragraphs B and C below, any loss reimbursement the Company receives from the United States Government under the Terrorism Risk Insurance Act of 2002 (the "Terrorism Act") as a result of loss occurrences commencing during the term of this Contract shall inure solely to the benefit of the Company and shall be entirely disregarded in applying all of the provisions of this Contract. B. If one or more loss occurrences commencing during the term of this Contract result(s) in recoveries made by the Company for insured losses (as defined in the Terrorism Act) under this Contract and under the Terrorism Act, and such recoveries, together with any other reinsurance recoveries made by the Company for insured losses applicable to said loss occurrence(s), exceed the total amount of insured losses, a percentage of any amount in excess thereof shall reduce the ultimate net loss subject to this Contract for the loss occurrence(s) to which the recoveries apply. The Company shall determine how such percentage is calculated. C. For purposes hereof, if a loss reimbursement received by the Company under the Terrorism Act is based on the Company's insured losses in more than one loss occurrence and the United States Government does not designate the amount allocable to each loss occurrence, the reimbursement shall be determined by the Company and in accordance with paragraph B above. ARTICLE XV - REINSURANCE PREMIUM A. As premium for the reinsurance provided hereunder during each contract year (except the runoff contract year, if any), the Company shall pay the Reinsurer 0.648% of its net earned premium for the contract year, subject to an annual minimum premium of $1,400,000 (or a pro rata portion thereof if this Contract is terminated in accordance with paragraph C of Article II). Page 14 B. The Company shall pay the Reinsurer an annual deposit premium of $1,750,000 in four equal installments of $437,500 on January 1, April 1, July 1 and October 1 of each contract year (except the runoff contract year, if any). However, in the event this Contract is terminated in accordance with paragraph C of Article II, no deposit premium shall be due after the effective date of termination. C. Within 60 days after the end of each contract year (or within 60 days after the effective date of termination if this Contract is terminated on a "runoff" basis), the Company shall provide a report to the Reinsurer setting forth the premium due hereunder for the contract year, computed in accordance with paragraph A, and any additional premium due the Reinsurer or return premium due the Company shall be remitted promptly. D. In the event this Contract is terminated on a "runoff" basis, the deposit premium shall be calculated by multiplying the unearned portion of premium in force at the effective date of termination by 0.648%, and paid semi-annually. E. "Net earned premium" as used herein is defined as the Company's gross earned premium collected on the classes of business subject to this Contract, less only the earned portion of premiums, if any, ceded by the Company for reinsurance which inures to the benefit of this Contract and less dividends incurred. ARTICLE XVI - LATE PAYMENTS A. The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Contract. B. In the event any premium, loss or other payment due either party is not received by the intermediary named in Article XXX (hereinafter referred to as the "Intermediary") by the payment due date, the party to whom payment is due, may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest penalty on the amount past due calculated for each such payment on the last business day of each month as follows: 1. The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times 2. 1/365ths of the sum of 400 basis points plus the six-month United States Treasury Bill rate as quoted in The Wall Street Journal on the first business day of the month for which the calculation is made; times 3. The amount past due, including accrued interest. It is agreed that interest shall accumulate until payment of the original amount due plus interest penalties have been received by the Intermediary. C. The establishment of the due date shall, for purposes of this Article, be determined as follows: Page 15 1. As respects the payment of routine deposits and premiums due the Reinsurer, the due date shall be as provided for in the applicable section of this Contract. In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days after the date of transmittal by the Intermediary of the initial billing for each such payment. 2. Any claim or loss payment due the Company hereunder shall be deemed due 45 business days after the proof of loss or demand for payment is transmitted to the Reinsurer. If such loss or claim payment is not received within the 45 days, interest will accrue on the payment or amount overdue in accordance with paragraph B above, from the date the proof of loss or demand for payment was transmitted to the Reinsurer. 3. As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs 1 and 2 of paragraph C above, the due date shall be as provided for in the applicable section of this Contract. In the event a due date is not specifically stated for a given payment, it shall be deemed due 10 business days following transmittal of written notification that the provisions of this Article have been invoked. For purposes of interest calculations only, amounts due hereunder shall be deemed paid upon receipt by the Intermediary. D. Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from contesting the validity of any claim, or from participating in the defense of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any arbitration or other proceeding in accordance with the provisions of this Contract. If the debtor party prevails in an arbitration or other proceeding, then any interest penalties due hereunder on the amount in dispute shall be null and void. If the debtor party loses in such proceeding, then the interest penalty on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings. If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article. E. Interest penalties arising out of the application of this Article that are $100 or less from any party shall be waived unless there is a pattern of late payments consisting of three or more items over the course of any 12-month period. ARTICLE XVII - OFFSET (BRMA 36A) The Company and the Reinsurer may offset any balance or amount due from one party to the other under this Contract or any other contract heretofore or hereafter entered into between the Company and the Reinsurer, whether acting as assuming reinsurer or ceding company. This provision shall not be affected by the insolvency of either party to this Contract. Page 16 ARTICLE XVIII - ACCESS TO RECORDS (BRMA 1D) The Reinsurer or its designated representatives shall have access at any reasonable time to all records of the Company which pertain in any way to this reinsurance. ARTICLE XIX - LIABILITY OF THE REINSURER A. The liability of the Reinsurer shall follow that of the Company in every case and be subject in all respects to all the general and specific stipulations, clauses, waivers and modifications of the Company's policies and any endorsements thereon. B. Nothing herein shall in any manner create any obligations or establish any rights against the Reinsurer in favor of any third party or any persons not parties to this Contract. ARTICLE XX - NET RETAINED LINES (BRMA 32E) A. This Contract applies only to that portion of any policy which the Company retains net for its own account (prior to deduction of any underlying reinsurance specifically permitted in this Contract), and in calculating the amount of any loss hereunder and also in computing the amount or amounts in excess of which this Contract attaches, only loss or losses in respect of that portion of any policy which the Company retains net for its own account shall be included. B. The amount of the Reinsurer's liability hereunder in respect of any loss or losses shall not be increased by reason of the inability of the Company to collect from any other reinsurer(s), whether specific or general, any amounts which may have become due from such reinsurer(s), whether such inability arises from the insolvency of such other reinsurer(s) or otherwise. ARTICLE XXI - ERRORS AND OMISSIONS Except as provided in Article XI, inadvertent delays, errors or omissions made in connection with this Contract or any transaction hereunder shall not relieve either party from any liability which would have attached had such delay, error or omission not occurred, provided always that such error or omission is rectified as soon as possible after discovery. ARTICLE XXII - TAXES (BRMA 50B) In consideration of the terms under which this Contract is issued, the Company will not claim a deduction in respect of the premium hereon when making tax returns, other than income or profits tax returns, to any state or territory of the United States of America or the District of Columbia. Page 17 ARTICLE XXIII - RESERVES AND LETTERS OF CREDIT (Applies only to a reinsurer which does not qualify for full credit with any insurance regulatory authority having jurisdiction over the Company's reserves, which is or becomes rated "B++" or lower by A.M. Best (inclusive of "Not Rated" ratings) and/or Standard & Poor's rating is or becomes "BBB+" or lower (inclusive of "Not Rated" ratings).) A. As regards policies or bonds issued by the Company coming within the scope of this Contract, the Company agrees that when it shall file with the insurance regulatory authority or set up on its books reserves for losses covered hereunder which it shall be required by law to set up, it will forward to the Reinsurer a statement showing the proportion of such reserves which is applicable to the Reinsurer. The Reinsurer hereby agrees to fund such reserves in respect of known outstanding losses that have been reported to the Reinsurer and allocated loss adjustment expense relating thereto, losses and allocated loss adjustment expense paid by the Company but not recovered from the Reinsurer, plus reserves for losses incurred but not reported, as shown in the statement prepared by the Company (hereinafter referred to as "Reinsurer's Obligations") by funds withheld, cash advances or a Letter of Credit. The Reinsurer shall have the option of determining the method of funding provided it is acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves with regards to unauthorized reinsurers; or, should the Reinsurer be downgraded, the method of funding shall be mutually agreed. B. When funding by a Letter of Credit, the Reinsurer agrees to apply for and secure timely delivery to the Company of a clean, irrevocable and unconditional Letter of Credit issued by a bank meeting the NAIC Securities Valuation Office credit standards for issuers of Letters of Credit and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves in an amount equal to the Reinsurer's proportion of said reserves. Such Letter of Credit shall be issued for a period of not less than one year, and shall contain an "evergreen" clause, which automatically extends the term for one year from its date of expiration or any future expiration date unless thirty (30) days (sixty (60) days where required by insurance regulatory authorities) prior to any expiration date the issuing bank shall notify the Company by certified or registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. C. The Reinsurer and Company agree that the Letters of Credit provided by the Reinsurer pursuant to the provisions of this Contract may be drawn upon at any time, notwithstanding any other provision of this Contract, and be utilized by the Company or any successor, by operation of law, of the Company including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Company for the following purposes, unless otherwise provided for in a separate Trust Agreement: 1. To reimburse the Company for the Reinsurer's Obligations, the payment of which is due under the terms of this Contract and which has not been otherwise paid; 2. To make refund of any sum which is in excess of the actual amount required to pay the Reinsurer's Obligations under this Contract, if so requested by the Reinsurer; 3. To fund an account with the Company for the Reinsurer's Obligations. Such cash deposit shall be held in an interest bearing account separate from the Company's Page 18 other assets, and interest thereon not in excess of the prime rate shall accrue to the benefit of the Reinsurer; 4. To pay the Reinsurer's share of any other amounts the Company claims are due under this Contract. D. In the event the amount drawn by the Company on any Letter of Credit is in excess of the actual amount required for subparagraphs 1 or 3, or in the case of subparagraph 4, the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn. All of the foregoing shall be applied without diminution because of insolvency on the part of the Company or the Reinsurer. E. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company. F. At annual intervals, or more frequently as agreed but never more frequently than quarterly, the Company shall prepare a specific statement of the Reinsurer's Obligations, for the sole purpose of amending the Letter of Credit, in the following manner: 1. If the statement shows that the Reinsurer's Obligations exceed the balance of credit as of the statement date, the Reinsurer shall, within thirty (30) days after receipt of notice of such excess, secure delivery to the Company of an amendment to the Letter of Credit increasing the amount of credit by the amount of such difference. 2. If, however, the statement shows that the Reinsurer's Obligations are less than the balance of credit as of the statement date, the Company shall, within thirty (30) days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit reducing the amount of credit available by the amount of such excess credit. ARTICLE XXIV - INSOLVENCY A. In the event of the insolvency of one or more of the reinsured companies, this reinsurance shall be payable directly to the company or to its liquidator, receiver, conservator or statutory successor on the basis of the liability of the company without diminution because of the insolvency of the company or because the liquidator, receiver, conservator or statutory successor of the company has failed to pay all or a portion of any claim. It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the company shall give written notice to the Reinsurer of the pendency of a claim against the company indicating the policy or bond reinsured which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that it may deem available to the company or its liquidator, receiver, conservator or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the Court, against the company as part of the expense of conservation or Page 19 liquidation to the extent of a pro rata share of the benefit which may accrue to the company solely as a result of the defense undertaken by the Reinsurer. B. Where two or more reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this Contract as though such expense had been incurred by the company. C. It is further understood and agreed that, in the event of the insolvency of one or more of the reinsured companies, the reinsurance under this Contract shall be payable directly by the Reinsurer to the company or to its liquidator, receiver or statutory successor, except as provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract specifically provides another payee of such reinsurance in the event of the insolvency of the company or (2) where the Reinsurer with the consent of the direct insured or insureds has assumed such policy obligations of the company as direct obligations of the Reinsurer to the payees under such policies and in substitution for the obligations of the company to such payees. ARTICLE XXV - ARBITRATION (BRMA 6J) A. As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Contract, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration. One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters. In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration. If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by drawing lots. B. Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire. The Arbiters shall consider this Contract as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law. The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties. Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction. C. If more than one reinsurer is involved in the same dispute, all such reinsurers shall constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the reinsurers participating under the terms of this Contract from several to joint. Page 20 D. Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration. In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties. E. Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Contract, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the state in which the Company has its principal office. ARTICLE XXVI - SERVICE OF SUIT (BRMA 49C) (Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not authorized in any State, Territory or District of the United States where authorization is required by insurance regulatory authorities) A. It is agreed that in the event the Reinsurer fails to pay any amount claimed to be due hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of a court of competent jurisdiction within the United States. Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States. B. Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby designates the party named in its Interests and Liabilities Agreement, or if no party is named therein, the Superintendent, Commissioner or Director of Insurance or other officer specified for that purpose in the statute, or his successor or successors in office, as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the Company or any beneficiary hereunder arising out of this Contract. ARTICLE XXVII - ENTIRE AGREEMENT This written Contract constitutes the entire agreement between the parties hereto with respect to the business being reinsured hereunder, and there are no understandings between the parties hereto other than as expressed in this Contract. Any change or modification to this Contract will be made by amendment to this Contract and signed by the parties. ARTICLE XXVIII - GOVERNING LAW (BRMA 71B) This Contract shall be governed by and construed in accordance with the laws of the State of Louisiana. Page 21 ARTICLE XXIX - AGENCY AGREEMENT If more than one reinsured company is named as a party to this Contract, the first named company shall be deemed the agent of the other reinsured companies for purposes of sending or receiving notices required by the terms and conditions of this Contract, and for purposes of remitting or receiving any monies due any party. ARTICLE XXX - INTERMEDIARY (BRMA 23A) Benfield Inc. is hereby recognized as the Intermediary negotiating this Contract for all business hereunder. All communications (including but not limited to notices, statements, premium, return premium, commissions, taxes, losses, loss adjustment expense, salvages and loss settlements) relating thereto shall be transmitted to the Company or the Reinsurer through Benfield Inc. Payments by the Company to the Intermediary shall be deemed to constitute payment to the Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed to constitute payment to the Company only to the extent that such payments are actually received by the Company. IN WITNESS WHEREOF, the Company by its duly authorized representative has executed this Contract as of the date undermentioned at: DeRidder, LA, this 31st day of January in the year 2005. /s/ Allan E. Farr --------------------------------------------------- American Interstate Insurance Company American Interstate Insurance Company of Texas Silver Oak Casualty, Inc. Page 22 NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE (U.S.A.) (Approved by Lloyd's Underwriters' Fire and Non-Marine Association) (1) This reinsurance does not cover any loss or liability accruing to the Reassured as a member of, or subscriber to, any association of insurers or reinsurers formed for the purpose of covering nuclear energy risks or as a direct or indirect reinsurer of any such member, subscriber or association. (2) Without in any way restricting the operation of paragraph (1) of this Clause it is understood and agreed that for all purposes of this reinsurance all the original policies of the Reassured (new, renewal and replacement) of the classes specified in Clause II of this paragraph (2) from the time specified in Clause III in this paragraph (2) shall be deemed to include the following provision (specified as the Limited Exclusion Provision): LIMITED EXCLUSION PROVISION.* I. It is agreed that the policy does not apply under any liability coverage, to (injury, sickness, disease, death or destruction (bodily injury or property damage with respect to which an insured under the policy is also an insured under a nuclear energy liability policy issued by Nuclear Energy Liability Insurance Association, Mutual Atomic Energy Liability Underwriters or Nuclear Insurance Association of Canada, or would be an insured under any such policy but for its termination upon exhaustion of its limit of liability. II. Family Automobile Policies (liability only), Special Automobile Policies (private passenger automobiles, liability only), Farmers Comprehensive Personal Liability Policies (liability only), Comprehensive Personal Liability Policies (liability only) or policies of a similar nature; and the liability portion of combination forms related to the four classes of policies stated above, such as the Comprehensive Dwelling Policy and the applicable types of Homeowners Policies. III. The inception dates and thereafter of all original policies as described in II above, whether new, renewal or replacement, being policies which either (a) become effective on or after 1st May, 1960, or (b) become effective before that date and contain the Limited Exclusion Provision set out above; provided this paragraph (2) shall not be applicable to Family Automobile Policies, Special Automobile Policies, or policies or combination policies of a similar nature, issued by the Reassured on New York risks, until 90 days following approval of the Limited Exclusion Provision by the Governmental Authority having jurisdiction thereof. (3) Except for those classes of policies specified in Clause II of paragraph (2) and without in any way restricting the operation of paragraph (1) of this Clause, it is understood and agreed that for all purposes of this reinsurance the original liability policies of the Reassured (new, renewal and replacement) affording the following coverages: Owners, Landlords and Tenants Liability, Contractual Liability, Elevator Liability, Owners or Contractors (including railroad) Protective Liability, Manufacturers and Contractors Liability, Product Liability, Professional and Malpractice Liability, Storekeepers Liability, Garage Liability, Automobile Liability (including Massachusetts Motor Vehicle or Garage Liability) shall be deemed to include, with respect to such coverages, from the time specified in Clause V of this paragraph (3), the following provision (specified as the Broad Exclusion Provision): BROAD EXCLUSION PROVISION.* It is agreed that the policy does not apply: I. Under any Liability Coverage to (injury, sickness, disease, death or destruction (bodily injury or property damage (a) with respect to which an insured under the policy is also an insured under a nuclear energy liability policy issued by Nuclear Energy Liability Insurance Association, Mutual Atomic Energy Liability Underwriters or Nuclear Insurance Association of Canada, or would be an insured under any such policy but for its termination upon exhaustion of its limit of liability; or (b) resulting from the hazardous properties of nuclear material and with respect to which (1) any person or organization is required to maintain financial protection pursuant to the Atomic Energy Act of 1954, or any law amendatory thereof, or (2) the insured is, or had this policy not been issued would be, entitled to indemnity from the United States of America, or any agency thereof, under any agreement entered into by the United States of America, or any agency thereof, with any person or organization. Page 1 of 2 II. Under any Medical Payments Coverage, or under any Supplementary Payments Provision relating to (immediate medical or surgical relief (first aid, to expenses incurred with respect to (bodily injury, sickness, disease or death (bodily injury resulting from the hazardous properties of nuclear material and arising out of the operation of a nuclear facility by any person or organization. III. Under any Liability Coverage to (injury, sickness, disease, death or destruction (bodily injury or property damage resulting from the hazardous properties of nuclear material, if (a) the nuclear material (1) is at any nuclear facility owned by, or operated by or on behalf of, an insured or (2) has been discharged or dispersed therefrom; (b) the nuclear material is contained in spent fuel or waste at any time possessed, handled, used, processed, stored, transported or disposed of by or on behalf of an insured; or (c) the (injury, sickness, disease, death or destruction (bodily injury or property damage arises out of the furnishing by an insured of services, materials, parts or equipment in connection with the planning, construction, maintenance, operation or use of any nuclear facility, but if such facility is located within the United States of America, its territories, or possessions or Canada, this exclusion (c) applies only to (injury to or destruction of property at such nuclear facility (property damage to such nuclear facility and any property thereat. IV. As used in this endorsement: "hazardous properties" include radioactive, toxic or explosive properties; "nuclear material" means source material, special nuclear material or byproduct material; "source material", "special nuclear material", and "byproduct material" have the meanings given them in the Atomic Energy Act of 1954 or in any law amendatory thereof; "spent fuel" means any fuel element or fuel component, solid or liquid, which has been used or exposed to radiation in a nuclear reactor; "waste" means any waste material (1) containing byproduct material and (2) resulting from the operation by any person or organization of any nuclear facility included within the definition of nuclear facility under paragraph (a) or (b) thereof; "nuclear facility" means (a) any nuclear reactor, (b) any equipment or device designed or used for (1) separating the isotopes of uranium or plutonium, (2) processing or utilizing spent fuel, or (3) handling processing or packaging waste, (c) any equipment or device used for the processing, fabricating or alloying of special nuclear material if at any time the total amount of such material in the custody of the insured at the premises where such equipment or device is located consists of or contains more than 25 grams of plutonium or uranium 233 or any combination thereof, or more than 250 grams of uranium 235, (d) any structure, basin, excavation, premises or place prepared or used for the storage or disposal of waste, and includes the site on which any of the foregoing is located, all operations conducted on such site and all premises used for such operations; "nuclear reactor" means any apparatus designed or used to sustain nuclear fission in a self-supporting chain reaction or to contain a critical mass of fissionable material; (With respect to injury to or destruction of property, the word "injury" or "destruction," ("property damage" includes all forms of radioactive contamination of property, (includes all forms of radioactive contamination of property. V. The inception dates and thereafter of all original policies affording coverages specified in this paragraph (3), whether new, renewal or replacement, being policies which become effective on or after 1st May, 1960, provided this paragraph (3) shall not be applicable to (i) Garage and Automobile Policies issued by the Reassured on New York risks, or (ii) statutory liability insurance required under Chapter 90, General Laws of Massachusetts, until 90 days following approval of the Broad Exclusion Provision by the Governmental Authority having jurisdiction thereof. (4) Without in any way restricting the operation of paragraph (1) of this Clause, it is understood and agreed that paragraphs (2) and (3) above are not applicable to original liability policies of the Reassured in Canada and that with respect to such policies this Clause shall be deemed to include the Nuclear Energy Liability Exclusion Provisions adopted by the Canadian Underwriters' Association or the Independent Insurance Conference of Canada. - ------------- *NOTE. The words printed in italics in the Limited Exclusion Provision and in the Broad Exclusion Provision shall apply only in relation to original liability policies which include a Limited Exclusion Provision or a Broad Exclusion Provision containing those words. 21/9/67 N.M.A. 1590 Page 2 of 2 SECOND CASUALTY EXCESS OF LOSS REINSURANCE CONTRACT EFFECTIVE: JANUARY 1, 2005 issued to American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group

REINSURERS PARTICIPATIONS THROUGH BENFIELD LIMITED Lloyd's Underwriters and Companies 100% Per Signing Schedule(s) TOTAL 100%

INTERESTS AND LIABILITIES AGREEMENT of Certain Underwriting Members of Lloyd's shown in the Signing Schedule attached hereto (hereinafter referred to as the "Subscribing Reinsurer") with respect to the SECOND CASUALTY EXCESS OF LOSS REINSURANCE CONTRACT EFFECTIVE: JANUARY 1, 2005 issued to and duly executed by American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group The Subscribing Reinsurer hereby accepts a 65.0% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above. This Agreement shall become effective at 12:01 a.m., Local Standard Time, January 1, 2005, and shall continue in force until terminated in accordance with the provisions of the attached Contract. The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers. In any action, suit or proceeding to enforce the Subscribing Reinsurer's obligations under the attached Contract, service of process may be made upon Mendes & Mount, 750 Seventh Avenue, New York, New York 10019. Signed for and on behalf of the Subscribing Reinsurer in the Signing Schedule attached hereto. INTERESTS AND LIABILITIES AGREEMENT of Certain Insurance Companies shown in the Signing Schedule(s) attached hereto (hereinafter referred to as the "Subscribing Reinsurer") with respect to the SECOND CASUALTY EXCESS OF LOSS REINSURANCE CONTRACT EFFECTIVE: JANUARY 1, 2005 issued to and duly executed by American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group The Subscribing Reinsurer hereby accepts a 35.0% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above. This Agreement shall become effective at 12:01 a.m., Local Standard Time, January 1, 2005, and shall continue in force until terminated in accordance with the provisions of the attached Contract. The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers. In any action, suit or proceeding to enforce the Subscribing Reinsurer's obligations under the attached Contract, service of process may be made upon Mendes & Mount, 750 Seventh Avenue, New York, New York 10019. Signed for and on behalf of the Subscribing Reinsurer in the Signing Schedule(s) attached hereto. EX-10.14 18 d27260exv10w14.txt WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS REINSURANCE CONSTRACT Exhibit 10.14 WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT EFFECTIVE: JANUARY 1, 2005 issued to American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group TABLE OF CONTENTS

ARTICLE PAGE I Classes of Business Reinsured 1 II Commencement and Termination 1 III Territory (BRMA 51A) 3 IV Exclusions 3 V Special Acceptances 7 VI Retention and Limit 7 VII Reinstatement 8 VIII Definitions 9 IX Annuities at Company's Option 11 X Claims 12 XI Sunset 12 XII Special Commutation 12 XIII Salvage and Subrogation 14 XIV Federal Terrorism Coverage 14 XV Reinsurance Premium 15 XVI Late Payments 15 XVII Offset (BRMA 36A) 17 XVIII Access to Records (BRMA 1D) 17 XIX Liability of the Reinsurer 17 XX Net Retained Lines (BRMA 32E) 17 XXI Errors and Omissions 18 XXII Taxes (BRMA 50B) 18 XXIII Reserves and Letters of Credit 18 XXIV Insolvency 20 XXV Arbitration (BRMA 6J) 20 XXVI Service of Suit (BRMA 49C) 21 XXVII Entire Agreement 22 XXVIII Governing Law (BRMA 71B) 22 XXIX Agency Agreement 22 XXX Intermediary 22 Schedule A

WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT EFFECTIVE: JANUARY 1, 2005 issued to American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group (hereinafter referred to collectively as the "Company") by The Subscribing Reinsurer(s) Executing the Interests and Liabilities Agreement(s) Attached Hereto (hereinafter referred to as the "Reinsurer") ARTICLE I - CLASSES OF BUSINESS REINSURED By this Contract the Reinsurer agrees to reinsure the excess liability which may accrue to the Company under its policies, contracts and binders of insurance or reinsurance (hereinafter called "policies") in force at the effective date hereof or issued or renewed on or after that date, and classified by the Company as Workers' Compensation, Employers Liability, including coverage provided under the U.S. Longshore and Harbor Workers' Compensation Act and the Jones Act, and General Liability business, subject to the terms, conditions and limitations set forth herein and in Schedule A attached to and forming part of this Contract. ARTICLE II - COMMENCEMENT AND TERMINATION A. This Contract shall become effective at 12:01 a.m., Local Standard Time, January 1, 2005, with respect to losses arising out of occurrences commencing at or after that time and date, and shall continue in force thereafter until terminated. B. Either party may terminate this Contract on any December 31 by giving the other party not less than 90 days prior notice by certified or registered mail. Page 1 C. Notwithstanding the provisions of paragraph B above, the Company may terminate a Subscribing Reinsurer's percentage share in this Contract by giving 90 days prior written notice to the Subscribing Reinsurer in the event any of the following circumstances occur, or as clarified by public announcement as respects subparagraphs 1 through 7 below or upon discovery as respects subparagraph 8 below, effective retroactively to the start of the calendar quarter preceding such circumstance: 1. The Subscribing Reinsurer's policyholders' surplus at the beginning of any contract year has been reduced by more than 20.0% of the amount of surplus 12 months prior to that date; or 2. The Subscribing Reinsurer's policyholders' surplus at any time during any contract year has been reduced by more than 20.0% of the amount of surplus at the date of the Subscribing Reinsurer's most recent financial statement filed with regulatory authorities and available to the public as of the beginning of the contract year; or 3. The Subscribing Reinsurer's A.M. Best's rating has been assigned or downgraded below A- (inclusive of "Not Rated" ratings) and/or Standard & Poor's rating has been assigned or downgraded below BBB+ (inclusive of "Not Rated" ratings); or 4. The Subscribing Reinsurer has become merged with, acquired by or controlled by any other company, corporation or individual(s) not controlling the Subscribing Reinsurer's operations previously; or 5. A State Insurance Department or other legal authority has ordered the Subscribing Reinsurer to cease writing business; or 6. The Subscribing Reinsurer has become insolvent or has been placed into liquidation or receivership (whether voluntary or involuntary) or proceedings have been instituted against the Subscribing Reinsurer for the appointment of a receiver, liquidator, rehabilitator, conservator or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations; or 7. The Subscribing Reinsurer has reinsured its entire liability under this Contract without the Company's prior written consent; or 8. The Subscribing Reinsurer has ceased assuming new and renewal treaty reinsurance business. D. Unless the Company elects that the Reinsurer have no liability for losses arising out of occurrences commencing after the effective date of termination, and so notifies the Reinsurer prior to or as promptly as possible after the effective date of termination, reinsurance hereunder on business in force on the effective date of termination shall remain in full force and effect until expiration, cancellation or next premium anniversary of such business, whichever first occurs, but in no event beyond 12 months plus odd time (not exceeding 18 months in all) following the effective date of termination. Page 2 ARTICLE III - TERRITORY (BRMA 51A) The territorial limits of this Contract shall be identical with those of the Company's policies. ARTICLE IV - EXCLUSIONS A. This Contract does not apply to and specifically excludes the following: 1. Lines of business not identified in Article I. 2. All excess of loss reinsurance assumed by the Company. 3. Reinsurance assumed by the Company under obligatory reinsurance agreements, except: a. Agency reinsurance where the policies involved are to be reunderwritten in accordance with the underwriting standards of the Company and reissued as Company policies at the next anniversary or expiration date; and b. Intercompany reinsurance between any of the reinsured companies under this Contract. 4. Business written by the Company on a co-indemnity basis where the Company is not the controlling carrier. 5. Business written to apply in excess of a deductible of more than $25,000, and business issued to apply specifically in excess over underlying insurance. However, if the Company is required, by any state regulation, to provide a deductible of more than $25,000, this exclusion shall not apply. 6. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause - Liability - Reinsurance (U.S.A.)" attached to and forming part of this Contract. 7. As regards interests which at time of loss or damage are on shore, no liability shall attach hereto in respect of any loss or damage which is occasioned by war, invasion, hostilities, acts of foreign enemies, civil war, rebellion, insurrection, military or usurped power, or martial law or confiscation by order of any government or public authority. This War Exclusion Clause shall not, however, apply to interests which at time of loss or damage are within the territorial limits of the United States of America (comprising the Fifty States of the Union, the District of Columbia, and including bridges between the United States of America and Mexico provided they are under United States ownership), Canada, St. Pierre and Miquelon, provided such interests are insured under policies containing a standard war or hostilities or warlike operations exclusion clause. 8. 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. Page 3 9. All liability of the Company arising by contract, operation of 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, however denominated, established or governed, which provides for any assessment of or payment or assumption by the Company of part or 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. 10. Workers' Compensation where the principal exposures, as defined by the governing class code, include: a. Operation of aircraft but only if the annual estimated policy premium is $250,000 or more; b. Railroad, subway, or street railway operations; c. Operation or navigation of vessels or barges; d. Manufacture, production, or refining of gas, natural or artificial fuel, or other liquefied petroleum fuel, but only if the annual estimated policy premium is $250,000 or more; e. Manufacturing, assembly, packing, or processing of fireworks, fuses, nitroglycerine, magnesium, pyroxylin, ammunition, or explosives. This exclusion does not apply to the assembly, packing, or processing of explosives when the estimated annual premium is under $250,000; f. Wrecking or demolition of structures but only if the annual estimated policy premium is $250,000 or more; g. Underground mining. 11. As respects Workers' Compensation and Employers' Liability only, unless otherwise excluded as set forth above, the reinsurance provided under this Contract shall not apply to any loss, cost or expense arising out of or related to, either directly or indirectly, any "terrorist activity," as defined herein, but this exclusion shall only apply when the activity includes, involves, or is associated with the use of any biological, chemical, radioactive, or nuclear agent, material, device or weapon, or when the predominant business of the policyholder as defined by the governing class code is: a. The operation of: airports and aircraft; flight schools; bridges, dams, tunnels, or locks; department stores; shopping malls; chain retail stores; casinos and casino hotels; cruise lines; railroads; ports/public transit authorities; security services; stadiums; convention/exhibition centers; or theme/amusement parks. b. The manufacture and distribution of: automobiles; chemicals, petrochemicals, pharmaceuticals; utilities (electric, gas, water, and sewer); major Page 4 defense/aerospace products; or, high-tech equipment, but only if the policyholder employs more than 20 personnel at the location of a terrorist activity at the time of its occurrence. c. The management or operation of the following type of structures, but only if greater than 25 stories in height: apartments/condominiums/co-ops; hotels/motels; or office buildings. d. Businesses primarily engaged in the entertainment, media, or transportation industry limited to the following: major media providers (NBC, FOX, ABC, CBS, etc.); television and motion picture studios; Broadway theaters; major internet companies (AOL, Yahoo, etc.); professional sports teams; major telecommunications companies (AT&T, Worldcom/MCI, etc.); national truck rental companies (Ryder, Penske, UHaul, etc.); or major national motor freight common carriers (J.B. Hunt, Red Arrow, etc.). e. Policyholders primarily located in, or predominantly doing business as: hospitals; universities; nuclear facilities; financial institutions; or governmental buildings and national landmarks. "Terrorist activity" shall mean any deliberate, unlawful act that: a. Is declared by any authorized government official to be or to involve terrorism, terrorist activity or acts of terrorism; or b. Includes, involves, or is associated with the use or threatened use of force, violence or harm against any person, tangible or intangible property, the environment, or any natural resources, where the act or threatened act is intended, in whole or in part, to: i. Promote or further any political, ideological, philosophical, racial, ethnic, social or religious cause or objective of the perpetrator or any organization, association or group affiliated with the perpetrator; or ii. Influence, disrupt or interfere with any government related operations, activities or policies; or iii. Intimidate, coerce or frighten the general public or any segment of the general public; or iv. Disrupt or interfere with a national economy or any segment of a national economy; or c. Includes, involves, or is associated with, in whole or in part, any of the following activities, or the threat thereof: i. Hijacking or sabotage of any form of transportation or conveyance, including but not limited to spacecraft, satellite, aircraft, train, vessel, or motor vehicle; Page 5 ii. Hostage taking or kidnapping; iii. The use of any bomb, incendiary device, explosive or firearm; iv. The interference with or disruption of basic public or commercial services and systems, including but not limited to the following services or systems: electricity, natural gas, power, postal, communications, telecommunications, information, public transportation, water, fuel, sewer or waste disposal; v. The injuring or assassination of any elected or appointed government official or any government employee; vi. The seizure, blockage, interference with, disruption of, or damage to any government buildings, institutions, functions, events, tangible or intangible property or other assets; or vii. The seizure, blockage, interference with, disruption of, or damage to tunnels, roads, streets, highways, or other places of public transportation or conveyance. d. Any of the activities listed in subparagraph c, above, shall be considered terrorist activity except where the Company can demonstrate to the Reinsurer that the foregoing activities or threats thereof were motivated solely by personal objectives of the perpetrator that are unrelated, in whole or in part, to any intention to: i. Promote or further any political, ideological, philosophical, racial, ethnic, social or religious cause or objective of the perpetrator or any organization, association or group affiliated with the perpetrator; ii. Influence, disrupt or interfere with any government-related operations, activities or policies; iii. Intimidate, coerce or frighten the general public or any segment of the general public; or iv. Disrupt or interfere with a national economy or any segment of a national economy. 12. As respects General Liability policies, exposures, other than those identified below, as included in the General Liability section of the Company's Commercial Lines Manual: a. Class 97111 - Logging; b. Class 58873 - Sawmill; c. Class 59984 - Woodyard and Drivers; d. Class 95410 - Grading of Land; Page 6 e. Class 45819 - Lumber Yard; f. Class 10073 - Repair Shops and Drivers; g. Class 43822 - Timber Cruiser; h. Class 99793 - Truckman Not Otherwise Classified; i. Class 91591 - Contractors - Subcontracted Work Other Than Construction; j. Class 49452 - Vacant Land. B. Any exclusion set forth in subparagraphs 10 and/or 12 of paragraph A shall be waived automatically when, in the opinion of the Company, the exposure excluded therein is incidental to the principal exposure on the risk in question. C. If the Company is bound, without the knowledge and contrary to the instructions of the Company's supervisory underwriting personnel, on any business falling within the scope of one or more of the exclusions set forth in subparagraphs 10 and/or 12 of paragraph A, the exclusion shall be suspended with respect to such business until the Company has the first opportunity to cancel the policy in compliance with governmental requirements. D. If the Company is required to accept an assigned risk which conflicts with one or more of the exclusions set forth in subparagraph 10 of paragraph A, reinsurance shall apply, but only for the difference between the Company's retention and the minimum limit required by the applicable state statute, and in no event shall the Reinsurer's liability exceed the limit set forth in Article VI. ARTICLE V - SPECIAL ACCEPTANCES From time to time the Company may request a special acceptance of reinsurance falling outside the scope of the provisions set forth herein. As respects each layer of this Contract separately, if each Subscribing Reinsurer whose share in the interests and liabilities of the Reinsurer is 20.0% or greater agrees to a special acceptance, such special acceptance shall be binding on all Subscribing Reinsurers with respect to their respective shares of each such layer. In the event agreement is not achieved, such special acceptance shall be made to a layer or layers of this Contract only with respect to the interests and liabilities of each Subscribing Reinsurer on such layer or layers who agrees to such special acceptance. In the event a reinsurer becomes a party to this Contract subsequent to one or more special acceptances hereunder, the new reinsurer shall automatically accept such special acceptance(s) as being covered hereunder. ARTICLE VI - RETENTION AND LIMIT A. As respects each excess layer of reinsurance coverage provided by this Contract, the Company shall retain and be liable for the first amount of ultimate net loss, shown as "Company's Retention" for that excess layer in Schedule A attached hereto, arising out of Page 7 each occurrence. The Reinsurer shall then be liable, as respects each excess layer, for the amount by which such ultimate net loss exceeds the Company's applicable retention, but the liability of the Reinsurer under each excess layer shall not exceed the amount shown as "Reinsurer's Per Occurrence Limit" for that excess layer in Schedule A attached hereto, as respects any one occurrence. B. The Company's ultimate net loss, for the purpose of this Contract, shall be deemed to be a maximum of $5,000,000 any one life. C. The Company shall be permitted to carry excess of loss and quota share reinsurance, recoveries under which shall inure solely to the benefit of the Company and be entirely disregarded in applying all of the provisions of this Contract. D. The Company shall be permitted to carry excess of loss reinsurance applying to Workers' Compensation risks in the State of Minnesota, recoveries under which shall inure to the benefit of this Contract. Such coverage shall be provided through the Minnesota Workers' Compensation Reinsurance Association. It is understood that the liability of the Reinsurer for Minnesota Workers' Compensation risks is not released. In the event the Company accrues liability that is not provided by any inuring reinsurance, for whatever reason, the Reinsurer agrees to reinsure such excess liability. E. In the event this Contract is terminated on a "runoff" basis, additional reinstatement coverage shall be negotiated on or prior to the effective date of termination. ARTICLE VII - REINSTATEMENT A. In the event all or any portion of the reinsurance under any excess layer of reinsurance coverage provided by this Contract is exhausted by loss, the amount so exhausted shall be reinstated immediately from the time the occurrence commences hereon. For each amount so reinstated the Company agrees to pay additional premium equal to the product of the following: 1. The percentage of the occurrence limit for the excess layer reinstated (based on the loss paid by the Reinsurer under that excess layer); times 2. The earned reinsurance premium for the excess layer reinstated for the contract year (exclusive of reinstatement premium). B. Whenever the Company requests payment by the Reinsurer of any loss under any excess layer hereunder, the Company shall submit a statement to the Reinsurer of reinstatement premium due the Reinsurer for that excess layer. If the earned reinsurance premium for any excess layer for the contract year has not been finally determined as of the date of any such statement, the calculation of reinstatement premium due for that excess layer shall be based on the annual deposit premium for that excess layer and shall be readjusted when the earned reinsurance premium for that excess layer for the contract year has been finally Page 8 determined. Any reinstatement premium shown to be due the Reinsurer for any excess layer as reflected by any such statement (less prior payments, if any, for that excess layer) shall be payable by the Company concurrently with payment by the Reinsurer of the requested loss for that excess layer. Any return reinstatement premium shown to be due the Company shall be remitted by the Reinsurer as promptly as possible after receipt and verification of the Company's statement. C. Notwithstanding anything stated herein, the liability of the Reinsurer under any excess layer of reinsurance coverage provided by this Contract shall not exceed any of the following: 1. The amount, shown as "Reinsurer's Per Occurrence Limit" for that excess layer in Schedule A attached hereto, as respects loss or losses arising out of any one occurrence; or 2. The amount, shown as "Reinsurer's Annual Limit" for that excess layer in Schedule A attached hereto, in all during the contract year. ARTICLE VIII - DEFINITIONS A. "Ultimate net loss" as used herein is defined as the sum or sums (including loss in excess of policy limits, extra contractual obligations and any loss adjustment expense, as hereinafter defined) paid or payable by the Company in settlement of claims and in satisfaction of judgments rendered on account of such claims, after deduction of all salvage, all recoveries and all claims on inuring insurance or reinsurance, whether collectible or not. Nothing herein shall be construed to mean that losses under this Contract are not recoverable until the Company's ultimate net loss has been ascertained. B. "Loss in excess of policy limits" and "extra contractual obligations" as used herein shall be defined as follows: 1. "Loss in excess of policy limits" shall mean 90.0% of any amount paid or payable by the Company in excess of its policy limits, but otherwise within the terms of its policy, such loss in excess of the Company's policy limits having been incurred because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of an action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action. 2. "Extra contractual obligations" shall mean 90.0% of any punitive, exemplary, compensatory or consequential damages paid or payable by the Company, not covered by any other provision of this Contract and which arise from the handling of any claim on business subject to this Contract, such liabilities arising because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of any action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action. An extra contractual obligation shall be deemed, in all Page 9 circumstances, to have occurred on the same date as the loss covered or alleged to be covered under the policy. If any provision of this Article shall be rendered illegal or unenforceable by the laws, regulations or public policy of any state, such provision shall be considered void in such state, but this shall not affect the validity or enforceability of any other provision of this Contract or the enforceability of such provision in any other jurisdiction. Notwithstanding anything stated herein, this Contract shall not apply to any loss in excess of policy limits or any extra contractual obligation incurred by the Company as a result of any fraudulent and/or criminal act by any officer or director of the Company acting individually or collectively or in collusion with any individual or corporation or any other organization or party involved in the presentation, defense or settlement of any claim covered hereunder. C. "Occurrence" as used herein is defined as an accident or occurrence or a series of accidents or occurrences arising out of or caused by one event, except that: 1. As respects General Liability policies where the Company's limit of liability for Products and Completed Operations coverages is determined on the basis of the insured's aggregate losses during a policy period, all such losses proceeding from or traceable to the same causative agency shall, at the Company's option, be deemed to have been caused by one occurrence commencing at the beginning of the policy period, it being understood and agreed that each renewal or annual anniversary date of the policy involved shall be deemed the beginning of a new policy period; 2. Each occupational disease case or cumulative trauma case contracted by an employee of an insured shall be deemed to have been caused by a separate occurrence commencing on: a. The date of disability for which compensation is payable if the case is compensable under the Workers' Compensation Law; b. The date disability due to the disease actually began if the case is not compensable under the Workers' Compensation Law; c. The date of cessation of employment if claim is made after employment has ceased. 3. Notwithstanding the provisions of subparagraph 2 above, as respects losses resulting from occupational disease or cumulative trauma suffered by employees of an insured for which the employer is liable, as a result of a sudden and accidental event not exceeding 72 hours in duration, all such losses shall be considered one occurrence and may be combined with losses classified as other than occupational disease or cumulative trauma which arise out of the same event and the combination of such losses shall be considered as one occurrence within the meaning hereof. Page 10 D. "Occupational disease" or industrial disease is any abnormal condition that fulfills all of the following conditions: 1. It is not traceable to a definite compensable accident occurring during the employee's past or present employment. 2. It has been caused by exposure to a disease producing agent or agents present in the workers' occupational environment. 3. It has resulted in disability or death. E. "Cumulative trauma" is an injury that fulfills all of the following conditions: 1. It is not traceable to a definite compensable accident occurring during the employee's past or present employment. 2. It has occurred from and has been aggravated by a repetitive employment related activity. 3. It has resulted in disability or death. F. "Loss adjustment expense" as used herein shall mean expenses allocable to the investigation, defense and/or settlement of specific claims, including litigation expenses, interest on judgments, declaratory judgment expenses or other legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto, and salaries and expenses of salaried adjusters associated with claims covered under policies of the Company reinsured hereunder but not including office expenses or salaries of the Company's regular employees. G. "Contract year" as used in this Contract shall mean the period from January 1, 2005 to December 31, 2005, both days inclusive, and each respective 12-month period thereafter that this Contract continues in force. However, if this Contract is terminated, the final contract year shall be from the beginning of the then current contract year through the date of termination if this Contract is terminated on a "cutoff" basis, or the end of the runoff period if this Contract is terminated on a "runoff" basis. ARTICLE IX - ANNUITIES AT COMPANY'S OPTION A. Whenever the Company is required, or elects, to purchase an annuity or to negotiate a structured settlement, either in satisfaction of a judgment or in an out-of-court settlement or otherwise, the cost of the annuity or the structured settlement, as the case may be, shall be deemed part of the Company's ultimate net loss. B. The terms "annuity" or "structured settlement" shall be understood to mean any insurance policy, lump sum payment, agreement or device of whatever nature resulting in the payment of a lump sum by the Company in settlement of any or all future liabilities which may attach to it as a result of an occurrence. Page 11 C. In the event the Company purchases an annuity which inures in whole or in part to the benefit of the Reinsurer, it is understood that the liability of the Reinsurer is not released thereby. In the event the Company is required to provide benefits not provided by the annuity for whatever reason, the Reinsurer shall pay its proportional share of any loss. ARTICLE X - CLAIMS A. Whenever a claim is reserved by the Company for an amount greater than 50.0% of its retention hereunder and/or whenever a claim appears likely to result in a claim under this Contract, the Company shall notify the Reinsurer. Further, the Company shall notify the Reinsurer whenever a claim involves a fatality, major limb amputation, spinal cord damage, brain damage, blindness or extensive burns, regardless of liability, if the policy limits or statutory benefits applicable to the claim are greater than the Company's retention hereunder. The Reinsurer shall have the right to participate, at its own expense, in the defense of any claim or suit or proceeding involving this reinsurance. B. All claim settlements made by the Company, provided they are within the terms of this Contract (including but not limited to ex-gratia payments), shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for which it may be liable upon receipt of satisfactory evidence of the amount paid by the Company. ARTICLE XI - SUNSET Ten years after the effective date of termination of this Contract (or after the end of the runoff period, if applicable), the Company shall advise the Reinsurer of any outstanding claims and/or occurrences (each hereinafter referred to as a "claim") arising during any contract year, which have not been finally settled and which may cause a recovery under this Contract. Unless mutually agreed, no liability shall attach hereunder for any claim not reported to the Reinsurer within 90 days following the 10-year period. ARTICLE XII - SPECIAL COMMUTATION A. In the event a Subscribing Reinsurer meets the following conditions, the Company may require a commutation of that portion of any excess loss hereunder represented by any outstanding claim or claims, including any related loss adjustment expense. 1. The Subscribing Reinsurer's A.M. Best's rating has been assigned or downgraded below A- (inclusive of "Not Rated" ratings) and/or Standard & Poor's rating has been assigned or downgraded below BBB+ (inclusive of "Not Rated" ratings); or 2. The Subscribing Reinsurer has ceased assuming new and renewal property and casualty treaty reinsurance business. "Outstanding claim or claims" shall be defined as known or unknown claims, including any billed yet unpaid claims. However, unless otherwise mutually agreed, this paragraph shall not apply unless the outstanding claim or claims is for an amount not less than $5,000. Page 12 B. If the Company elects to require commutation as provided in paragraph A above, the Company shall submit a Statement of Valuation of the outstanding claim or claims as of the last day of the month immediately preceding the month in which the Company elects to require commutation, as determined by the Company. Such Statement of Valuation shall include the elements considered reasonable to establish the excess loss and shall set forth or attach the information relied upon by the Company and the methodology employed to calculate the excess loss. The Subscribing Reinsurer shall then pay the amount requested within 30 calendar days of receipt of such Statement of Valuation, unless the Subscribing Reinsurer needs additional information from the Company to assess the Company's Statement of Valuation or contests such amount. C. If the Subscribing Reinsurer needs additional information from the Company to assess the Company's Statement of Valuation or contests the amount requested, the Subscribing Reinsurer shall so notify the Company within 15 calendar days of receipt of the Company's Statement of Valuation. The Company shall supply any reasonably requested information to the Subscribing Reinsurer within 15 calendar days of receipt of the notification. Within 30 calendar days of the date of the notification or of the receipt of the information, whichever is later, the Subscribing Reinsurer shall provide the Company with its Statement of Valuation of the outstanding claim or claims as of the last day of the month immediately preceding the month in which the Company elects to require commutation, as determined by the Subscribing Reinsurer. Such Statement of Valuation shall include the elements considered reasonable to establish the excess loss and shall set forth or attach the information relied upon by the Subscribing Reinsurer and the methodology employed to calculate the excess loss. D. In the event the Subscribing Reinsurer's Statement of Valuation of the outstanding claim or claims is viewed as unacceptable to the Company, the Company may either abandon the commutation effort, or may seek to settle any difference by using an independent actuary agreed to by the parties. E. If the parties cannot agree on an acceptable independent actuary within 15 calendar days of the date of the Subscribing Reinsurer's Statement of Valuation, then each party shall appoint an actuary as party arbitrators for the limited and sole purpose of selecting an independent actuary. If the actuaries cannot agree on an acceptable independent actuary within 15 calendar days of the date of the Subscribing Reinsurer's Statement of Valuation, the Company shall supply the Subscribing Reinsurer with a list of at least three proposed independent actuaries, and the Subscribing Reinsurer shall select the independent actuary from that list. F. Upon selection of the independent actuary, both parties shall present their respective written submissions to the independent actuary. The independent actuary may, at his or her discretion, request additional information. The independent actuary shall issue his or her decision within 45 calendar days after the written submissions have been filed and any additional information has been provided. G. The decision of the independent actuary shall be final and binding. The expense of the independent actuary shall be equally divided between the two parties. For the purposes of Page 13 this Article, unless mutually agreed otherwise, an "independent actuary" shall be an actuary who satisfies each of the following criteria: 1. Is regularly engaged in the valuation of claims resulting from lines of business subject to this Contract; and 2. Is either a Fellow of the Casualty Actuarial Society or of the American Academy of Actuaries; and 3. Is disinterested and impartial regarding this commutation. H. Notwithstanding paragraph A, B and C above, in the event that the Subscribing Reinsurer no longer meets the conditions set forth in subparagraph 1 or 2 in paragraph A above, this commutation may continue on a mutually agreed basis. I. Payment by the Subscribing Reinsurer of the amount requested in accordance with paragraph B, C or F above, shall release the Subscribing Reinsurer from all further liability for outstanding claim or claims, known or unknown, under this Contract, which shall release the Company from all further liability for payments of salvage or subrogation amounts, known or unknown, to the Subscribing Reinsurer under this Contract. J. In the event of any conflict between this Article and any other Article of this Contract, the terms of this Article shall control. K. This Article shall survive the termination of this Contract. ARTICLE XIII - SALVAGE AND SUBROGATION The Reinsurer shall be credited with salvage (i.e., reimbursement obtained or recovery made by the Company, less the actual cost, excluding salaries of officials and employees of the Company and sums paid to attorneys as retainer, of obtaining such reimbursement or making such recovery) or subrogation on account of claims and settlements involving reinsurance hereunder. Salvage or subrogation thereon shall always be used to reimburse the excess carriers in the reverse order of their priority according to their participation before being used in any way to reimburse the Company for its primary loss. The Company hereby agrees to enforce its rights to salvage or subrogation where it is economically reasonable in the judgment of the Company, relating to any loss, a part of which loss was sustained by the Reinsurer, and to prosecute all claims arising out of such rights. ARTICLE XIV - FEDERAL TERRORISM COVERAGE A. Any loss reimbursement the Company receives from the United States Government under the Terrorism Risk Insurance Act of 2002 (the "Terrorism Act") as a result of occurrences commencing during the contract year shall inure to the benefit of this Contract in the proportion that the Company's insured losses (as defined in the Terrorism Act) in that occurrence under policies reinsured under this Contract bear to the Company's total insured losses in that occurrence. Page 14 B. If a loss reimbursement received by the Company under the Terrorism Act is based on the Company's insured losses in more than one occurrence and the United States Government does not designate the amount allocable to each occurrence, the reimbursement shall be prorated in the proportion that the Company's insured losses in each occurrence bear to the Company's total insured losses arising out of all occurrences to which the recovery applies. ARTICLE XV - REINSURANCE PREMIUM A. As premium for each excess layer of reinsurance coverage provided by this Contract, the Company shall pay the Reinsurer the greater of the following: 1. The amount, shown as "Annual Minimum Premium" for that excess layer in Schedule A attached hereto (or a pro rata portion thereof if the contract year is less than 12 months); or 2. The percentage, shown as "Premium Rate" for that excess layer in Schedule A attached hereto, of the Company's net earned premium for the contract year. B. The Company shall pay the Reinsurer a deposit premium for each excess layer of the amount, shown as "Annual Deposit Premium" for that excess layer in Schedule A attached hereto, in four equal installments of the amount, shown as "Quarterly Deposit Premium" for that excess layer in Schedule A attached hereto, on January 1, April 1, July 1 and October 1 of each contract year (except the runoff contract year, if any). However, if this Contract is terminated, no deposit premium installments shall be due after the effective date of termination. C. Within 60 days after the end of each contract year (or within 60 days after the effective date of termination if this Contract is terminated on a "runoff" basis), the Company shall provide a report to the Reinsurer setting forth the premium due hereunder for each excess layer, computed in accordance with paragraph A, and any additional premium due the Reinsurer or return premium due the Company for each excess layer shall be remitted promptly. D. In the event this Contract is terminated on a "runoff" basis, the deposit premium shall be calculated by multiplying the unearned portion of premium in force at the effective date of termination by the percentage, shown as "Premium Rate" for that excess layer in Schedule A attached hereto, and paid semi-annually. E. "Net earned premium" as used herein is defined as the Company's gross earned premium collected on the classes of business subject to this Contract, less only the earned portion of premiums, if any, ceded by the Company for reinsurance which inures to the benefit of this Contract and less dividends incurred. ARTICLE XVI - LATE PAYMENTS A. The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Contract. Page 15 B. In the event any premium, loss or other payment due either party is not received by the intermediary named in Article XXX (hereinafter referred to as the "Intermediary") by the payment due date, the party to whom payment is due, may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest penalty on the amount past due calculated for each such payment on the last business day of each month as follows: 1. The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times 2. 1/365ths of the sum of 400 basis points plus the six-month United States Treasury Bill rate as quoted in The Wall Street Journal on the first business day of the month for which the calculation is made; times 3. The amount past due, including accrued interest. It is agreed that interest shall accumulate until payment of the original amount due plus interest penalties have been received by the Intermediary. C. The establishment of the due date shall, for purposes of this Article, be determined as follows: 1. As respects the payment of routine deposits and premiums due the Reinsurer, the due date shall be as provided for in the applicable section of this Contract. In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days after the date of transmittal by the Intermediary of the initial billing for each such payment. 2. Any claim or loss payment due the Company hereunder shall be deemed due 45 business days after the proof of loss or demand for payment is transmitted to the Reinsurer. If such loss or claim payment is not received within the 45 days, interest will accrue on the payment or amount overdue in accordance with paragraph B above, from the date the proof of loss or demand for payment was transmitted to the Reinsurer. 3. As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs 1 and 2 of paragraph C above, the due date shall be as provided for in the applicable section of this Contract. In the event a due date is not specifically stated for a given payment, it shall be deemed due 10 business days following transmittal of written notification that the provisions of this Article have been invoked. For purposes of interest calculations only, amounts due hereunder shall be deemed paid upon receipt by the Intermediary. D. Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from contesting the validity of any claim, or from participating in the defense of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any Page 16 arbitration or other proceeding in accordance with the provisions of this Contract. If the debtor party prevails in an arbitration or other proceeding, then any interest penalties due hereunder on the amount in dispute shall be null and void. If the debtor party loses in such proceeding, then the interest penalty on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings. If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article. E. Interest penalties arising out of the application of this Article that are $100 or less from any party shall be waived unless there is a pattern of late payments consisting of three or more items over the course of any 12-month period. ARTICLE XVII - OFFSET (BRMA 36A) The Company and the Reinsurer may offset any balance or amount due from one party to the other under this Contract or any other contract heretofore or hereafter entered into between the Company and the Reinsurer, whether acting as assuming reinsurer or ceding company. This provision shall not be affected by the insolvency of either party to this Contract. ARTICLE XVIII - ACCESS TO RECORDS (BRMA 1D) The Reinsurer or its designated representatives shall have access at any reasonable time to all records of the Company which pertain in any way to this reinsurance. ARTICLE XIX - LIABILITY OF THE REINSURER A. The liability of the Reinsurer shall follow that of the Company in every case and be subject in all respects to all the general and specific stipulations, clauses, waivers and modifications of the Company's policies and any endorsements thereon. B. Nothing herein shall in any manner create any obligations or establish any rights against the Reinsurer in favor of any third party or any persons not parties to this Contract. ARTICLE XX - NET RETAINED LINES (BRMA 32E) A. This Contract applies only to that portion of any policy which the Company retains net for its own account (prior to deduction of any underlying reinsurance specifically permitted in this Contract), and in calculating the amount of any loss hereunder and also in computing the amount or amounts in excess of which this Contract attaches, only loss or losses in respect of that portion of any policy which the Company retains net for its own account shall be included. Page 17 B. The amount of the Reinsurer's liability hereunder in respect of any loss or losses shall not be increased by reason of the inability of the Company to collect from any other reinsurer(s), whether specific or general, any amounts which may have become due from such reinsurer(s), whether such inability arises from the insolvency of such other reinsurer(s) or otherwise. ARTICLE XXI - ERRORS AND OMISSIONS Except as provided in Article XI, inadvertent delays, errors or omissions made in connection with this Contract or any transaction hereunder shall not relieve either party from any liability which would have attached had such delay, error or omission not occurred, provided always that such error or omission is rectified as soon as possible after discovery. ARTICLE XXII - TAXES (BRMA 50B) In consideration of the terms under which this Contract is issued, the Company will not claim a deduction in respect of the premium hereon when making tax returns, other than income or profits tax returns, to any state or territory of the United States of America or the District of Columbia. ARTICLE XXIII - RESERVES AND LETTERS OF CREDIT [Applies only to a reinsurer which does not qualify for full credit with any insurance regulatory authority having jurisdiction over the Company's reserves, which is or becomes rated "B++" or lower by A.M. Best (inclusive of "Not Rated" ratings) and/or Standard & Poor's rating is or becomes "BBB+" or lower (inclusive of "Not Rated" ratings.)] A. As regards policies or bonds issued by the Company coming within the scope of this Contract, the Company agrees that when it shall file with the insurance regulatory authority or set up on its books reserves for losses covered hereunder which it shall be required by law to set up, it will forward to the Reinsurer a statement showing the proportion of such reserves which is applicable to the Reinsurer. The Reinsurer hereby agrees to fund such reserves in respect of known outstanding losses that have been reported to the Reinsurer and allocated loss adjustment expense relating thereto, losses and allocated loss adjustment expense paid by the Company but not recovered from the Reinsurer, plus reserves for losses incurred but not reported, as shown in the statement prepared by the Company (hereinafter referred to as "Reinsurer's Obligations") by funds withheld, cash advances or a Letter of Credit. The Reinsurer shall have the option of determining the method of funding provided it is acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves with regards to unauthorized reinsurers; or, should the Reinsurer be downgraded, the method of funding shall be mutually agreed. B. When funding by a Letter of Credit, the Reinsurer agrees to apply for and secure timely delivery to the Company of a clean, irrevocable and unconditional Letter of Credit issued by a bank meeting the NAIC Securities Valuation Office credit standards for issuers of Letters of Credit and containing provisions acceptable to the insurance regulatory authorities Page 18 having jurisdiction over the Company's reserves in an amount equal to the Reinsurer's proportion of said reserves. Such Letter of Credit shall be issued for a period of not less than one year, and shall contain an "evergreen" clause, which automatically extends the term for one year from its date of expiration or any future expiration date unless thirty (30) days (sixty (60) days where required by insurance regulatory authorities) prior to any expiration date the issuing bank shall notify the Company by certified or registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. C. The Reinsurer and Company agree that the Letters of Credit provided by the Reinsurer pursuant to the provisions of this Contract may be drawn upon at any time, notwithstanding any other provision of this Contract, and be utilized by the Company or any successor, by operation of law, of the Company including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Company for the following purposes, unless otherwise provided for in a separate Trust Agreement: 1. To reimburse the Company for the Reinsurer's Obligations, the payment of which is due under the terms of this Contract and which has not been otherwise paid; 2. To make refund of any sum which is in excess of the actual amount required to pay the Reinsurer's Obligations under this Contract, if so requested by the Reinsurer; 3. To fund an account with the Company for the Reinsurer's Obligations. Such cash deposit shall be held in an interest bearing account separate from the Company's other assets, and interest thereon not in excess of the prime rate shall accrue to the benefit of the Reinsurer; 4. To pay the Reinsurer's share of any other amounts the Company claims are due under this Contract. D. In the event the amount drawn by the Company on any Letter of Credit is in excess of the actual amount required for subparagraphs 1 or 3, or in the case of subparagraph 4, the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn. All of the foregoing shall be applied without diminution because of insolvency on the part of the Company or the Reinsurer. E. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company. F. At annual intervals, or more frequently as agreed but never more frequently than quarterly, the Company shall prepare a specific statement of the Reinsurer's Obligations, for the sole purpose of amending the Letter of Credit, in the following manner: 1. If the statement shows that the Reinsurer's Obligations exceed the balance of credit as of the statement date, the Reinsurer shall, within thirty (30) days after receipt of notice of such excess, secure delivery to the Company of an amendment to the Letter of Credit increasing the amount of credit by the amount of such difference. Page 19 2. If, however, the statement shows that the Reinsurer's Obligations are less than the balance of credit as of the statement date, the Company shall, within thirty (30) days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit reducing the amount of credit available by the amount of such excess credit. ARTICLE XXIV - INSOLVENCY A. In the event of the insolvency of one or more of the reinsured companies, this reinsurance shall be payable directly to the company or to its liquidator, receiver, conservator or statutory successor on the basis of the liability of the company without diminution because of the insolvency of the company or because the liquidator, receiver, conservator or statutory successor of the company has failed to pay all or a portion of any claim. It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the company shall give written notice to the Reinsurer of the pendency of a claim against the company indicating the policy or bond reinsured which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that it may deem available to the company or its liquidator, receiver, conservator or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the Court, against the company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit which may accrue to the company solely as a result of the defense undertaken by the Reinsurer. B. Where two or more reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this Contract as though such expense had been incurred by the company. C. It is further understood and agreed that, in the event of the insolvency of one or more of the reinsured companies, the reinsurance under this Contract shall be payable directly by the Reinsurer to the company or to its liquidator, receiver or statutory successor, except as provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract specifically provides another payee of such reinsurance in the event of the insolvency of the company or (2) where the Reinsurer with the consent of the direct insured or insureds has assumed such policy obligations of the company as direct obligations of the Reinsurer to the payees under such policies and in substitution for the obligations of the company to such payees. ARTICLE XXV - ARBITRATION (BRMA 6J) A. As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Contract, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration. One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall Page 20 be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters. In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration. If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by drawing lots. B. Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire. The Arbiters shall consider this Contract as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law. The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties. Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction. C. If more than one reinsurer is involved in the same dispute, all such reinsurers shall constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the reinsurers participating under the terms of this Contract from several to joint. D. Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration. In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties. E. Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Contract, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the state in which the Company has its principal office. ARTICLE XXVI - SERVICE OF SUIT (BRMA 49C) (Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not authorized in any State, Territory or District of the United States where authorization is required by insurance regulatory authorities) A. It is agreed that in the event the Reinsurer fails to pay any amount claimed to be due hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of a court of competent jurisdiction within the United States. Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States. Page 21 B. Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby designates the party named in its Interests and Liabilities Agreement, or if no party is named therein, the Superintendent, Commissioner or Director of Insurance or other officer specified for that purpose in the statute, or his successor or successors in office, as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the Company or any beneficiary hereunder arising out of this Contract. ARTICLE XXVII - ENTIRE AGREEMENT This written Contract constitutes the entire agreement between the parties hereto with respect to the business being reinsured hereunder, and there are no understandings between the parties hereto other than as expressed in this Contract. Any change or modification to this Contract will be made by amendment to this Contract and signed by the parties. ARTICLE XXVIII - GOVERNING LAW (BRMA 71B) This Contract shall be governed by and construed in accordance with the laws of the State of Louisiana. ARTICLE XXIX - AGENCY AGREEMENT If more than one reinsured company is named as a party to this Contract, the first named company shall be deemed the agent of the other reinsured companies for purposes of sending or receiving notices required by the terms and conditions of this Contract, and for purposes of remitting or receiving any monies due any party. ARTICLE XXX - INTERMEDIARY Benfield Inc. is hereby recognized as the Intermediary negotiating this Contract for all business hereunder. All communications relating thereto (including but not limited to notices, statements, premium, return premium, commissions, taxes, losses, loss adjustment expense, salvages and loss settlements) relating thereto shall be transmitted to the Company or the Reinsurer through Benfield Inc. Payments by the Company to the Intermediary shall be deemed to constitute payment to the Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed to constitute payment to the Company only to the extent that such payments are actually received by the Company. IN WITNESS WHEREOF, the Company by its duly authorized representative has executed this Contract as of the date undermentioned at: DeRidder, LA, this 20th day of April in the year 2005. /s/ Allan E. Farr ------------------------------------------------ American Interstate Insurance Company American Interstate Insurance Company of Texas Silver Oak Casualty, Inc. Page 22 SCHEDULE A WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT EFFECTIVE: JANUARY 1, 2005 issued to American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group

FIRST EXCESS EXCESS SECOND - -------------------------------- ----------- ----------- Company's Retention $10,000,000 $10,000,000 Reinsurer's Per Occurrence Limit $10,000,000 $20,000,000 Reinsurer's Annual Limit $20,000,000 $20,000,000 Annual Minimum Premium $ 648,000 $ 440,000 Premium Rate 0.300% 0.204% Annual Deposit Premium $ 810,000 $ 550,000 Quarterly Deposit Premium $ 202,500 $ 137,500

The figures listed above for each excess layer shall apply to each Subscribing Reinsurer in the percentage share for that excess layer as expressed in its Interests and Liabilities Agreement attached hereto. Schedule A NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE (U.S.A.) (Approved by Lloyd's Underwriters' Fire and Non-Marine Association) (1) This reinsurance does not cover any loss or liability accruing to the Reassured as a member of, or subscriber to, any association of insurers or reinsurers formed for the purpose of covering nuclear energy risks or as a direct or indirect reinsurer of any such member, subscriber or association. (2) Without in any way restricting the operation of paragraph (1) of this Clause it is understood and agreed that for all purposes of this reinsurance all the original policies of the Reassured (new, renewal and replacement) of the classes specified in Clause II of this paragraph (2) from the time specified in Clause III in this paragraph (2) shall be deemed to include the following provision (specified as the Limited Exclusion Provision): LIMITED EXCLUSION PROVISION.* I. It is agreed that the policy does not apply under any liability coverage, to (injury, sickness, disease, death or destruction (bodily injury or property damage with respect to which an insured under the policy is also an insured under a nuclear energy liability policy issued by Nuclear Energy Liability Insurance Association, Mutual Atomic Energy Liability Underwriters or Nuclear Insurance Association of Canada, or would be an insured under any such policy but for its termination upon exhaustion of its limit of liability. II. Family Automobile Policies (liability only), Special Automobile Policies (private passenger automobiles, liability only), Farmers Comprehensive Personal Liability Policies (liability only), Comprehensive Personal Liability Policies (liability only) or policies of a similar nature; and the liability portion of combination forms related to the four classes of policies stated above, such as the Comprehensive Dwelling Policy and the applicable types of Homeowners Policies. III. The inception dates and thereafter of all original policies as described in II above, whether new, renewal or replacement, being policies which either (a) become effective on or after 1st May, 1960, or (b) become effective before that date and contain the Limited Exclusion Provision set out above; provided this paragraph (2) shall not be applicable to Family Automobile Policies, Special Automobile Policies, or policies or combination policies of a similar nature, issued by the Reassured on New York risks, until 90 days following approval of the Limited Exclusion Provision by the Governmental Authority having jurisdiction thereof. (3) Except for those classes of policies specified in Clause II of paragraph (2) and without in any way restricting the operation of paragraph (1) of this Clause, it is understood and agreed that for all purposes of this reinsurance the original liability policies of the Reassured (new, renewal and replacement) affording the following coverages: Owners, Landlords and Tenants Liability, Contractual Liability, Elevator Liability, Owners or Contractors (including railroad) Protective Liability, Manufacturers and Contractors Liability, Product Liability, Professional and Malpractice Liability, Storekeepers Liability, Garage Liability, Automobile Liability (including Massachusetts Motor Vehicle or Garage Liability) shall be deemed to include, with respect to such coverages, from the time specified in Clause V of this paragraph (3), the following provision (specified as the Broad Exclusion Provision): BROAD EXCLUSION PROVISION.* It is agreed that the policy does not apply: I. Under any Liability Coverage to (injury, sickness, disease, death or destruction (bodily injury or property damage (a) with respect to which an insured under the policy is also an insured under a nuclear energy liability policy issued by Nuclear Energy Liability Insurance Association, Mutual Atomic Energy Liability Underwriters or Nuclear Insurance Association of Canada, or would be an insured under any such policy but for its termination upon exhaustion of its limit of liability; or (b) resulting from the hazardous properties of nuclear material and with respect to which (1) any person or organization is required to maintain financial protection pursuant to the Atomic Energy Act of 1954, or any law amendatory thereof, or (2) the insured is, or had this policy not been issued would be, entitled to indemnity from the United States of America, or any agency thereof, under any agreement entered into by the United States of America, or any agency thereof, with any person or organization. Page 1 of 2 II. Under any Medical Payments Coverage, or under any Supplementary Payments Provision relating to (immediate medical or surgical relief (first aid, to expenses incurred with respect to (bodily injury, sickness, disease or death (bodily injury resulting from the hazardous properties of nuclear material and arising out of the operation of a nuclear facility by any person or organization. III. Under any Liability Coverage to (injury, sickness, disease, death or destruction (bodily injury or property damage resulting from the hazardous properties of nuclear material, if (a) the nuclear material (1) is at any nuclear facility owned by, or operated by or on behalf of, an insured or (2) has been discharged or dispersed therefrom; (b) the nuclear material is contained in spent fuel or waste at any time possessed, handled, used, processed, stored, transported or disposed of by or on behalf of an insured; or (c) the (injury, sickness, disease, death or destruction (bodily injury or property damage arises out of the furnishing by an insured of services, materials, parts or equipment in connection with the planning, construction, maintenance, operation or use of any nuclear facility, but if such facility is located within the United States of America, its territories, or possessions or Canada, this exclusion (c) applies only to (injury to or destruction of property at such nuclear facility (property damage to such nuclear facility and any property thereat. IV. As used in this endorsement: "hazardous properties" include radioactive, toxic or explosive properties; "nuclear material" means source material, special nuclear material or byproduct material; "source material", "special nuclear material", and "byproduct material" have the meanings given them in the Atomic Energy Act of 1954 or in any law amendatory thereof; "spent fuel" means any fuel element or fuel component, solid or liquid, which has been used or exposed to radiation in a nuclear reactor; "waste" means any waste material (1) containing byproduct material and (2) resulting from the operation by any person or organization of any nuclear facility included within the definition of nuclear facility under paragraph (a) or (b) thereof; "nuclear facility" means (a) any nuclear reactor, (b) any equipment or device designed or used for (1) separating the isotopes of uranium or plutonium, (2) processing or utilizing spent fuel, or (3) handling processing or packaging waste, (c) any equipment or device used for the processing, fabricating or alloying of special nuclear material if at any time the total amount of such material in the custody of the insured at the premises where such equipment or device is located consists of or contains more than 25 grams of plutonium or uranium 233 or any combination thereof, or more than 250 grams of uranium 235, (d) any structure, basin, excavation, premises or place prepared or used for the storage or disposal of waste, and includes the site on which any of the foregoing is located, all operations conducted on such site and all premises used for such operations; "nuclear reactor" means any apparatus designed or used to sustain nuclear fission in a self-supporting chain reaction or to contain a critical mass of fissionable material; (With respect to injury to or destruction of property, the word "injury" or "destruction," ("property damage" includes all forms of radioactive contamination of property, (includes all forms of radioactive contamination of property. V. The inception dates and thereafter of all original policies affording coverages specified in this paragraph (3), whether new, renewal or replacement, being policies which become effective on or after 1st May, 1960, provided this paragraph (3) shall not be applicable to (i) Garage and Automobile Policies issued by the Reassured on New York risks, or (ii) statutory liability insurance required under Chapter 90, General Laws of Massachusetts, until 90 days following approval of the Broad Exclusion Provision by the Governmental Authority having jurisdiction thereof. (4) Without in any way restricting the operation of paragraph (1) of this Clause, it is understood and agreed that paragraphs (2) and (3) above are not applicable to original liability policies of the Reassured in Canada and that with respect to such policies this Clause shall be deemed to include the Nuclear Energy Liability Exclusion Provisions adopted by the Canadian Underwriters' Association or the Independent Insurance Conference of Canada. - ----------------- *NOTE. The words printed in italics in the Limited Exclusion Provision and in the Broad Exclusion Provision shall apply only in relation to original liability policies which include a Limited Exclusion Provision or a Broad Exclusion Provision containing those words. 21/9/67 N.M.A. 1590 Page 2 of 2 WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT EFFECTIVE: JANUARY 1, 2005 issued to American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group First Workers' Compensation Catastrophe Reinsurance REINSURERS PARTICIPATIONS IOA RE, Inc. (for Catlin Insurance Company Ltd.) 10.0% Platinum Underwriters Reinsurance, Inc. 10.0 THROUGH BENFIELD LIMITED Lloyd's Underwriters and Companies Per Signing Schedule(s) 80.0 TOTAL 100.0% Second Workers' Compensation Catastrophe Reinsurance REINSURERS PARTICIPATIONS Chubb Re, Inc. (for Federal Insurance Company) 20.0% IOA RE, Inc. (for Catlin Insurance Company Ltd.) 10.0 Platinum Underwriters Reinsurance, Inc. 10.0 THROUGH BENFIELD LIMITED Lloyd's Underwriters and Companies Per Signing Schedule(s) 60.0 TOTAL 100.0% INTERESTS AND LIABILITIES AGREEMENT of Federal Insurance Company Indianapolis, Indiana through Chubb Re, Inc. Bernardsville, New Jersey (hereinafter referred to as the "Subscribing Reinsurer") with respect to the WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT EFFECTIVE: JANUARY 1, 2005 issued to and duly executed by American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group The Subscribing Reinsurer hereby accepts the following percentage shares in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above: 0% of the First Workers' Compensation Catastrophe Reinsurance 20.0% of the Second Workers' Compensation Catastrophe Reinsurance This Agreement shall become effective at 12:01 a.m., Local Standard Time, January 1, 2005, and shall continue in force until terminated in accordance with the provisions of the attached Contract. The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers. IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date undermentioned at: Bernardsville, New Jersey, this 1st day of March in the year 2005. /s/ William Pentony --------------------------------------------------------------- Chubb Re, Inc. (for and on behalf of Federal Insurance Company) INTERESTS AND LIABILITIES AGREEMENT of Catlin Insurance Company Ltd. Hamilton, Bermuda by IOA RE, Inc. East Norriton, Pennsylvania (hereinafter referred to as the "Subscribing Reinsurer") with respect to the WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT EFFECTIVE: JANUARY 1, 2005 issued to and duly executed by American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group The Subscribing Reinsurer hereby accepts the following percentage shares in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above: 10.0% of the First Workers' Compensation Catastrophe Reinsurance 10.0% of the Second Workers' Compensation Catastrophe Reinsurance This Agreement shall become effective at 12:01 a.m., Local Standard Time, January 1, 2005, and shall continue in force until terminated in accordance with the provisions of the attached Contract. The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers. IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date undermentioned at: East Norriton, Pennsylvania, this 16th day of February in the year 2005. /s/ William Reichert -------------------------------------------------- IOA RE, Inc. (for and on behalf of Catlin Insurance Company Ltd.) INTERESTS AND LIABILITIES AGREEMENT of Platinum Underwriters Reinsurance, Inc. Baltimore, Maryland (hereinafter referred to as the "Subscribing Reinsurer") with respect to the WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT EFFECTIVE: JANUARY 1, 2005 issued to and duly executed by American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group The Subscribing Reinsurer hereby accepts the following percentage shares in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above: 10.0% of the First Workers' Compensation Catastrophe Reinsurance 10.0% of the Second Workers' Compensation Catastrophe Reinsurance This Agreement shall become effective at 12:01 a.m., Local Standard Time, January 1, 2005, and shall continue in force until terminated in accordance with the provisions of the attached Contract. The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers. IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date undermentioned at: New York, New York, this 11th day of March in the year 2005. /s/ Michael Smiley ------------------------------------------------- Platinum Underwriters Reinsurance, Inc. INTERESTS AND LIABILITIES AGREEMENT of Certain Underwriting Members of Lloyd's shown in the Signing Schedules attached hereto (hereinafter referred to as the "Subscribing Reinsurer") with respect to the WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT EFFECTIVE: JANUARY 1, 2005 issued to and duly executed by American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group The Subscribing Reinsurer hereby accepts the following percentage shares in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above: 60.0% of the First Workers' Compensation Catastrophe Reinsurance 40.0% of the Second Workers' Compensation Catastrophe Reinsurance This Agreement shall become effective at 12:01 a.m., Local Standard Time, January 1, 2005, and shall continue in force until terminated in accordance with the provisions of the attached Contract. The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers. In any action, suit or proceeding to enforce the Subscribing Reinsurer's obligations under the attached Contract, service of process may be made upon Mendes & Mount, 750 Seventh Avenue, New York, New York 10019. Signed for and on behalf of the Subscribing Reinsurer in the Signing Schedules attached hereto. INTERESTS AND LIABILITIES AGREEMENT of Certain Insurance Companies shown in the Signing Schedule(s) attached hereto (hereinafter referred to as the "Subscribing Reinsurer") with respect to the WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT EFFECTIVE: JANUARY 1, 2005 issued to and duly executed by American Interstate Insurance Company DeRidder, Louisiana American Interstate Insurance Company of Texas Austin, Texas Silver Oak Casualty, Inc. DeRidder, Louisiana and any other insurance companies which are now or hereafter come under the ownership, control or management of Amerisafe Insurance Group The Subscribing Reinsurer hereby accepts the following percentage shares in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above: 20.0% of the First Workers' Compensation Catastrophe Reinsurance 20.0% of the Second Workers' Compensation Catastrophe Reinsurance This Agreement shall become effective at 12:01 a.m., Local Standard Time, January 1, 2005, and shall continue in force until terminated in accordance with the provisions of the attached Contract. The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers. In any action, suit or proceeding to enforce the Subscribing Reinsurer's obligations under the attached Contract, service of process may be made upon Mendes & Mount, 750 Seventh Avenue, New York, New York 10019. Signed for and on behalf of the Subscribing Reinsurer in the Signing Schedule(s) attached hereto. EX-10.15 19 d27260exv10w15.txt COMMUTATION AND RELEASE AGREEMENT Exhibit 10.15 COMMUTATION AND RELEASE AGREEMENT As of the Effective Date, this Commutation and Release Agreement (this "Commutation Agreement") is made and entered into by and between AMERISAFE, Inc., (also known as Amerisafe Insurance Group of DeRidder, Louisiana) on behalf of itself and all of its Affiliated (as defined herein) and/or subsidiary companies, including, but not limited to, American Interstate Insurance Company and Silver Oak Casualty, Inc., and Converium Reinsurance (North America) Inc. (formerly known as Zurich Reinsurance (North America), Inc.) of Stamford, Connecticut. WHEREAS, Company (as defined herein) and Reinsurer (as defined herein) have entered into the Reinsurance Agreements (as defined herein) pursuant to which Company ceded to Reinsurer, and Reinsurer assumed from Company, certain liabilities arising out of policies of insurance written by Company; and WHEREAS, Company and Reinsurer wish to terminate and extinguish the Reinsurance Agreements and to fully and finally settle, resolve and commute, by means of the payment described herein, all their rights, privileges, duties, liabilities and obligations under the Reinsurance Agreements; and WHEREAS, Company and Reinsurer understand and acknowledge that Reinsurer's liabilities and obligations to Company under the Reinsurance Agreements include paid and outstanding losses and loss adjustment expenses, as well as losses incurred but not reported, and therefore can be estimated but cannot presently be determined in an amount certain; and WHEREAS, Company and Reinsurer intend by this Commutation Agreement to fully and forever release and discharge each other from their respective existing and future liabilities and obligations, including contingent and uncertain liabilities, under the Reinsurance Agreements; and WHEREAS, Company and Reinsurer agree that it is in each of their best interests to freely and voluntarily enter into this Commutation Agreement and to compromise, resolve and settle all amounts due, or which may become due, between each other. NOW, THEREFORE, and in consideration of the premises and mutual covenants and conditions set forth herein and the payment to be made hereunder, and intending to be legally bound, Company and Reinsurer agree as follows: ARTICLE I - DEFINITIONS A. "Affiliate" or "Affiliated" means that the person in question is an "affiliate" of, or a person "affiliated" with a specified person, if the person in question is a person that directly, or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified person. B. "Company" means AMERISAFE, Inc., (also known as Amerisafe Insurance Group of DeRidder, Louisiana) and its predecessors, successors and assigns, and all Affiliated and/or subsidiary insurers that are presently, or were at one time, parties to any Reinsurance Agreement, including, but not limited to, the following persons: American Interstate Insurance Company and Silver Oak Casualty, Inc. C. "Closing Date" is July 27, 2005 D. "Effective Date" is June 30, 2005. E. "Reinsurer" is Converium Reinsurance (North America) Inc. (formerly known as Zurich Reinsurance (North America), Inc.) and its predecessors, successors and assigns. F. "Reinsurance Agreements" are: (i) the specific treaty reinsurance agreements, including all amendments, endorsements and addenda thereto, entered into by and between Company and Reinsurer as follows: (CRNA ref. no. WC3080A) First Casualty Excess of Loss Reinsurance Agreement - A20500-221 99-0101 A4, (CRNA ref. no. WC3080B) Second Casualty Excess of Loss Reinsurance Agreement- A20500-222 99-0101 A4, (CRNA ref. no. WC3080C) Third Casualty Excess of Loss Reinsurance Agreement - A20500-223 99-01-01 A4; and (ii) also any and all other insurance or reinsurance agreements that are not identified specifically in this paragraph (F) and that are agreements pursuant to which Reinsurer assumes or has assumed from Company liabilities or obligations arising out of insurance written and/or reinsurance assumed by Company with the exception of the following treaties that are excluded from the scope of this Commutation Agreement and shall remain in full force and effect: (CRNA ref. no. WC3080D) Fourth Casualty Excess of Loss Reinsurance Agreement - A20500-224 99-01-01 A4, (CRNA ref. no. WC3080E) Fifth Casualty Excess of Loss Reinsurance Agreement - A20500-225 99-01-01 A4. ARTICLE II - PAYMENT A. Reinsurer shall pay to Company the sum of USD $61,296,796.68 (the "Commutation Amount"). B. Reinsurer shall remit payment of 81% of the Commutation Amount via direct wire transfer, in immediately available funds, to the account designated by Company in Exhibit A (that is attached hereto and incorporated herein by reference) within two (2) business days of the Closing Date. Reinsurer shall remit payment of the remaining 19% of the Commutation Amount via direct wire transfer, in immediately available funds, to the account designated by Company in Exhibit A within eight (8) business days of the Closing Date. ARTICLE III - RELEASE As of the Effective Date, the Reinsurance Agreements shall be terminated and commuted in full and the parties agree as follows: 2 A. In consideration for Reinsurer's payment of the Commutation Amount, Company, on behalf of itself, its Affiliates, and its successors and assigns, hereby fully and unconditionally releases and forever discharges Reinsurer and its Affiliates, its successors and assigns, and their officers, directors, shareholders, employees, representatives and attorneys and their heirs, executors and assigns from any and all liabilities and obligations arising out of, in respect of, or relating to the Reinsurance Agreements, including, but not limited to, any and all premiums, losses, claims, liabilities, damages, judgments, debts, duties, sums of money, covenants, errors, omissions, counter-claims, suits, accounts, contributions, indemnifications, promises, interest credit, ultimate net loss amounts, return premium amounts, funds withheld account balance amounts (whether such balance amounts are positive or negative as of the Effective Date), experience refund amounts, dividends, expenses, costs, offsets, attorney's fees, and all other causes of action and demands whatsoever, whether in law, in equity, or otherwise, whether known or unknown, vested or contingent, liquidated or unliquidated, matured or unmatured, reported or unreported, disputed or undisputed, quantified or not quantified and whether currently existing or arising in the future. Company acknowledges that its receipt of the Commutation Amount effects a complete discharge, release, accord, satisfaction, settlement and commutation of all of the past, present and future liabilities and obligations of Reinsurer arising out of, in respect of, or relating to the Reinsurance Agreements. B. Effective simultaneously with Company's release of Reinsurer as provided in Paragraph A herein, Reinsurer on behalf of itself, its Affiliates, and its successors and assigns, hereby fully and unconditionally releases and forever discharges Company and its Affiliates, its successors and assigns, and their officers, directors, shareholders, employees, representatives and attorneys and their heirs, executors and assigns from any and all liabilities and obligations arising out of, in respect of, or relating to the Reinsurance Agreements, including, but not limited to, any and all premiums, losses, claims, liabilities, damages, judgments, debts, duties, sums of money, covenants, errors, omissions, counter-claims, suits, accounts, contributions, indemnifications, promises, interest credit, ultimate net loss amounts, return premium amounts, funds withheld account balance amounts (whether such balance amounts are positive or negative as of the Effective Date), experience refund amounts, dividends, expenses, costs, offsets, attorney's fees, and all other causes of action and demands whatsoever, whether in law, in equity, or otherwise, whether known or unknown, vested or contingent, liquidated or unliquidated, matured or unmatured, reported or unreported, disputed or undisputed, quantified or not quantified and whether currently existing or arising in the future, it being the intention of the parties that this Commutation Agreement operates as a full and final settlement of any and all of the parties' respective obligations and liabilities related to the Reinsurance Agreements. C. Nothing in this Commutation Agreement shall be construed as releasing any claims that Company or Reinsurer may have against any person that is not a person (or category or subset of persons) that is included within the scope of the general release language set forth in Paragraph A and Paragraph B herein, 3 including but not limited to, any claims or potential claims that Reinsurer may have against its retrocessionaires that arise out of or are related to one or more of the Reinsurance Agreements. This Commutation Agreement shall not confer any rights or benefits upon any third party, except as may be expressly provided herein. D. Company and Reinsurer expressly assume the risk that acts, omissions, matters, causes or things may have occurred which are not known or are not expected to exist by either of them. To the fullest extent permitted by law, Company and Reinsurer hereby waive, and shall not seek the protection of the terms and provisions of any statute, rule or doctrine of common law which: (i) narrowly construes releases that purport by their terms to release claims based upon, relating to or arising out of such acts, omissions, matters, causes or things referred to above in this Paragraph D, or (ii) restricts or prohibits the release of such claims. ARTICLE IV - NON-RELIANCE A. This Commutation Agreement fully and finally resolves the rights, duties and obligations of Company and Reinsurer under the Reinsurance Agreements, and neither party shall: (i) have any remedy in respect of any representation, warranty or undertaking of the other that is not specifically set forth in this Commutation Agreement, whether or not relied upon by the other party, or (ii) seek to reopen or set aside this Commutation Agreement or any of the Reinsurance Agreements on any basis whatsoever, including, without limitation, that this Commutation Agreement or any of the Reinsurance Agreements is void or voidable due to a mistake or change in law or mistake of fact in any way related to this Commutation Agreement or any of the Reinsurance Agreements. B. Each of Company and Reinsurer has entered voluntarily into this Commutation Agreement based upon its own independent assessment of the relevant facts and its rights and obligations under the Reinsurance Agreements and not based upon any representations that were made or disclosures that were not made by the other party, its Affiliates, officers, directors, shareholders, employees, representatives, agents, attorneys or their respective heirs, administrators, predecessors, successors and assigns. Company and Reinsurer acknowledge that each has had a full and fair opportunity to consult with, and seek the advice and recommendations of, its counsel prior to its execution of this Commutation Agreement. 4 ARTICLE V - OTHER A. Each of Company and Reinsurer represents and warrants to the other that: (i) it is authorized to enter into this Commutation Agreement; (ii) the persons executing this Commutation Agreement on behalf of the party have the necessary and appropriate authority to do so and that this Commutation Agreement has been duly and validly executed by such party; (iii) this Commutation Agreement constitutes the valid and binding obligation of such party and is enforceable according to its terms; (iv) there are no pending or existing agreements, transactions, or negotiations to which either party is a party that would render this Commutation Agreement, or any part thereof, void, voidable or unenforceable; (v) it has obtained all authorizations, consents or approvals of any governmental or regulatory entity required to make this Commutation Agreement valid and binding; and (vi) no claim or loss being released by this Commutation Agreement has been assigned, transferred or sold to any other person or entity. B. Company represents and warrants to Reinsurer the following: (i) all Affiliated insurers that are presently, or were at one time, parties to any Reinsurance Agreement are listed specifically in the definition of "Company" in this Commutation Agreement; and (ii) there are no insurers that were formerly Affiliated with Company and that are presently, or were at one time, parties to any Reinsurance Agreement that are now controlled by a person that is not Affiliated with Company. C. This Commutation Agreement may not be modified except by written amendment executed by both Company and Reinsurer. D. This Commutation Agreement, and the rights, duties and obligations set forth herein, shall inure to the benefit of, and be binding upon, Company's and Reinsurer's officers, directors, employees, affiliates, stockholders, predecessors, successors, assigns and, to the extent permitted by law, liquidators, rehabilitators, receivers and other statutory successors. E. Company and Reinsurer each intend and agree that the existence of this Commutation Agreement, and the terms hereof, shall remain strictly confidential. Neither Company nor Reinsurer (including their respective attorneys, agents, representatives and/or Affiliates) shall disclose or disseminate in any way the facts or terms related to this Commutation Agreement, except as may be 5 necessary or appropriate to parent companies and/or Affiliates, retrocessionaires, auditors, reinsurance intermediaries, rating agencies, governmental or regulatory authorities, in filings with the Securities and Exchange Commission, or as may be required by legal or regulatory process or for any purpose relating to or arising from such filings. F. This Commutation Agreement may be executed and delivered in multiple counterparts, each of which, when so executed and delivered, shall constitute an original, and all of which taken together shall constitute one instrument. This Commutation Agreement may be executed and transmitted by facsimile provided that an original executed copy shall be exchanged promptly and be substituted for copies executed and transmitted by facsimile. G. This Commutation Agreement shall be construed and governed by the laws of the State of Louisiana, without regard for the State of Louisiana's conflicts of law provision, and any action brought to enforce the terms of this Commutation Agreement shall be brought solely in the State or Federal Courts for the State of Louisiana. In any such action, the Parties consent to the jurisdiction of the State or Federal Courts for the State of Louisiana and waive any right to argue that the State or Federal Courts for the State of Louisiana are an inappropriate or inconvenient forum. H. The parties, as between and among themselves, understand that they may have sustained damages or incurred obligations that may not yet be manifest and that are presently unknown, but nevertheless, the parties deliberately intend and do hereby fully release one another as provided in this Commutation Agreement. Furthermore, the parties expressly accept and assume the risk that the factual or legal assumptions made by either party in connection with this Commutation Agreement may be found hereafter to be different from the true facts or law, and the parties agree that this Commutation Agreement (including the release of claims contemplated thereby) shall be and remain in full force and effect notwithstanding such differences in facts or law. I. The parties specifically agree and acknowledge that Reinsurer's payment of the value of the Commutation Amount is being paid in good faith and constitutes fair consideration for the discharge of amounts allegedly owing now or potentially owing in the future by either party in respect of the Reinsurance Agreements. J. Each party has had the opportunity to negotiate the terms and modify the draftsmanship of this Commutation Agreement. Therefore, the terms of this Commutation Agreement shall be considered and interpreted without any presumption, inference or rule requiring construction or interpretation of any provision of this Commutation Agreement against the interest of the drafter of the Commutation Agreement. K. The failure of the parties to enforce any provision of this Commutation Agreement shall not be construed as a waiver of such provision or any other provision of this Commutation Agreement. No waiver of any provision of this 6 Commutation Agreement shall be deemed a waiver of any of its other terms, nor shall such waiver constitute a continuing waiver. L. The Parties agree that in the event payment of the Commutation Amount by Reinsurer, as described in Article II herein, is not received by Company, then this Commutation Agreement shall be considered null and void ab initio. Moreover, if any court of competent jurisdiction issues an order, decision or ruling in accordance with applicable law declaring this Commutation Agreement, any of the provisions contained in Article III(A) or Article III(B) herein, or the payment of the Commutation Amount made under Article II herein to be null, void, illegal, avoided or otherwise unenforceable or rescinded ab initio and such order, decision or ruling becomes final and unappealable with no appeal or stay pending (the "Final Order"), then this Commutation Agreement shall be rescinded immediately and be declared null and void ab initio, each of Reinsurer and Company shall be restored to the position they were in just prior to the execution of this Commutation Agreement and the Reinsurance Agreements shall be in full force and effect as if this Commutation Agreement had never existed. Company shall return the Commutation Amount plus an Investment Credit Amount (as defined herein) within ten (10) business days of the date of such Final Order, subject to deduction and/or offset by Company for amounts that would have become due and owing under the Reinsurance Agreements during the period commencing with the Effective Date and ending with the date of the Final Order. In the event that Company wrongfully fails to return the Commutation Amount plus the Investment Credit Amount within ten (10) business days of such Final Order (subject to deduction and/or offset by Company for amounts that Reinsurer would have paid to Company under the Reinsurance Agreements had this Commutation Agreement not been in effect) and Reinsurer institutes legal proceedings against Company to enforce its rights under this Commutation Agreement, Company shall pay all of Reinsurer's reasonable and necessary expenses and costs, including, but not limited to, Reinsurer's reasonable attorneys' fees, associated with such legal proceedings. The "Investment Credit Amount" shall be defined as the sum of all Quarterly Investment Credits (as defined herein) for each calendar quarter from the date that the Commutation Amount was paid by Reinsurer to the date that Reinsurer receives payment in full pursuant to this paragraph L. The "Quarterly Investment Credit" shall be calculated quarterly, commencing with the calendar quarter following the date that the Commutation Amount was paid by Reinsurer, by applying the coupon rate on a 10-Year U.S. Treasury Bond as of the last business day of each calendar quarter, divided by 4, to the Remaining Balance (as defined herein) as of the end of each calendar quarter. If Reinsurer is repaid at other than quarter-end, the final Quarterly Investment Credit will be pro-rated accordingly. The "Remaining Balance" shall be defined as the Commutation Amount less all amounts that would have been paid to Company under the Reinsurance Agreements if this Commutation Agreement had never existed. In the event of a Final Order, Reinsurer expressly reserves all rights it has to challenge any claims billed to it by Company under the Reinsurance Agreements and the parties each reserve all rights to setoff, recoupment, counterclaim and defenses that it may have. Company agrees that neither the foregoing provision nor any other provision in this paragraph is intended to be and shall not be 7 deemed or argued to constitute a waiver by Reinsurer of any and all rights that it may have to audit, question, challenge, or dispute any claims deducted or offset from the Commutation Amount by Company under this paragraph, and Reinsurer expressly reserves all such rights. In the event that any part of this Commutation Agreement (except for any of the provisions contained in Article III(A) or Article III(B) herein or the payment of the Commutation Amount made under Article II) should for any reason become or be found to be null, void, illegal or otherwise unenforceable, it shall be struck out to the extent that it is so null, void, illegal or unenforceable, and the remaining provisions of this Commutation Agreement shall remain in full force and effect. M. This Commutation Agreement constitutes the entire agreement between Company and Reinsurer and supersedes all prior and contemporaneous oral and/or written agreements and understandings between the parties relating to the Reinsurance Agreements. N. Company and Reinsurer absolutely and unconditionally covenant and agree with each other, and their respective successors and assigns, that subsequent to the Closing Date of this Commutation Agreement, neither party will hereafter for any reason whatsoever, demand, claim, file suit or initiate arbitration, mediation, litigation or other legal proceedings against the other in respect of any matters relating to the Reinsurance Agreements, except for a legal proceeding to enforce rights and/or remedies that are provided for expressly pursuant to this Commutation Agreement. 8 IN WITNESS WHEREOF, the parties have executed this Commutation Agreement by their respective duly authorized officers. AMERISAFE, INC. (ALSO KNOWN AS AMERISAFE INSURANCE GROUP) ON BEHALF OF ITSELF AND ALL OF ITS AFFILIATED AND/OR SUBSIDIARY COMPANIES, INCLUDING, BUT NOT LIMITED TO, AMERICAN INTERSTATE INSURANCE COMPANY AND SILVER OAK CASUALTY, INC. By: /s/ C Allen Bradley, Jr. ---------------------------------------------------- Title: President and Chief Executive Officer CONVERIUM REINSURANCE (NORTH AMERICA) INC. (FORMERLY KNOWN AS ZURICH REINSURANCE (NORTH AMERICA), INC.) By: /s/ Raymond Dowling -------------------------------------------------- Raymond Dowling _______________________________________________ Title: Senior Vice President and Chief Reinsurance Officer 9 EX-21.1 20 d27260exv21w1.txt SUBSIDIARIES . . . Exhibit 21.1 SUBSIDIARIES OF AMERISAFE, INC.

NAME JURISDICTION - ---- ------------ American Interstate Insurance Company Louisiana - American Interstate Insurance Company of Texas Texas - Silver Oak Casualty, Inc. Louisiana Amerisafe Risk Services, Inc. Louisiana Amerisafe General Agency, Inc. Louisiana

EX-23.2 21 d27260exv23w2.htm CONSENT OF ERNST & YOUNG LLP

Exhibit 23.2

Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption “Experts” and to the use of our report dated May 8, 2005, except Note 22, as to which the date is July 28, 2005, in the Registration Statement on Form S-1 and related Prospectus of AMERISAFE, Inc. dated August 3, 2005.

/s/ Ernst & Young LLP

New Orleans, Louisiana
August 1, 2005

EX-3.2

                                                                     Exhibit 3.2

================================================================================

                                     BYLAWS

                                       OF

                                 AMERISAFE, INC.

                           AS AMENDED AND RESTATED ON

                              ___________ ___, 2005

================================================================================



                            TABLE OF CONTENTS



                                                                                    PAGE
                                                                                 
                                    ARTICLE I
                                     OFFICES

Section 1.1   Offices...........................................................      1

                                   ARTICLE II
                            MEETINGS OF SHAREHOLDERS

Section 2.1   Time and Place of Meetings........................................      1

Section 2.2   Annual Meetings...................................................      1

Section 2.3   Special Meetings..................................................      1

Section 2.4   Notice of Meetings................................................      1

Section 2.5   Record Date.......................................................      2

Section 2.6   Shareholder List..................................................      2

Section 2.7   Quorum............................................................      2

Section 2.8   Voting............................................................      3

Section 2.9   Method of Voting..................................................      3

Section 2.10  Inspectors of Election............................................      3

Section 2.11  Procedure.........................................................      3

                                   ARTICLE III
                                    DIRECTORS

Section 3.1   Responsibilities..................................................      5

Section 3.2   Number; Election; Qualification; Term.............................      5

Section 3.3   Vacancies; Increases..............................................      5

Section 3.4   Removal...........................................................      6

Section 3.5   Place of Meetings.................................................      6

Section 3.6   Regular Meetings..................................................      6

Section 3.7   Special Meetings..................................................      6

Section 3.8   Purpose of Meetings...............................................      6

Section 3.9   Quorum; Majority Vote.............................................      6

Section 3.10  Procedure.........................................................      6

Section 3.11  Presumption of Assent.............................................      6

Section 3.12  Compensation......................................................      7

Section 3.13  Committees........................................................      7

Section 3.14  Committee Procedures..............................................      7


                                      -i-



                                TABLE OF CONTENTS
                                   Continued)



                                                                                    PAGE
                                                                                 
Section 3.15  Action Without Meeting............................................      7

                                   ARTICLE IV
                                     NOTICES

Section 4.1   Method............................................................      7

Section 4.2   Waiver............................................................      8

                                    ARTICLE V
                                    OFFICERS

Section 5.1   Number............................................................      8

Section 5.2   Term; Vacancies...................................................      8

Section 5.3   Removal...........................................................      8

Section 5.4   Compensation......................................................      9

Section 5.5   Duties............................................................      9

                               ARTICLE VI
                INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 6.1   Indemnification...................................................      9

                                   ARTICLE VII
                        CERTIFICATES REPRESENTING SHARES

Section 7.1   Certificates......................................................      9

Section 7.2   Lost, Stolen or Destroyed Certificates............................     10

Section 7.3   Transfer of Shares................................................     10

Section 7.4   Registered Shareholders...........................................     10

Section 7.5   Regulations.......................................................     10

Section 7.6   Legends...........................................................     10

                              ARTICLE VIII
                           GENERAL PROVISIONS

Section 8.1   Distributions and Share Dividends.................................     11

Section 8.2   Checks............................................................     11

Section 8.3   Fiscal Year.......................................................     11

Section 8.4   Seal..............................................................     11

Section 8.5   Resignation.......................................................     11

Section 8.6   Telephone and Similar Meetings....................................     11

Section 8.7   Amendment of Bylaws...............................................     11


                                      -ii-



                                     BYLAWS
                                       OF
                                 AMERISAFE, INC.

                                   ARTICLE I

                                     OFFICES

      Section 1.1 Offices: The Corporation may have offices at such places,
within or without the State of Texas, as the Board of Directors may from time to
time determine, or as the business of the Corporation may require.

                                   ARTICLE II

                            MEETINGS OF SHAREHOLDERS

      Section 2.1 Time and Place of Meetings: All meetings of the shareholders
shall be held at such time and place, within or without the State of Texas, as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof.

      Section 2.2 Annual Meetings: Annual meetings of shareholders shall be held
on such date and time as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting. At the annual meeting, the
shareholders entitled to vote thereat shall elect a Board of Directors and
transact such other business as may properly be brought before the meeting.

      Section 2.3 Special Meetings: Special meetings of the shareholders may be
called by the Chairman of the Board or the President and shall be called by the
Secretary upon written request, stating the purpose or purposes therefor, by a
majority of the whole Board of Directors or by the holders of at least 25% of
the combined voting power of the then-outstanding securities entitled to vote
generally in the election of directors of the Corporation (the "Voting Shares").
Business conducted at any special meeting shall be confined to the purpose or
purposes described in the notice thereof.

      Section 2.4 Notice of Meetings: Written or printed notice stating the
place, day and hour of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than 10 calendar days (20 calendar days in the case of a meeting to approve a
plan of merger or exchange) nor more than 60 calendar days before the date of
the meeting, by personal delivery, by mail or, with consent of the shareholder,
by electronic transmission, by or at the direction of the officer or person
calling the meeting, to each shareholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail addressed to the shareholder at his, her or its
address as it appears on the share transfer records of the Corporation, with
postage thereon prepaid. If electronically transmitted, such notice shall be
deemed given when transmitted to a facsimile number or electronic mail address
provided by the shareholder for the purpose of receiving notice.

                                       1


      Section 2.5 Record Date: For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive a distribution by the Corporation
(other than a distribution involving a purchase or redemption by the Corporation
of any of its own shares) or a share dividend or in order to make a
determination of shareholders for any other purpose, the Board of Directors may
fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than 60 calendar days, and,
in the case of a meeting of shareholders, not less than 10 calendar days, prior
to the date on which the particular action requiring such determination of
shareholders is to be taken. If no record date is fixed for the determination of
shareholders entitled to notice of or vote at a meeting of shareholders, or
shareholders entitled to receive a distribution by the Corporation (other than a
distribution involving a purchase or redemption by the Corporation of any of its
own shares) or a share dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of Directors declaring
such distribution or share dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this Section 2.5, such determination shall apply to any adjournment
thereof.

      Section 2.6 Shareholder List: The officer or agent having charge of the
share transfer records for shares of the Corporation shall make, at least 10
calendar days before each meeting of shareholders, a complete list of the
shareholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of shares
held by each, which list, for a period of 10 calendar days prior to such
meeting, shall be kept on file at the registered office or principal place of
business of the Corporation and shall be subject to inspection by any
shareholder at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any shareholder during the whole time of the meeting. The
original share transfer records shall be prima facie evidence as to who are the
shareholders entitled to examine such list or transfer records or to vote at any
meeting of shareholders.

      Section 2.7 Quorum: A quorum shall be present at a meeting of shareholders
if the holder or holders of a majority of the combined voting power of the
shares entitled to vote at the meeting are present in person, represented by a
duly authorized representative in the case of a corporation or other legal
entity or represented by proxy, unless otherwise provided in the Articles of
Incorporation. Unless otherwise provided in the Articles of Incorporation, once
a quorum is present at a duly constituted meeting of shareholders, the
shareholders present or represented at the meeting may conduct such business as
may be properly brought before the meeting until it is adjourned, and the
subsequent withdrawal from the meeting of any shareholder present or represented
shall not affect the presence of a quorum at the meeting. Unless otherwise
provided in the Articles of Incorporation, the shareholders entitled to vote and
present or represented at a meeting of shareholders at which a quorum is not
present may adjourn the meeting until such time and to such place as may be
determined by a vote of the holders of a majority of the shares represented at
that meeting. At such adjourned meeting at which a quorum shall be present or
represented, any business may be conducted which might have been conducted at
the meeting as originally notified.

                                       2


      Section 2.8 Voting: With respect to any matter, other than the election of
directors or a matter for which the affirmative vote of the holders of a
specified portion of the shares is required by the Articles of Incorporation or
applicable law, the affirmative vote of the holders of a majority of the
combined voting power of the shares entitled to vote on that matter and
represented at a meeting of shareholders at which a quorum is present shall be
the act of the shareholders. Unless otherwise provided in the Articles of
Incorporation, directors shall be elected by a plurality of the votes cast by
the holders of shares entitled to vote in the election of directors at a meeting
of shareholders at which a quorum is present.

      Section 2.9 Method of Voting: Each outstanding share shall be entitled to
one vote on each matter submitted to a vote at a meeting of shareholders, unless
the Articles of Incorporation provide for more or less than one vote per share
or limit or deny voting rights to the holders of the shares of any class or
series or as otherwise provided by applicable law. A shareholder may vote in
person, by duly authorized representative in the case of a corporation or other
legal entity or by proxy executed in writing by the shareholder or by his, her
or its duly authorized attorney-in-fact. No proxy shall be valid after 11 months
from the date of its execution unless otherwise provided in the proxy. Each
proxy shall be revocable unless the proxy form conspicuously states that the
proxy is irrevocable and the proxy is coupled with an interest. Each proxy shall
be filed with the Secretary of the Corporation prior to the time of the meeting.

      Section 2.10 Inspectors of Election: The chairman of each meeting of
shareholders shall appoint one or more persons to act as inspectors of election.
The inspectors of election shall report to the meeting the number of shares of
each class and series of stock, and of all classes, represented either in person
or by proxy. The inspectors of elections shall oversee the vote of the
shareholders for the election of directors and for any other matters that are
put to a vote of shareholders at the meeting; receive a ballot evidencing votes
cast by the proxy committee of the Board of Directors; judge the qualifications
of shareholders voting; collect, count, and report the results of ballots cast
by any shareholders voting in person; and perform such other duties as may be
required by the chairman of the meeting or the shareholders.

      Section 2.11 Procedure:

      (a) The Chairman of the Board of Directors, or such other officer of the
Corporation designated by the Board of Directors, will call meetings of the
shareholders to order and will act as presiding officer at the meetings. Unless
otherwise determined by the Board of Directors prior to the meeting, the
presiding officer of the meeting of the shareholders will also determine the
order of business and have the authority in his or her sole discretion to
regulate the conduct of any such meeting, including without limitation by
imposing restrictions on the persons (other than shareholders of the Corporation
or their duly appointed proxies) who may attend such shareholders' meeting, by
ascertaining whether any shareholder or his, her or its proxy may be excluded
from any meeting of the shareholders based upon any determination by the
presiding officer, in his or her sole discretion, that any such person has
unduly disrupted or is likely to disrupt the proceedings , and by determining
the circumstances in which any person may make a statement or ask questions at
any meeting of the shareholders.

      (b) At an annual meeting of the shareholders, only such business will be
conducted or considered as is properly brought before the meeting. To be
properly brought before an annual

                                       3


meeting, business must be (i) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors in
accordance with Section 2.4, (ii) otherwise properly brought before the meeting
by the presiding officer or by or at the direction of a majority of the Board of
Directors, or (iii) otherwise properly requested to be brought before the
meeting by a shareholder in accordance with Section 2.11(c).

      (c) For business, including nominations of directors, to be properly
requested by a shareholder for consideration at an annual meeting, the
shareholder must (i) be a shareholder of record of the Corporation at the time
of the giving of the notice for such annual meeting provided for in these
Bylaws, (ii) be entitled to vote at such meeting, and (iii) have given timely
notice in writing to the Secretary. To be timely, a shareholder's notice (except
for a shareholder's notice recommending a director candidate) must be delivered
to or mailed and received at the principal executive offices of the Corporation
not less than 60 nor more than 90 calendar days prior to the annual meeting;
provided, however, that in the event public announcement of the date of the
annual meeting is not made at least 75 calendar days prior to the date of the
annual meeting, notice by the shareholder to be timely must be so received not
later than the close of business on the 10th calendar day following the day on
which public announcement is first made of the date of the annual meeting. A
shareholder's notice recommending a director candidate will be timely if it is
received not less than 60 nor more than 90 calendar days before the anniversary
of the date on which the Corporation first mailed its proxy materials for the
prior year's annual meeting of shareholders. A shareholder's notice to the
Secretary must set forth as to each matter the shareholder proposes to bring
before the annual meeting (i) a description in reasonable detail of the business
desired to be brought before the annual meeting and the reasons for conducting
such business at the annual meeting, (ii) the name and address, as they appear
on the Corporation's books, of the shareholder proposing such business and the
beneficial owner, if any, on whose behalf the proposal is made, (iii) the class
and number of shares of the Corporation that are owned beneficially and of
record by the shareholder proposing such business and by the beneficial owner,
if any, on whose behalf the proposal is made, (iv) any material interest of such
shareholder proposing such business and the beneficial owner, if any, on whose
behalf the proposal is made in such business, and (v) if recommending a director
candidate, all information relating to such person that is required to be
disclosed in solicitations for proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director, if elected. Notwithstanding the foregoing provisions of
this Section 2.11(c), a shareholder must also comply with all applicable
requirements of the Exchange Act, and the rules and regulations thereunder with
respect to the matters set forth in this Section 2.11(c). For purposes of this
Section 2.11(c), "PUBLIC ANNOUNCEMENT" means disclosure in a press release
reported by a national news service or in a document filed by the Corporation
with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d)
of the Exchange Act or furnished to shareholders. Nothing in this Section
2.11(c) will be deemed to affect any rights of shareholders to request inclusion
of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under
the Exchange Act.

      (d) At a special meeting of shareholders, only such business may be
conducted or considered as is properly brought before the meeting. To be
properly brought before a special

                                       4


meeting, business must be specified in the notice of the meeting (or any
supplement thereto) given in accordance with Section 2.4.

      (e) The determination of whether any business sought to be brought before
any annual or special meeting of the shareholders is properly brought before
such meeting in accordance with this Section 2.11 will be made by the presiding
officer of such meeting. If the presiding officer determines that any business
is not properly brought before such meeting, he or she will so declare to the
meeting and any such business will not be conducted or considered.

                                  ARTICLE III

                                   DIRECTORS

      Section 3.1 Responsibilities: The powers of the Corporation shall be
exercised by or under the authority of, and the business and affairs of the
Corporation shall be managed under the direction of, its Board of Directors.

      Section 3.2 Number; Election; Qualification; Term: The number of directors
shall be fixed from time to time by the Board of Directors; provided, however,
that no decrease in the number of directors shall have the effect of shortening
the term of any incumbent director. The directors shall be elected at the annual
meeting of the shareholders, as provided in this Section 3.2, except as
otherwise provided in Section 3.3. The directors shall be classified, with
respect to the time for which they severally hold office, into three classes,
each class to be as nearly equal in number as possible, as determined by the
Board of Directors, one class to hold office initially for a term expiring at
the annual meeting of shareholders to be held in 2006, another class to hold
office initially for a term expiring at the annual meeting of shareholders to be
held in 2007, and another class to hold office initially for a term expiring at
the annual meeting of shareholders to be held in 2008, with members of each
class to hold office until their successors are elected and qualified. At each
annual meeting of the shareholders of the Corporation, the successors to the
class of directors whose term expires at that meeting shall be elected by the
holders of shares entitled to vote in the election of directors to hold office
for a term expiring at the annual meeting of shareholders held in the third year
following the year of their election. Unless removed in accordance with the
Articles of Incorporation or Section 3.4, each director elected shall hold
office for the term for which he or she is elected and until his or her
successor shall have been elected and qualified or until his or her earlier
death, retirement, resignation or removal for cause in accordance with the
provisions of these Bylaws. Directors need not be residents of the State of
Texas or shareholders of the Corporation, but they must have been nominated in
accordance with the procedures set forth in these Bylaws in order to be eligible
for election as directors.

      Section 3.3 Vacancies; Increases: Any vacancy occurring in the Board of
Directors (by death, retirement, resignation, removal or otherwise) may be
filled by election at an annual or special meeting of shareholders called for
that purpose, or by the affirmative vote of a majority of the remaining
directors then in office, though less than a quorum. Each director elected to
fill a vacancy shall be elected for the unexpired term of his or her predecessor
in office. Any directorship to be filled by reason of an increase in the number
of directors may be filled by election at an annual or special meeting of
shareholders called for that purpose or by the Board of Directors for a term of
office continuing only until the next election of one or more directors

                                       5


by the shareholders; provided, however, that the Board of Directors may not fill
more than two such directorships during the period between any two successive
annual meetings of shareholders.

      Section 3.4 Removal: At any meeting of shareholders called expressly for
that purpose, any director may be removed, but only for cause, by the
affirmative vote of the holder or holders of two-thirds of the combined voting
power of the Voting Shares.

      Section 3.5 Place of Meetings: Meetings of the Board of Directors, regular
or special, may be held either within or without the State of Texas.

      Section 3.6 Regular Meetings: Regular meetings of the Board of Directors
may be held at such time and at such place as shall from time to time be
determined by the Board of Directors. Regular meetings of the Board of Directors
may be held without notice.

      Section 3.7 Special Meetings: Special meetings of the Board of Directors
may be called by the Chairman of the Board or by the President of the
Corporation and shall be called by the Secretary on the written request of not
less than a majority of the directors then in office. Notice specifying the time
and place of special meetings shall be given to each director at least one day
before the date of the meeting, either personally or by telephone, mail,
telegram or, with consent of the director, electronic transmission.

      Section 3.8 Purpose of Meetings: Neither the purpose of, nor the business
to be transacted at, any regular or special meeting of the Board of Directors
need be specified in the notice or waiver of notice of such meeting.

      Section 3.9 Quorum; Majority Vote: At all meetings of the Board of
Directors, a majority of the number of the directors fixed in the manner
provided in these Bylaws shall constitute a quorum for the transaction of
business unless a different number is specifically required by the Articles of
Incorporation, these Bylaws or applicable law. The act of a majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors, unless the act of a greater number is required by the
Articles of Incorporation, these Bylaws or applicable law. If a quorum shall not
be present at any meeting of the Board of Directors, the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.

      Section 3.10 Procedure: At meetings of the Board of Directors, business
shall be transacted in such order as the Board of Directors may determine from
time to time. The Chairman of the Board, if such office has been filled, and, if
not or if the Chairman of the Board is absent or otherwise unable to act, a
chairman chosen by the Board of Directors from among the directors present, will
preside over the meetings of the Board. The Secretary of the Corporation shall
act as the secretary of the meetings of the Board of Directors unless the Board
of Directors appoints another person to act as secretary of the meeting. The
Board of Directors shall keep regular minutes of its proceedings which shall be
placed in the minute book of the Corporation.

      Section 3.11 Presumption of Assent: A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be

                                       6


presumed to have assented to the action unless his or her dissent shall be
entered in the minutes of the meeting or unless he or she shall file a written
dissent to such action with the person acting as secretary of the meeting before
the adjournment thereof or shall forward any dissent by certified or registered
mail to the Secretary of the Corporation immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a director who voted in
favor of such action.

      Section 3.12 Compensation: The Board of Directors shall have authority to
fix the compensation, including fees and reimbursement of expenses, paid to
directors for attendance at regular or special meetings of the Board of
Directors, any committee thereof or for any other services to the Corporation;
provided, however, that nothing contained in these Bylaws shall be construed to
preclude any director from serving the Corporation in any other capacity or
receiving compensation therefor.

      Section 3.13 Committees: The Board of Directors, by resolution adopted by
a majority of the full Board of Directors, may designate from among its members
one or more committees, each of which shall be comprised of one or more members,
and may designate one or more of its members as alternate members of any
committee, who may, subject to any limitations imposed by the Board of
Directors, replace absent or disqualified members at any meeting of that
committee. Any such committee, to the extent provided in such resolution or in
the Articles of Incorporation or these Bylaws, shall have and may exercise all
of the authority of the Board of Directors, except as otherwise provided by
applicable law. The designation of such committee and the delegation thereto of
authority shall not operate to relieve the Board of Directors, or any member
thereof, of any responsibility imposed by applicable law. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors.

      Section 3.14 Committee Procedures: Except as may be otherwise provided in
a resolution or resolutions adopted by the Board of Directors, a majority of the
members of a committee shall constitute a quorum and a majority vote of the
members at a meeting at which a quorum is present shall be the act of the
committee. A committee shall keep minutes of its proceedings, and shall report
its proceedings to the Board of Directors when required or when requested by a
director to do so.

      Section 3.15 Action Without Meeting: Unless otherwise restricted by the
Articles of Incorporation or these Bylaws, any action required or permitted to
be taken at a meeting of the Board of Directors or any committee may be taken
without a meeting if a consent in writing, setting forth the action so taken, is
signed by all the members of the Board of Directors or committee, as the case
may be. Such consent shall have the same force and effect as a unanimous vote at
a meeting.

                                   ARTICLE IV

                                     NOTICES

      Section 4.1 Method: Whenever by the Articles of Incorporation, these
Bylaws, applicable law or otherwise, notice is required to be given to a
director or shareholder, and no

                                       7


provision is made as to how the notice shall be given, it shall not be construed
to be personal notice, but any such notice may be given: (a) in writing, (i) by
mail, postage prepaid, addressed to the director or shareholder at the last
address known by the Corporation for such director or shareholder at the address
appearing on the share transfer records of the Corporation, (ii) with consent of
the director or shareholder, by electronic transmission or (iii) by telegram,
(b) by telephone, or (c) by any other method permitted by law. Any notice
required or permitted to be given by mail shall be deemed given at the time when
the same is deposited in the United States mail. If electronically transmitted,
such notice shall be deemed given when transmitted to a facsimile number or
electronic mail address provided by the director or shareholder for the purpose
of receiving notice.

      Section 4.2 Waiver: Whenever by the Articles of Incorporation, these
Bylaws or applicable law, any notice is required to be given to a director or
shareholder, a waiver thereof in writing, signed by the person or persons
entitled to such notice, or in the case of a corporation or other legal entity
by its duly authorized representative, whether before or after the time stated
therein, shall be equivalent to the giving of such notice. Attendance of a
director, committee member or shareholder at a meeting shall constitute a waiver
of notice of such meeting, except where such person attends for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business on the basis that the meeting is not lawfully called or convened.

                                   ARTICLE V

                                    OFFICERS

      Section 5.1 Number: The officers of the Corporation shall consist of a
President and a Secretary, each of whom shall be elected by the Board of
Directors. The Board of Directors may also elect a Chairman of the Board, a
Chief Executive Officer, a Chief Financial Officer, a Treasurer, a General
Counsel, a Controller and one or more Vice Presidents and such other officers as
it deems necessary or appropriate. The Board of Directors may appoint, and may
empower the Chief Executive Officer to appoint, such Assistant Secretaries,
Assistant Treasurers, Assistant Controllers and other officers and agents as the
Board of Directors or the Chief Executive Officer shall deem necessary or
appropriate in the conduct of the affairs of the Corporation with such
designations, titles, seniority, duties and responsibilities as the Board of
Directors or the Chief Executive Officer shall deem advisable. Any two or more
offices may be held by the same person.

      Section 5.2 Term; Vacancies: An officer of the Corporation shall hold
office until his or her successor is elected and qualified, until his or her
death or until he or she shall resign or shall have been removed in accordance
with these Bylaws. Any officer elected by the Board of Directors may be removed
at any time by the Board of Directors. Any vacancy occurring in any office of
the Corporation shall be filled by the Board of Directors.

      Section 5.3 Removal: Any officer elected by the Board of Directors may be
removed by the Board of Directors whenever in its judgment the best interests of
the Corporation will be served thereby. No elected officer shall have any
contractual rights against the Corporation for compensation by virtue of such
election beyond the date of the election of his or her successor,

                                       8


his or her death, his or her resignation or his or her removal, whichever event
shall first occur, except as otherwise provided in an employment contract or
under an employee benefit plan.

      Section 5.4 Compensation: The compensation of all officers and agents of
the Corporation who are also directors of the Corporation shall be fixed by the
Board of Directors or a committee thereof. The compensation of the Chief
Executive Officer shall be fixed by the Board of Directors or a committee
thereof. The compensation of all other officers and agents of the Corporation
shall be fixed by the Board of Directors or a committee thereof, or the Board of
Directors may delegate the power to fix the compensation of any such other
officers and agents of the Corporation to an officer of the Corporation.

      Section 5.5 Duties: The officers of the Corporation shall have such
authority and shall perform such duties as are customarily incident to their
respective offices, or as may be specified from time to time by resolution of
the Board of Directors regardless of whether such authority and duties are
customarily incident to such office.

                                   ARTICLE VI

                    INDEMNIFICATION OF DIRECTORS AND OFFICERS

      Section 6.1 Indemnification: Each person who is or was a director or
officer of the Corporation, or while a director or officer of the Corporation is
or was serving at the request of the Corporation as a director, officer,
partner, venturer, proprietor, trustee, employee, agent or similar functionary
of another corporation, employee benefit plan, other enterprise or other entity
shall be indemnified by the Corporation to the fullest extent that a corporation
is required or permitted to grant indemnification to such person under the Texas
Business Corporation Act and the Texas Miscellaneous Corporation Laws Act, as
the same exist or may hereafter be amended. Reasonable expenses incurred by a
director or officer of the Corporation who was, is or is threatened to be made a
named defendant or respondent in a proceeding shall be paid or reimbursed by the
Corporation, in advance of the final disposition of the proceeding, to the
maximum extent permitted under the Texas Business Corporation Act, as the same
exists or may hereafter be amended. The right to indemnification under this
Article VI shall be a contract right. In the event of the death of any person
having a right of indemnification under this Article VI, such right will inure
to the benefit of his or her heirs, executors, administrators and personal
representatives. The rights under this Article VI will not be exclusive of any
other right which any person may have or hereinafter acquire under any bylaw,
resolution of shareholders or directors, agreement, applicable law or otherwise.

                                  ARTICLE VII

                        CERTIFICATES REPRESENTING SHARES

      Section 7.1 Certificates: Certificates for shares of stock of the
Corporation shall be in such form as shall be approved by the Board of
Directors. The certificates shall be signed by the Chairman of the Board, the
Chief Executive Officer, the President or a Vice President and also by the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer.
Any and all signatures on the certificate may be a facsimile and each such
certificate may be sealed with

                                       9


the seal of the Corporation or a facsimile thereof. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate has ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the Corporation
with the same effect as if he or she were such officer, transfer agent or
registrar at the date of issue. The certificates shall be consecutively numbered
and shall be entered in the books of the Corporation as they are issued and
shall exhibit the holder's name and the number of shares.

      Section 7.2 Lost, Stolen or Destroyed Certificates: The Board of Directors
may direct a new certificate or certificates representing shares of stock be
issued in place of a certificate or certificates representing shares of stock
theretofore issued by the Corporation and alleged to have been lost or destroyed
upon the making of an affidavit of that fact by the person claiming the
certificate or certificates representing shares of stock that was or were lost
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost or destroyed certificate or
certificates, or his or her legal representative, to advertise the same in such
manner as it shall require and/or to give the Corporation a bond with a surety
or sureties satisfactory to the Corporation in such sum as it may direct as
indemnity against any claim or expense resulting from a claim that may be made
against the Corporation with respect to the certificate or certificates alleged
to have been lost or destroyed.

      Section 7.3 Transfer of Shares: Shares of stock of the Corporation shall
be transferable only on the books of the Corporation by the holders thereof in
person or by their duly authorized attorneys or legal representatives. Upon
surrender to the Corporation or the transfer agent of the Corporation of a
certificate representing shares duly endorsed or accompanied by proper evidence
of succession, assignment or authority to transfer, the Corporation or its
transfer agent shall issue a new certificate to the person entitled thereto,
cancel the old certificate and record the transaction upon its books.

      Section 7.4 Registered Shareholders: The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by applicable law.

      Section 7.5 Regulations: The Board of Directors shall have the power and
authority to make all such rules and regulations as it may deem expedient
concerning the issue, transfer and registration or the replacement of
certificates for shares of stock of the Corporation.

      Section 7.6 Legends: The Board of Directors shall have the power and
authority to provide that the certificates representing shares of stock of the
Corporation bear such legends as the Board of Directors deems appropriate to
assure that the Corporation does not become liable for violations of federal or
state securities laws or other applicable law.

                                       10


                                  ARTICLE VIII

                               GENERAL PROVISIONS

      Section 8.1 Distributions and Share Dividends: Subject to any provision of
the Articles of Incorporation or applicable law, distributions (in the form of
cash or property) or share dividends may be declared by the Board of Directors
at any regular or special meeting.

      Section 8.2 Checks: All checks, demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.

      Section 8.3 Fiscal Year: The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors; provided, however, that if such fiscal
year is not fixed by the Board of Directors and the Board of Directors does not
defer determination of the fiscal year, the fiscal year shall be the calendar
year.

      Section 8.4 Seal: The Board of Directors may adopt a corporate seal and
use the same by causing it or a facsimile thereof to be impressed, affixed,
reproduced or otherwise.

      Section 8.5 Resignation: Any director, committee member or officer may
resign by so stating at any meeting of the Board of Directors or by giving
written notice to the Board of Directors, the Chairman of the Board, the Chief
Executive Officer, the President or the Secretary. Such resignation shall take
effect at the time specified therein, or immediately if no time is specified
therein. Unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.

      Section 8.6 Telephone and Similar Meetings: Unless otherwise restricted by
the Articles of Incorporation, members of the Board of Directors or members of
any committee of the Board of Directors may participate in and hold a meeting of
the Board of Directors or committee, as the case may be, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in such a
meeting shall constitute presence in person at the meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the basis that the meeting is not lawfully called
or convened.

      Section 8.7 Amendment of Bylaws: The Board of Directors may amend or
repeal these Bylaws, or adopt new bylaws, unless (a) such power shall be
reserved exclusively to the shareholders in whole or part by the Articles of
Incorporation or by applicable law or, (b) the shareholders in amending
repealing or adopting a particular bylaw shall have expressly provided that the
Board of Directors may not amend or repeal that bylaw. Unless the Articles of
Incorporation or a bylaw adopted by the shareholders shall provide otherwise as
to all or some portion of the Corporation's bylaws, the shareholders may amend,
repeal or adopt (but only by the affirmative vote of the holders of not less
than two-thirds of the combined voting power of the Voting Shares) the
Corporation's bylaws even though the bylaws may also be amended, repealed or
adopted by the Board of Directors.

                                       11

EX-4.1

                                                                     Exhibit 4.1

               AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

                                                                  March 18, 1998

To the several persons named
  at the foot hereof

Dear Sirs:

            This will confirm that in consideration of:

            (a) the purchase by the persons and entities listed in Schedule I to
      the Recapitalization Agreement, dated as of August 11, 1997 (the
      "Recapitalization Agreement") among AMERISAFE, Inc., a Texas corporation
      (the "Company"), and the other parties listed in Schedules I and II
      thereto (such persons and entities being hereinafter collectively called
      the "Cash Investors"), on the date hereof, of (i) an aggregate 15,027,566
      shares (the "Common Shares") of Common Stock, $.01 par value ("Common
      Stock") , of the Company, (ii) an aggregate 950,000 shares of Series A
      Preferred Stock, $.01 par value, of the Company, (iii) stock purchase
      warrants to purchase up to an aggregate 7,057,144 shares of Common Stock
      (the "Series A Warrants") and (iv) stock purchase warrants to purchase up
      to an aggregate 1,556,725 shares of Common Stock (the "Series B
      Warrants"), and as an inducement to the Cash Investors to consummate the
      transactions contemplated by the Recapitalization Agreement;

            (b) the entry by the several persons listed in Schedule II to the
      Recapitalization Agreement (such persons being hereinafter collectively
      called the "Original Stockholders") into (x) the Recapitalization
      Agreement, pursuant to which they will retain an aggregate 4,172,018
      shares of Common Stock, and (y) the Stockholders Agreement, dated as of
      the date hereof (the "Stockholders Agreement"), among the Company, the
      Cash Investors and the Original Stockholders, and as an inducement to them
      to consummate the transactions contemplated by the Recapitalization
      Agreement and the Stockholders Agreement; and

            (c) the purchase by the entities listed in Schedule I to the
      Preferred Stock Subscription Agreement, dated as of February 11, 1998 (the
      "Subscription Agreement") among the Company and the several purchasers
      listed in Schedule I thereto (such purchasers being hereinafter
      collectively called the "Preferred Stockholders") of an aggregate 500,000
      shares (the "Convertible Preferred Shares") of Series C Convertible
      Deferred Pay Preferred Stock, $.01 par value, and Series D Non-Voting
      Convertible Deferred Pay Preferred Stock, $.01 par value (collectively,
      the "Convertible Preferred Stock"), of the Company pursuant to (i) the
      Subscription Agreement and (ii) the Preferred Stock Transfer Agreement,
      dated as of February 11, 1998, among the Preferred Stockholders and the
      Cash Investors, and as an inducement to the Preferred Stockholders to
      consummate the transactions contemplated by the Subscription Agreement;




the Company hereby covenants and agrees with each of you, with each subsequent
holder of Restricted Stock (as such term is defined herein), and with each
holder of Original Stockholders Stock and Series E Preferred Stock (as such
terms are defined herein), as follows:

            1. Certain Definitions. As used herein, the following terms shall
have the following respective meanings:

            "Commission" means the Securities and Exchange Commission, or any
      other federal agency at the time administering the Securities Act.

            "Common Stock" means shares of the Common Stock of the Company, as
      constituted as of the date of this Agreement, subject to adjustment
      pursuant to the provisions of Section 12 hereof.

            "Conversion Shares" means the shares of Common Stock and Non-Voting
      Common Stock issued upon conversion of the Convertible Preferred Stock and
      the shares of Common Stock issued upon conversion of the Non-Voting Common
      Stock.

            "Exchange Act" means the Securities Exchange Act of 1934 or any
      similar federal statute, and the rules and regulations of the Commission
      thereunder, all as the same shall be in effect at the time.

            "Non-Voting Common Stock" means shares of the Convertible Non-Voting
      Common Stock, $.01 par value, of the Company, as constituted as of the
      date of this Agreement, subject to adjustment pursuant to the provisions
      of Section 12 hereof.

            "Original Stockholders Stock" means the shares of Common Stock owned
      by the Original Stockholders on September 2, 1997.

            "Registration Expenses" means the expenses so described in Section
      10 hereof.

            "Restricted Stock" means any securities of the Company, the
      certificates for which are required to bear the legend set forth in
      Section 2 hereof, except that such term shall not include Original
      Stockholders Stock, Series B Warrants, Series B Warrant Shares, the
      Convertible Preferred Shares, Conversion Shares and shares of Series E
      Preferred Stock.

            "Securities Act" means the Securities Act of 1933 or any similar
      federal statute, and the rules and regulations of the Commission
      thereunder, all as the same shall be in effect at the time.

            "Selling Expenses" means the expenses so described in Section 10
      hereof.

            "Series A Warrant Shares" means shares of Common Stock issued upon
      exercise of the Series A Warrants.

            "Series B Warrant Shares" means shares of Common Stock issued upon
      exercise of the Series B Warrants.

                                        2



            "Series E Preferred Stock" means the Series E Preferred Stock, $.01
      par value, of the Company.

            "Warrants" means both the Series A Warrants and the Series B
      Warrants.

            "Warrant Shares" means both the Series A Warrant Shares and the
      Series B Warrant Shares.

            2. Restrictive Legend. Each certificate representing (i) the Common
Shares, the Series A Warrants, the Series B Warrants, the Convertible Preferred
Shares and the Original Stockholders Stock, (ii) the Series A Warrant Shares and
Series B Warrant Shares issuable upon exercise of the Series A Warrants and the
Series B Warrants, respectively, (iii) the Conversion Shares issuable upon
conversion of the Convertible Preferred Stock and the Non-Voting Common Stock,
as the case may be, and (iv) the shares of Series E Preferred Stock issuable
from time to time as dividends upon the Convertible Preferred Stock and other
shares of Series E Preferred Stock, as the case may be, and each certificate
issued upon exchange or transfer of any of the foregoing (other than in a public
sale or as otherwise permitted by the last paragraph of paragraph 3 hereof)
shall be stamped or otherwise imprinted with a legend substantially in the
following form:

      "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
      LAWS. NEITHER THE SECURITIES EVIDENCED HEREBY, NOR ANY INTEREST THEREIN,
      MAY BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS EITHER
      (i) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND LAWS
      RELATING THERETO OR (ii) THE CORPORATION HAS RECEIVED AN OPINION OF
      COUNSEL, REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO THE CORPORATION,
      STATING THAT SUCH REGISTRATION IS NOT REQUIRED."

            3. Notice of Proposed Transfer. Prior to any proposed transfer of
any Restricted Stock, Series B Warrants, Series B Warrant Shares, Original
Stockholders Stock, Convertible Preferred Shares, Conversion Shares or Series E
Preferred Stock, as the case may be, (other than under the circumstances
described in Section 4, 5, 6, 7 or 8 hereof), the holder thereof shall give
written notice to the Company of its intention to effect such transfer. Each
such notice shall describe the manner of the proposed transfer and, if requested
by the Company, shall be accompanied by an opinion of counsel reasonably
satisfactory to the Company (it being agreed that Reboul, MacMurray, Hewitt,
Maynard & Kristol and Testa, Hurwitz & Thibeault, LLP shall be satisfactory) to
the effect that the proposed transfer of the Restricted Stock, Series B
Warrants, Series B Warrant Shares, Original Stockholders Stock, Convertible
Preferred Shares, Conversion Shares or Series E Preferred Stock, as the case may
be, may be effected without registration under the Securities Act, whereupon
such holder shall be entitled to transfer such securities in accordance with the
terms of its notice; provided, however, that no such opinion or other
documentation shall be required if such notice shall cover a distribution by any
Cash Investor that is a partnership to its partners; and provided, further,
however, that no such opinion

                                        3





shall be required if such notice shall cover a transfer to a "Qualified
Institutional Buyer," as defined in Rule 144A under the Securities Act, and the
Company shall have received a written representation (in form reasonably
satisfactory to the Company) from the proposed transferee to such effect. Each
certificate for Restricted Stock, Series B Warrants, Series B Warrant Shares,
Original Stockholders Stock, Convertible Preferred Shares, Conversion Shares or
Series E Preferred Stock, as the case may be, transferred as above provided
shall bear the legend set forth in Section 2, unless (i) such transfer is in
accordance with the provisions of Rule 144 (or any other rule permitting public
sale without registration under the Securities Act) or (ii) the opinion of
counsel referred to above is to the further effect that the transferee and any
subsequent transferee (other than an affiliate of the Company) would be entitled
to transfer such securities in a public sale without registration under the
Securities Act.

            The foregoing restrictions on transferability of Restricted Stock,
Series B Warrants, Series B Warrant Shares, Original Stockholders Stock,
Convertible Preferred Shares, Conversion Shares and Series E Preferred Stock
shall terminate as to any such securities when the same shall have been
effectively registered under the Securities Act and sold or otherwise disposed
of in accordance with the intended method of disposition by the seller or
sellers thereof set forth in the registration statement concerning such shares.
Whenever a holder of Restricted Stock, Series B Warrant Shares, Original
Stockholders Stock, Convertible Preferred Shares, Conversion Shares or Series E
Preferred Stock is able to demonstrate to the reasonable satisfaction of the
Company (and its counsel) that the provisions of Rule 144 (k) of the Securities
Act (or any successor rule) are available to such holder without limitation,
such holder shall be entitled to receive from the Company, without expense, a
new certificate representing such securities that does not bear the restrictive
legend set forth in Section 2.

            4. Restricted Stock Required Registration.

            (a) At any time the holders of Restricted Stock constituting at
least a majority of the total Restricted Stock outstanding at such time
(treating for such purpose the holders of Series A Warrants as the holders of
the Series A Warrant Shares issuable upon exercise thereof) may request the
Company to register under the Securities Act all or any portion of the
Restricted Stock held by such requesting holder or holders for sale in the
manner specified in such notice; provided, however, that with respect to the
Series A Warrants the only securities which the Company shall be required to
register pursuant hereto shall be Series A Warrant Shares.

            (b) Promptly following receipt of any notice under this Section 4,
the Company shall promptly notify any holders of Restricted Stock from whom
notice has not been received and any holders of Series B Warrant Shares
(treating for such purpose the holders of Series B Warrants as the holders of
the Series B Warrant Shares issuable upon exercise thereof), Conversion Shares
(treating for such purpose the holders of Convertible Preferred Shares as the
holders of the Conversion Shares issuable upon conversion thereof) and Original
Stockholders Stock, and shall use its reasonable best efforts to register under
the Securities Act, for public sale in accordance with the method of disposition
specified in such notice from the requesting holders, the number of shares of
Restricted Stock specified in such notice (and, as applicable, in any notices
received from other holders and holders of Series B Warrant Shares, Conversion

                                        4



Shares or Original Stockholders Stock within 20 days after their receipt of such
notice from the Company; it being understood that with respect to the Series B
Warrants and the Conversion Shares the only securities which the Company shall
be required to register pursuant hereto shall be Series B Warrant Shares and
shares of Common Stock, respectively); provided, however, that if the proposed
method of disposition specified by the requesting holders shall be an
underwritten public offering, the number of shares of Restricted Stock, Series B
Warrant Shares, Conversion Shares or Original Stockholders Stock, as the case
may be, to be included in such an offering may be reduced (pro rata among the
requesting holders of Conversion Shares, Restricted Stock, Series B Warrant
Shares and Original Stockholders Stock (except that two shares of either
Restricted Stock, Series B Warrant Shares or shares of Original Stockholders
Stock proposed to be registered shall be "cut back" for every Conversion Share
so cut back) based upon the number of Conversion Shares, shares of Restricted
Stock, Series B Warrant Shares and shares of Original Stockholders Stock so
requested to be registered) if and to the extent that the managing underwriter
shall be of the opinion that such inclusion would adversely affect the marketing
of the Restricted Stock, Series B Warrant Shares, Conversion Shares and Original
Stockholders Stock, as the case may be, to be sold. If such method of
disposition shall be an underwritten public offering, the Company may designate
the managing underwriter of such offering, subject to the approval of the
selling holders of a majority of the Restricted Stock (treating for such purpose
the holders of Series A Warrants as the holders of the Series A Warrant Shares
issuable upon exercise thereof) included in the offering, which approval shall
not be unreasonably withheld. The Company shall be obligated to register
Restricted Stock, Series B Warrant Shares, Conversion Shares and Original
Stockholders Stock pursuant to this Section 4 on two occasions only.
Notwithstanding anything to the contrary contained herein, the obligation of the
Company under this Section 4 shall be deemed satisfied only when a registration
statement covering all shares of Restricted Stock specified in notices received
as aforesaid (or such reduced number of shares as contemplated above), for sale
in accordance with the method of disposition specified by the requesting holder,
shall have become effective and, if such method of disposition is a firm
commitment underwritten public offering, all such shares shall have been sold
pursuant thereto.

            (c) The Company shall be entitled to include in any registration
statement referred to in this Section 4, for sale in accordance with the method
of disposition specified by the requesting holders, shares of Common Stock to be
sold by the Company for its own account, except as and to the extent that, in
the opinion of the managing underwriter (if such method of disposition shall be
an underwritten public offering), such inclusion would adversely affect the
marketing of the Restricted Stock, Series B Warrant Shares, Conversion Shares
and Original Stockholders Stock to be sold. Except as provided in this paragraph
(c), the Company will not effect any other registration of its Common Stock,
whether for its own account or that of other holders, from the date of receipt
of a notice from requesting holders pursuant to this Section 4 until the
completion of the period of distribution of the registration contemplated
thereby (not to exceed 180 days), other than registrations of Common Stock on
Form S-8 (or other applicable forms) issuable pursuant to employee benefit plans
of the Company, or registrations pursuant to which notice was previously
received pursuant to Section 7 hereof.

            (d) Notwithstanding anything to the contrary contained in this
Agreement, the Company will be entitled, once in any one year period, to
postpone the filing period (or suspend the effectiveness) of any registration of
the Restricted Stock, Series B Warrant Shares, Conversion Shares or Original
Stockholders Stock, as the case may be, pursuant to this Section 4 for a
reasonable period of time not in excess of 90 calendar days, if the Board of
Directors of the Company (the "Board") determines, in its reasonable business
judgment, that such registration

                                        5



and offering could materially interfere with bona fide financing plans of the
Company (other than a planned public offering of securities by the Company for
cash) or would require disclosure of information, the premature disclosure of
which would, in the Board's reasonable business judgment, materially and
adversely affect the Company. If the Company postpones the filing of a
registration statement pursuant to this Section 4, it will promptly notify, in
writing, the holders of Restricted Stock, Series B Warrant Shares, Conversion
Shares and Original Stockholders Stock that requested such registration when the
events or circumstances permitting such postponement have ended.

            5. Conversion Shares Required Registration.

            (a) At any time after the 180th day following the consummation of a
firm commitment underwritten public offering of the Company's equity securities
registered pursuant to the Securities Act, the holders of Conversion Shares
constituting at least a majority of the total Conversion Shares outstanding at
such time (treating for such purpose the holders of Convertible Preferred Shares
as the holders of the Conversion Shares issuable upon the conversion thereof)
may request the Company to register under the Securities Act all or any portion
of the Conversion Shares held by such requesting holder or holders for sale in
the manner specified in such notice; provided, however, that with respect to the
Conversion Shares the only securities that the Company shall be required to
register shall be shares of Common Stock.

            (b) Promptly following receipt of any notice under this Section 5,
the Company shall promptly notify any holders of Conversion Shares or
Convertible Preferred Stock from whom notice has not been received and any
holders of Restricted Stock, Series B Warrant Shares (treating for such purpose
the holders of Series B Warrants as the holders of the Series B Warrant Shares
issuable upon exercise thereof) and Original Stockholders Stock, and shall use
its reasonable best efforts to register under the Securities Act, for public
sale in accordance with the method of disposition specified in such notice from
the requesting holders, the number of Conversion Shares specified in such notice
(and, as applicable, in any notices received from other holders of Conversion
Shares and holders of Restricted Stock, Series B Warrant Shares or Original
Stockholders Stock within 20 days after their receipt of such notice from the
Company; it being understood that the only securities which the Company shall be
required to register pursuant hereto shall be shares of Common Stock; provided,
however, that if the proposed method of disposition specified by the requesting
holders shall be an underwritten public offering, the number of Conversion
Shares, shares of Restricted Stock, Series B Warrant Shares or Original
Stockholders Stock, as the case may be, to be included in such an offering may
be reduced (pro rata among the requesting holders of Conversion Shares,
Restricted Stock, Series B Warrant Shares and Original Stockholders Stock
(except that two shares of either Restricted Stock, Series B Warrant Shares or
shares of Original Stockholders Stock proposed to be registered shall be "cut
back" for every Conversion Share so cut back) based upon the number of
Conversion Shares, shares of Restricted Stock, Series B Warrant Shares and
shares of Original Stockholders Stock so requested to be registered) if and to
the extent that the managing underwriter shall be of the opinion that such
inclusion would adversely affect the marketing of the Conversion Shares,
Restricted Stock, Series B Warrant Shares and Original Stockholders Stock, as
the case may be, to be sold. If such method of disposition shall be an
underwritten public offering, the Company may designate the managing underwriter
of such offering, subject to the approval of the selling holders of a majority
of the Conversion Shares (treating for such

                                        6



purpose the holders of Convertible Preferred Stock as the holders of the
Conversion Shares issuable upon conversion thereof) included in the offering,
which approval shall not be unreasonably withheld. The Company shall be
obligated to register Conversion Shares, Restricted Stock, Series B Warrant
Shares and Original Stockholders Stock pursuant to this Section 5 on one
occasion only. Notwithstanding anything to the contrary contained herein, the
obligation of the Company under this Section 5 shall be deemed satisfied only
when a registration statement covering all Conversion Shares specified in
notices received as aforesaid (or such reduced number of shares as contemplated
above), for sale in accordance with the method of disposition specified by the
requesting holder, shall have become effective and, if such method of
disposition is a firm commitment underwritten public offering, all such shares
shall have been sold pursuant thereto.

            (c) The Company shall be entitled to include in any registration
statement referred to in this Section 5, for sale in accordance with the method
of disposition specified by the requesting holders, shares of Common Stock to be
sold by the Company for its own account, except as and to the extent that, in
the opinion of the managing underwriter (if such method of disposition shall be
an underwritten public offering), such inclusion would adversely affect the
marketing of the Conversion Shares, Restricted Stock, Series B Warrant Shares
and Original Stockholders Stock to be sold. Except as provided in this paragraph
(c), the Company will not effect any other registration of its Common Stock or
Non-Voting Common Stock, whether for its own account or that of other holders,
from the date of receipt of a notice from requesting holders pursuant to this
Section 5 until the completion of the period of distribution of the registration
contemplated thereby (not to exceed 180 days), other than registrations of
Common Stock on Form S-8 (or other applicable forms) issuable pursuant to
employee benefit plans of the Company, or registrations pursuant to which notice
was previously received pursuant to Section 7 hereof.

            (d) Notwithstanding anything to the contrary contained in this
Agreement, the Company will be entitled, once in any one year period, to
postpone the filing period (or suspend the effectiveness) of any registration of
the Restricted Stock, Series B Warrant Shares or Original Stockholders Stock, as
the case may be, pursuant to this Section 5 for a reasonable period of time not
in excess of 90 calendar days, if the Board determines, in its reasonable
business judgment, that such registration and offering could materially
interfere with bona fide financing plans of the Company (other than a planned
public offering of securities by the Company for cash) or would require
disclosure of information, the premature disclosure of which would, in the
Board's reasonable business judgment, materially and adversely affect the
Company. If the Company postpones the filing of a registration statement
pursuant to this Section 5, it will promptly notify, in writing, the holders of
Restricted Stock, Series B Warrant Shares and Original Stockholders Stock that
requested such registration when the events or circumstances permitting such
postponement have ended.

            6. Series B Warrant Shares Required Registration.

            (a) At any time after the fifth anniversary from the date hereof,
the holders of Series B Warrant Shares constituting at least 33% of the total
Series B Warrant Shares outstanding at such time (treating for such purpose the
holders of Series B Warrants as the holders of the Series B Warrant Shares
issuable upon exercise thereof) may request the Company

                                        7



to register under the Securities Act all or any portion of the Series B Warrant
Shares held by such requesting holder or holders for sale in the manner
specified in such notice; provided, however, that with respect to the Series B
Warrants the only securities which the Company shall be required to register
pursuant hereto shall be Series B Warrant Shares.

            (b) Promptly following receipt of any notice under this Section 6,
the Company shall promptly notify any holders of Restricted Stock, Original
Stockholders Stock, Series B Warrant Shares and conversion-shares (treating for
such purpose the holders of Convertible Preferred Shares and Series B Warrants
as the holders of the Conversion Shares or Series B Warrant Shares issuable upon
conversion or exercise thereof, as the case may be) from whom notice has not
been received, and shall use its reasonable best efforts to register under the
Securities Act, for public sale in accordance with the method of disposition
specified in such notice from requesting holders, the number of Series B Warrant
Shares, shares of Restricted Stock, shares of Original Stockholders Stock and
Conversion Shares specified in such notice (and, as applicable, in any notices
received from other holders of Series B Warrant Shares, Restricted Stock,
Original Stockholders Stock and Conversion Shares within 20 days after their
receipt of such notice from the Company, it being understood that with respect
to the Series B Warrants and the Conversion Shares the only securities which the
Company shall be required to register pursuant hereto shall be Series B Warrant
Shares and shares of Common Stock, respectively); provided, however, that if the
proposed method of disposition specified by the requesting holders shall be an
underwritten public offering, the number of Series B Warrant Shares, shares of
Restricted Stock, shares of Original Stockholders Stock and Conversion Shares to
be included in such an offering may be reduced (pro rata among the requesting
holders of Conversion Shares, Restricted Stock, Series B Warrant Shares and
Original Stockholders Stock (except that two shares of either Restricted Stock,
Series B Warrant Shares or shares of Original Stockholders Stock proposed to be
registered shall be "cut back" for every Conversion Share so cut back) if and to
the extent that the managing underwriter shall be of the opinion that such
inclusion would adversely affect the marketing of the Series B Warrant Shares,
Restricted Stock, Original Stockholders Stock and Conversion Shares to be sold.
If such method of disposition shall be an underwritten public offering, the
Company may designate the managing underwriter of such offering, subject to the
approval of the selling holders of 33% of the Series B Warrant Shares (treating
for such purpose the holders of Series B Warrants as the holders of the Series B
Warrant Shares issuable upon exercise thereof) included in the offering, which
approval shall not be unreasonably withheld. The Company shall be obligated to
register Series B Warrant Shares pursuant to this Section 6 on one occasion
only. Notwithstanding anything to the contrary contained herein, the obligation
of the Company under this Section 6 shall be deemed satisfied only when a
registration statement covering all Series B Warrant Shares specified in notices
received as aforesaid (or such reduced number of shares as contemplated above),
for sale in accordance with the method of disposition specified by the
requesting holder, shall have become effective and, if such method of
disposition is a firm commitment underwritten public offering, all such shares
shall have been sold pursuant thereto.

            (c) The Company shall be entitled to include in any registration
statement referred to in this Section 6, for sale in accordance with the method
of disposition specified by the requesting holders, shares of Common Stock to be
sold by the Company for its own account, except as and to the extent that, in
the opinion of the managing underwriter (if such method of disposition shall be
an underwritten public offering), such inclusion would adversely affect the

                                        8



marketing of the Series B Warrant Shares, Restricted Stock, Original
Stockholders Stock and Conversion Shares to be sold. Except as provided in this
paragraph (c), the Company will not effect any other registration of its Common
Stock or Non-Voting Common Stock, whether for its own account or that of other
holders, from the date of receipt of a notice from requesting holders pursuant
to this Section 6 until the completion of the period of distribution of the
registration contemplated thereby (not to exceed 180 days), other than
registrations of Common Stock on Form S-8 (or other applicable forms) issuable
pursuant to employee benefit plans of the Company, or registrations pursuant to
which notice was previously received pursuant to Section 7 hereof.

            (d) Notwithstanding anything to the contrary contained in this
Agreement, the Company, at its option, may once in any one year period delay the
filing (or suspend the effectiveness) of a registration statement required
pursuant to this Section 6 for a reasonable period of time not in excess of 90
calendar days, if the Board determines, in its reasonable business judgment,
that such registration and offering could materially interfere with bona fide
financing plans of the Company (other than a planned public offering of
securities by the Company for cash) or would require disclosure of information,
the premature disclosure of which would, in the Board's reasonable business
judgment, materially and adversely affect the Company. If the Company postpones
the filing of a registration statement pursuant to this Section 6, it will
promptly notify, in writing, the holders of Series B Warrant Shares, Restricted
Stock, Original Stockholders Stock and Conversion Shares that requested such
registration when the events or circumstances permitting such postponement have
ended.

            7. Form S-3 Registration.

            (a) If the Company shall receive from any holder or holders of
Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or
Conversion Shares a written request or requests that the Company effect a
registration on Form S-3 and any related qualification or compliance with
respect to Restricted Stock, Series B Warrant Shares, Original Stockholders
Stock or Conversion Shares, as the case may be, owned by such holder or holders
in a public sale not involving an underwritten public offering, the reasonably
anticipated aggregate price to the public of which would exceed $1,000,000, the
Company will:

            (i) promptly give written notice of the proposed registration, and
      any related qualification or compliance, to all other holders of
      Restricted Stock, Series B Warrant Shares, Original Stockholders Stock and
      Conversion Shares; and

            (ii) as soon as practicable, effect such registration (including,
      without limitation, the execution of an undertaking to file post-effective
      amendments, appropriate qualifications under applicable blue sky or other
      state securities laws and appropriate compliance with applicable
      regulations issued under the Securities Act and any other government
      requirements or regulations) as may be so requested and as would permit or
      facilitate the sale and distribution of all or such portion of such
      holder's or holders' Restricted Stock, Series B Warrant Shares, Original
      Stockholders Stock or Conversion Shares, as the case may be, as are
      specified in such request, together with all or such portion of the
      Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or
      Conversion Shares of any holder or holders joining in such request as are
      specified in a

                                        9


      written request given within thirty (30) days after receipt of such
      written notice from the Company; provided that the Company shall not be
      obligated to effect any such registration, qualification or compliance
      pursuant to this Section 7 (a) more than once in any 180-day period, or
      (B) if the Company is not entitled to use Form S-3; and provided, further,
      the only securities which the Company shall be required to register
      pursuant hereto shall be shares of Common Stock.

Subject to the foregoing, the Company shall file a registration statement
covering the Restricted Stock, Series B Warrant Shares, Original Stockholders
Stock and Conversion Shares so requested to be registered as soon as practicable
after receipt of the request or requests of the holders of the Restricted Stock,
Series B Warrants, Series B Warrant Shares, Original Stockholders Stock and
Conversion Shares, as the case may be.

            (b) Registrations effected pursuant to this Section 7 shall not be
counted as requests for registration effected pursuant to Section 4, 5 or 6, as
the case may be.

            (c) Notwithstanding anything to the contrary contained in this
Agreement, the Company will be entitled to postpone the filing period (or
suspend the effectiveness or use) of any registration statement relating to the
Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or
Conversion Shares, as the case may be, pursuant to this Section 7 for a
reasonable period of time not in excess of 90 calendar days, if the Board
determines, in its reasonable business judgment, that such registration and
offering could materially interfere with bona fide financing plans of the
Company or would require disclosure of information, the premature disclosure of
which could, in the Board's reasonable business judgment, materially and
adversely affect the Company. If the Company postpones the filing (or suspends
the effectiveness or use) of a registration statement pursuant to this Section
7, it will promptly notify, in writing, the holders of Restricted Stock, Series
B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case
may be, that requested such registration when the events or circumstances
permitting such postponement have ended.

            8. Incidental Registration. If the Company at any time (other than
pursuant to Section 4, 5, 6 or 7 hereof) proposes to register any of its Common
Stock under the Securities Act for sale to the public, whether for its own
account or for the account of other securityholders or both (except with respect
to registration statements on Form S-4 or S-8 or another form not available for
registering the Restricted Stock, Series B Warrant Shares, Original Stockholders
Stock or Conversion Shares for sale to the public), it will give written notice
at such time to all holders of Restricted Stock, Original Stockholders Stock,
Series B Warrant Shares and Conversion Shares (treating for such purpose the
holders of Series B Warrants and Convertible Preferred Stock as the holders of
the Series B Warrant Shares or Conversion Shares issuable upon exercise or
conversion thereof, as applicable) of its intention to do so. Upon the written
request of any such holder, given within 30 days after receipt of any such
notice by the Company, to register any of its Restricted Stock, Series B Warrant
Shares, Original Stockholders Stock or Conversion Shares, the Company will use
its reasonable best efforts to cause the Restricted Stock, Series B Warrant
Shares, Original Stockholders Stock or Conversion Shares as to which
registration shall have been so requested, to be included in the securities to
be covered by the registration statement proposed to be filed by the Company,
all to the extent requisite to permit the sale or other disposition by the
holder of such Restricted Stock, Series B Warrant

                                       10


Shares, Original Stockholders Stock or Conversion Shares, as the case may be, so
registered; provided that nothing herein shall prevent the Company from
abandoning or delaying such registration at any time; provided, further, that
the only securities which the Company shall be required to register pursuant
hereto shall be shares of Common Stock. The number of shares of Restricted
Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion
Shares, as the case may be, to be included in such an underwriting may be
reduced (pro rata among the requesting holders of Conversion Shares, Restricted
Stock, Series B Warrant Shares and Original Stockholders Stock (except that two
shares of either Restricted Stock, Series B Warrant Shares or shares of Original
Stockholders Stock proposed to be registered shall be "cut back" for every
Conversion Share so cut back) based upon the number of Conversion Shares, shares
of Restricted Stock, Series B Warrant Shares and shares of Original Stockholders
Stock so requested to be registered) if and to the extent that the managing
underwriter shall be of the opinion that such inclusion would adversely affect
the marketing of the securities to be sold by the Company therein; provided,
however, that such number of shares of Restricted Stock, Series B Warrant
Shares, Original Stockholders Stock or Conversion Shares, as the case may be,
shall not be reduced if any shares are to be included in such underwriting for
the account of any person other than the Company and persons requesting
registration under this Agreement.

            Notwithstanding anything to the contrary contained in this Section
8, in the event that there is a firm commitment underwritten public offering of
securities of the Company pursuant to a registration covering Restricted Stock,
Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, and a
holder of Restricted Stock, Original Stockholders Stock, Series B Warrant Shares
or Conversion Shares (treating for such purpose the holders of Series B Warrants
and Convertible Preferred Stock as the holders of the Series B Warrant Shares or
Conversion Shares issuable upon the exercise or conversion thereof, as
applicable) does not sell its Restricted Stock or Conversion Shares, as the case
may be, to the underwriters of the Company's securities in connection with such
offering, such holder, at the written request of such underwriter, shall refrain
from selling any securities of the Company during the period of distribution of
the Company's securities by such underwriters (not to exceed 180 days) and such
period (not to exceed 90 days) in which the underwriting syndicate participates
in the after market.

            9. Registration Procedures and Expenses. If and whenever the Company
is required by the provisions of Section 4, 5, 6, 7 or 8 hereof to effect or to
use its reasonable best efforts to effect the registration of any of the
Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or
Conversion Shares, as the case may be, under the Securities Act, the Company
will, as promptly as possible:

            (a) prepare (and afford one counsel for the selling holders (as
      designated by a majority in interest of the selling holders) reasonable
      opportunity to review and comment thereon) and file with the Commission a
      registration statement (which, in the case of an underwritten public
      offering pursuant to Section 4, 5 or 6 hereof, shall be on Form S-1 or
      another form of general applicability satisfactory to the managing
      underwriter selected as therein provided) with respect to such securities
      and use its best efforts to cause such registration statement to become
      and remain effective for the period of the distribution contemplated
      thereby (determined as hereinafter provided);

                                       11



            (b) prepare (and afford the selected counsel for the selling holders
      reasonable opportunity to review and comment thereon) and file with the
      Commission such amendments and supplements to such registration statement
      and the prospectus used in connection therewith as may be necessary to
      keep such registration statement effective for the period specified in
      paragraph (a) above and as comply with the provisions of the Securities
      Act with respect to the disposition of all Restricted Stock, Series B
      Warrant Shares, Original Stockholders Stock or Conversion Shares, as the
      case may be, covered by such registration statement in accordance with the
      sellers' intended method of disposition set forth in such registration
      statement for such period;

            (c) furnish to each seller and to each underwriter such number of
      copies of the registration statement and the prospectus included therein
      (including each preliminary prospectus) as such persons may reasonably
      request in order to facilitate the public sale or other disposition of the
      Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or
      Conversion Shares, as the case may be, covered by such registration
      statement;

            (d) register or qualify the Restricted Stock, Series B Warrant
      Shares, Original Stockholders Stock or Conversion Shares, as the case may
      be, covered by such registration statement under the securities or blue
      sky laws of such jurisdictions as the sellers of Restricted Stock, Series
      B Warrant Shares, Original Stockholders Stock or Conversion Shares, as the
      case may be, or, in the case of an underwritten public offering, the
      managing underwriter, shall reasonably request (provided that the Company
      will not be required to (i) qualify generally to do business in any
      jurisdiction where it would not otherwise be required to qualify but for
      this paragraph (d), (ii) subject itself to taxation in any such
      jurisdiction or (iii) consent to general service of process in any
      jurisdiction);

            (e) promptly notify each seller under such registration statement
      and each underwriter, at any time when a prospectus relating thereto is
      required to be delivered under the Securities Act, of the happening of any
      event as a result of which the prospectus contained in such registration
      statement, as then in effect, includes an untrue statement of a material
      fact or omits to state any material fact required to be stated therein or
      necessary to make the statements therein not misleading in the light of
      the circumstances then existing;

            (f) if the offering is underwritten, to furnish, at the request of
      any seller, on the date that Restricted Stock, Series B Warrant Shares,
      Original Stockholders Stock or Conversion Shares, as the case may be, is
      delivered to the underwriters for sale pursuant to such registration: (i)
      an opinion dated such date of counsel representing the Company for the
      purposes of such registration, addressed to the underwriters and to such
      seller, stating that such registration statement has become effective
      under the Securities Act and that (A) to the best knowledge of such
      counsel, no stop order suspending the effectiveness thereof has been
      issued and no proceedings for that purpose have been instituted or are
      pending or contemplated under the Securities Act, (B) the registration
      statement, the related prospectus, and each amendment or supplement
      thereof, comply as to form in all material respects with the requirements
      of the Securities Act and the applicable rules and regulations of the
      Commission thereunder (except that such counsel

                                       12



      need express no opinion as to financial statements, the notes thereto, and
      the financial schedules and other financial and statistical data contained
      therein) and (C) to such other effects as may reasonably be requested by
      counsel for the underwriters or by such seller or its counsel, and (ii) a
      letter dated such date from the independent public accountants retained by
      the Company, addressed to the underwriters, stating that they are
      independent public accountants within the meaning of the Securities Act
      and that, in the opinion of such accountants, the financial statements of
      the Company included in the registration statement or the prospectus, or
      any amendment or supplement thereof, comply as to form in all material
      respects with the applicable accounting requirements of the Securities
      Act, and such letter shall additionally cover such other financial matters
      (including information as to the period ending no more than five business
      days prior to the date of such letter) with respect to the registration in
      respect of which such letter is being given as such underwriters or seller
      may reasonably request; and

            (g) make available for inspection by each seller, any underwriter
      participating in any distribution pursuant to such registration statement,
      and any attorney, accountant or other agent retained by such seller or
      underwriter, all financial and other records, pertinent corporate
      documents and properties of the Company, and cause the Company's officers,
      directors and employees to supply all information reasonably requested by
      any such seller, underwriter, attorney, accountant or agent in connection
      with such registration statement and permit such seller, attorney,
      accountant or agent to participate in the preparation of such registration
      statement.

For purposes of paragraphs (a) and (b) above and of Sections 4 (c) , 5 (c) and 6
(c) hereof, the period of distribution of Restricted Stock, Series B Warrant
Shares, Original Stockholders Stock or Conversion Shares, as the case may be, in
a firm commitment underwritten public offering shall be deemed to extend until
each underwriter has completed the distribution of all securities purchased by
it, and the period of distribution of Restricted Stock, Series B Warrant Shares,
Original Stockholders Stock or Conversion Shares, as the case may be, in any
other registration shall be deemed to extend until the earlier of the sale of
all Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or
Conversion Shares, as the case may be, covered thereby or six months after the
effective date thereof.

            In connection with each registration hereunder, the selling holders
of Restricted Stock, Series B Warrant Shares, Original Stockholders Stock and
Conversion Shares, if applicable, will furnish to the Company in writing such
information with respect to themselves and the proposed distribution by them as
shall be reasonably necessary in order to assure compliance with federal and
applicable state securities laws.

            In connection with each registration pursuant to Sections 4, 5, 6, 7
and 8 hereof covering an underwritten public offering, the Company and any
selling holder of Restricted Stock, Series B Warrant Shares, Original
Stockholders stock or Conversion Shares, as the case may be, agree to enter into
a written agreement with the managing underwriter selected in the manner herein
provided in such form and containing such provisions as are customary in the
securities business for such an arrangement between major underwriters and
companies of the Company's size and investment stature, provided, however, that
(1) the selling holders and their counsel shall have an opportunity to review
and comment on such agreement, (2) such

                                       13



agreement shall not contain any such provision applicable to the Company or such
selling holders which is inconsistent with the provisions hereof and (3) the
time and place of the closing under said agreement shall be as mutually agreed
upon among the Company, such managing underwriter and the selling holders of
Restricted Stock, Series B Warrants, Series B Warrant Shares, Original
Stockholders Stock and Conversion Shares, if applicable.

            10. Expenses. All expenses incurred by the Company in complying with
Sections 4, 5, 6, 7 and 8 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees of the National
Association of Securities Dealers, Inc., transfer taxes, fees of transfer agents
and registrars and fees and expenses of one counsel for the sellers of
Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or
Conversion Shares, as the case may be, but excluding any Selling Expenses, are
herein called "Registration Expenses". All underwriting discounts and selling
commissions applicable to the sale of Restricted Stock, Series B Warrant Shares,
Original Stockholders Stock or Conversion Shares, as the case may be, are herein
called "Selling Expenses".

            The Company will pay all Registration Expenses in connection with
each registration statement filed pursuant to Section 4, 5, 6, 7 or 8 hereof.
All Selling Expenses in connection with any registration statement filed
pursuant to Section 4, 5, 6, 7 or 8 hereof shall be borne by the participating
sellers in proportion to the number of shares sold by each, or by such persons
other than the Company (except to the extent the Company shall be a seller) as
they may agree.

            11. Indemnification. In the event of a registration of any of the
Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or
Conversion Shares, as the case may be, under the Securities Act pursuant to
Section 4, 5, 6, 7 or 8 hereof, the Company will indemnify and hold harmless
each seller of such Restricted Stock, Series B Warrant Shares, Original
Stockholders Stock or Conversion Shares, as the case may be, thereunder and each
underwriter of Restricted Stock, Series B Warrant Shares, Original Stockholders
Stock or Conversion Shares, as the case may be, thereunder and each other
person, if any, who controls such seller or underwriter within the meaning of
the Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such seller or underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such Restricted Stock,
Series B Warrant Shares, original Stockholders Stock or Conversion Shares, as
the case may be, was registered under the Securities Act pursuant to Section 4,
5, 6, 7 or 8, any preliminary prospectus or final prospectus contained therein,
or any amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each such seller, each such underwriter and each such controlling
person for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any such case
if and to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission so made in conformity with

                                       14



information furnished by such seller, such underwriter or such controlling
person in writing specifically for use in such registration statement or
prospectus.

            In the event of a registration of any of the Restricted Stock,
Series B Warrant Shares, Original Stockholders Stock or Conversion Shares, as
the case may be, under the Securities Act pursuant to Section 4, 5, 6, 7 or 8
hereof, each seller of such Restricted Stock, Series B Warrant Shares, Original
Stockholders Stock or Conversion Shares, as the case may be, thereunder,
severally and not jointly, will indemnify and hold harmless the Company and each
person, if any, who controls the Company within the meaning of the Securities
Act, each officer of the Company who signs the registration statement, each
director of the Company, each underwriter and each person who controls any
underwriter within the meaning of the Securities Act, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
officer or director or underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in the registration statement under which such Restricted Stock, Series B
Warrant Shares, Original Stockholder Stock or Conversion Shares, as the case may
be, was registered under the Securities Act pursuant to Section 4, 5, 6, 7 or 8,
any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that such seller will be liable
hereunder in any such case only if and only to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with information pertaining to such seller, as such, furnished
in writing to the Company by such seller specifically for use in such
registration statement or prospectus; provided, further, however, that the
liability of each seller hereunder shall be limited to the proportion of any
such loss, claim, damage, liability or expense which is equal to the proportion
that the public offering price of shares sold by such seller under such
registration statement bears to the total public offering price of all
securities sold thereunder, but not to exceed the proceeds (net of underwriting
discounts and commissions) received by such seller from the sale of Restricted
Stock, Series B Warrant Shares, Original Stockholders Stock or Conversion
Shares, as the case may be, covered by such registration statement.

            Promptly after receipt by an indemnified party hereunder of notice
of the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party other than under this Section 11. In case any such action
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel satisfactory to such indemnified
party (provided that such indemnifying party shall not, without the consent of
the indemnified party, agree to a settlement involving a plea of nolo contendere
or an admission

                                       15



of liability on the part of such indemnified party) and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 11 for any legal expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation and of liaison with counsel so selected;
provided, however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses available to it
which are different from or additional to those available to the indemnifying
party, or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, the indemnified party
shall have the right to select a separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred.

            Notwithstanding the foregoing, any indemnified party shall have the
right to retain its own counsel in any such action, but the fees and
disbursements of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party shall have failed to retain counsel for the
indemnified person as aforesaid or (ii) the indemnifying party and such
indemnified party shall have mutually agreed to the retention of such counsel.
It is understood that the indemnifying party shall not, in connection with any
action or related actions in the same jurisdiction, be liable for the fees and
disbursements of more than one separate firm qualified in such jurisdiction to
act as counsel for the indemnified party. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.

            If the indemnification provided for in the first two paragraphs of
this Section 11 is unavailable or insufficient to hold harmless an indemnified
party under such paragraphs in respect of any losses, claims, damages or
liabilities or actions in respect thereof referred to therein, then each
indemnifying party shall in lieu of indemnifying such indemnified party
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or actions in such proportion as
appropriate to reflect the relative fault of the Company, on the one hand, and
the underwriters and the sellers of such Restricted Stock, Series B Warrant
Shares, Original Stockholders Stock or Conversion Shares, as the case may be, on
the other, in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or actions as well as any other relevant
equitable considerations, including the failure to give any notice under the
third paragraph of this Section 11. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact relates to information supplied by the Company, on the one
hand, or the underwriters and the sellers of such Restricted Stock, Series B
Warrant Shares, Original Stockholders Stock or Conversion Shares, as the case
may be, on the other, and to the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and each selling holder of Restricted Stock, Series B Warrant
Shares, Original Stockholders Stock or Conversion Shares, as the case may be,
agree that it would not be just and equitable if contributions pursuant to this

                                       16



paragraph were determined by pro rata allocation (even if all of the sellers of
such Restricted Stock, Series B Warrant Shares, Original Stockholders Stock or
Conversion Shares, as the case may be, were treated as one entity for such
purpose) or by any other method of allocation which did not take account of the
equitable considerations referred to above in this paragraph. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities or action in respect thereof, referred to above in this paragraph,
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this paragraph, the sellers
of such Restricted Stock, Series B Warrant Shares, Original Stockholders Stock
or Conversion Shares, as the case may be, shall not be required to contribute
any amount in excess of the amount, if any, by which the total price at which
the Common Stock sold by each of them was offered to the public exceeds the
amount of any damages which they would have otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission. No person guilty
of fraudulent misrepresentations (within the meaning of Section 11(f) of the
Securities Act), shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation.

            The indemnification of underwriters provided for in this Section 11
shall be on such other terms and conditions as are at the time customary and
reasonably required by such underwriters. In that event the indemnification of
the sellers of Restricted Stock, Series B Warrant Shares, Original Stockholders
Stock or Conversion Shares or any of the above, as the case may be, in such
underwriting shall at the sellers' request be modified to conform to such terms
and conditions.

            12. Changes in Common Stock and Non-Voting Common Stock. If, and as
often as, there are any changes in the Common Stock or the Non-Voting Common
Stock by way of stock split, stock dividend, combination or reclassification, or
through merger, consolidation, reorganization or recapitalization, or by any
other means, appropriate adjustment shall be made in the provisions hereof, as
may be required, so that the rights and privileges granted hereby shall continue
with respect to the Common Stock or the Non-Voting Stock (as the case may be) as
so changed.

            13. Representations and Warranties of the Company. The Company
represents and warrants to you as follows:

            (a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other agency of
government, the Amended and Restated Articles of Incorporation or Bylaws of the
Company, or any provision of any indenture, agreement or other instrument to
which it or any of its properties or assets is bound, or conflict with, result
in a breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement or other instrument, or result in
the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company.

            (b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in

                                       17



accordance with its terms, subject to considerations of public policy in the
case of the indemnification provisions hereof.

            14. Rule 144 Reporting. The Company agrees with you as follows:

            (a) The Company shall use its reasonable best efforts to make and
      keep public information available, as those terms are understood and
      defined in Rule 144 under the Securities Act, at all times from and after
      the date it is first required to do so.

            (b) The Company shall use its reasonable best efforts to file with
      the Commission in a timely manner all reports and other documents as the
      Commission may prescribe under Section 13 (a) or 15 (d) of the Exchange
      Act at any time after the Company has become subject to such reporting
      requirements of the Exchange Act.

            (c) The Company shall furnish to such holder of Restricted Stock,
      Series B Warrants or Series B Warrant Shares forthwith upon request (i) a
      written statement by the Company as to whether it is in compliance with
      the reporting requirements of Rule 144 (at any time from and after the
      date it first becomes subject to such reporting requirements, and of the
      Securities Act and the Exchange Act (at any time after it has become
      subject to such reporting requirements), (ii) a copy of the most recent
      annual or quarterly report of the Company filed with the Commission, and
      (iii) such other reports and documents so filed as a holder may reasonably
      request to avail itself of any rule or regulation of the Commission
      allowing a holder of Restricted Stock, Series B Warrants, Series B Warrant
      Shares, Convertible Preferred Stock or Conversion Shares to sell any such
      securities without registration.

            15. Miscellaneous.

            (a) All covenants and agreements contained in this Agreement by or
      on behalf of any of the parties hereto shall bind and inure to the benefit
      of the respective successors and assigns of the parties hereto whether so
      expressed or not. Without limiting the generality of the foregoing, the
      registration rights conferred herein on the holders of Restricted Stock,
      Series B Warrants, Series B Warrant Shares, Original Stockholders Stock,
      Convertible Preferred Stock and Conversion Shares shall inure to the
      benefit of any and all subsequent holders from time to time of the
      Restricted Stock, Series B Warrants, Series B Warrant Shares, Original
      Stockholders Stock, Convertible Preferred Stock and Conversion Shares for
      so long as the certificates representing the Restricted Stock, Series B
      Warrants, Series B Warrant Shares, Original Stockholders Stock,
      Convertible Preferred Stock or Conversion Shares, as the case may be,
      shall be required to bear the legend specified in Section 2 hereof.

            (b) All notices, requests, consents and other communications
      hereunder shall be in writing and shall be mailed by first class
      registered mail, postage prepaid, addressed as follows:

                                       18



            if to the Company, to it at:

               AMERISAFE, Inc.
               2301 Highway 190 West
               DeRidder, Louisiana 70634
               Attention: President
               Telecopy:  (318) 463-7298

            if to any holder of Restricted Stock, Series B Warrants or Series B
Warrant Shares, to it at its address as set forth in Schedule I hereto;

            if to any holder of Original Stockholders Stock, to it at its
address as set forth in Schedule II hereto;

            if to any holder of Convertible Preferred Stock or Conversion
Shares, to it at its address as set forth in Schedule III hereto;

            if to any subsequent holder of Restricted Stock, Series B Warrants,
Series B Warrant Shares, Original Stockholders Stock, Convertible Preferred
Stock or Conversion Shares, to it at such address as may have been furnished to
the Company in writing by such holder;

or, in any case, at such other address or addresses as shall have been furnished
in writing to the Company (in the case of a holder of Restricted Stock, Series B
Warrants, Series B Warrant Shares, Original Stockholders Stock, Convertible
Preferred Stock or Conversion Shares) or to the holders of Restricted Stock,
Series B Warrants, Series B Warrant Shares, Original Stockholders Stock,
Convertible Preferred Stock or Conversion Shares (in the case of the Company).

            (c) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
      WITH THE LAWS OF THE STATE OF NEW YORK.

            (d) This Agreement constitutes the entire agreement of the parties
      with respect to the subject matter hereof and may not be modified or
      amended except in writing with the consent of at least (i) holders of a
      majority of the Restricted Stock (treating for such purpose the holders of
      Series A Warrants as the holders of the Series A Warrant Shares issuable
      upon exercise thereof), (ii) holders of a majority of the Series B Warrant
      Shares (treating for such purpose the holders of Series B Warrants as the
      holders of the Series B Warrant Shares issuable upon exercise thereof),
      (iii) holders of a majority of the Original Stockholders Stock and (iv)
      holders of not less than 66-2/3% of the Conversion Shares (treating for
      such purpose the holders of Convertible Preferred Stock as the holders of
      the Conversion Shares issuable upon conversion thereof); provided that
      this Agreement may be amended to grant registration rights with respect to
      new securities to be issued by the Company after the date hereof with the
      consent of holders of at least a majority of Restricted Stock, Series B
      Warrant Shares, Original Stockholders Stock and Conversion Shares, voting
      as one class of stock (and treating the holders of Series A Warrants,
      Series B Warrants and Convertible Preferred Stock as the holders of the
      Series A Warrant Shares, Series B Warrant Shares and Conversion Shares
      issuable upon exercise or conversion thereof, as applicable); provided,
      further, however, that such grants of registration rights shall not affect
      the relative rights of the Restricted Stock, Series B

                                       19



      Warrant Shares, Original Stockholders Stock and Conversion Shares
      hereunder with respect to each other.

            (e) This Agreement may be executed in two or more counterparts, each
      of which shall be deemed an original, but all of which together shall
      constitute one and the same instrument.

                                       20



      Please indicate your acceptance of the foregoing by signing and returning
the enclosed counterpart of this letter, whereupon this letter (herein sometimes
called "this Agreement") shall be a binding agreement between the Company and
each of you.

                                       Very truly yours,

                                       AMERISAFE, Inc.

                                       By /s/ Mark R. Anderson
                                          ------------------------
                                          Name:
                                          Title:

AGREED TO AND ACCEPTED as of
   the date first above written.

WELSH, CARSON, ANDERSON &
   STOWE VII, L.P.
By WCAS VII Partners, L.P.
General Partner

By /s/ Laura Van Buren
   ----------------------------------
        General Partner

WCAS HEALTHCARE PARTNERS, L.P.
By: WCAS HC Partners
General Partner

By /s/ Laura Van Buren (Attorney-in-Fact)
   --------------------------------------
        General Partner

Patrick J. Welsh
Russell L. Carson
Bruce K. Anderson
Andrew M. Paul
Thomas E. McInerney
Laura VanBuren
James B. Hoover
Robert A. Minicucci
Anthony J. de Nicola
Paul B. Queally

By /s/ Laura Van Buren
   ---------------------------------------
Name:
Individually and as Attorney-in-Fact

                                       21

EX-5.1

                                                                     EXHIBIT 5.1
                             [Jones Day Letterhead]




                                 _________, 2005



AMERISAFE, Inc.
2301 Highway 190 West
DeRidder, Louisiana 70634


         Re:      ______________ shares of Common Stock, par value $0.01 per
                  share, to be Offered Through Underwriters

Ladies and Gentlemen:

         We are acting as counsel for AMERISAFE, Inc., a Texas corporation (the
"Company"), in connection with the issuance and sale of up to ______________
shares of Common Stock, par value $0.01 per share, of the Company (the "Shares")
pursuant to the Underwriting Agreement (the "Underwriting Agreement") proposed
to be entered into between the Company and certain shareholders of the Company
to be named therein and Friedman, Billings, Ramsey & Co., Inc., Keefe, Bruyette
& Woods, Inc. and William Blair & Company, LLC, as representatives of the
underwriters to be named therein ("Underwriters").

         In rendering this opinion, we have examined such documents and records,
including an examination of originals or copies certified or otherwise
identified to our satisfaction, and matters of law as we have deemed necessary
for purposes of this opinion. Based upon the foregoing and subject to the
qualifications and limitations stated herein, we are of the opinion that the
Shares are duly authorized and, when issued and delivered to the Underwriters
pursuant to the terms of the Underwriting Agreement against payment of the
consideration therefor as provided therein, will be validly issued, fully paid,
and nonassessable.

         Our examination of matters of law in connection with the opinion
expressed herein has been limited to, and accordingly our opinion herein is
limited to, the laws of the State of Texas. We express no opinion with respect
to the laws of any other jurisdiction.



AMERISAFE, Inc.
_________, 2005
Page 2


         We hereby consent to the filing of this opinion as Exhibit 5.1 to
Registration Statement No. 333-_______ on Form S-1 (the "Registration
Statement") filed by the Company to effect registration of the Shares under the
Securities Act of 1933, as amended (the "Act") and to the reference to us under
the caption "Legal Matters" in the prospectus constituting a part of such
Registration Statement. In giving such consent, we do not hereby admit that we
are included in the category of persons whose consent is required under Section
7 of the Act or the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.


                                                          Very truly yours,

EX-10.1

                                                                    Exhibit 10.1

                               EXECUTIVE AGREEMENT

      This EXECUTIVE AGREEMENT ("Agreement") with an effective date of January
1, 2004 is entered into by and between AMERISAFE, INC., a Texas corporation (the
"Company"), and Mark R. Anderson (the "Executive").

                                   WITNESSETH:

      WHEREAS the Company desires to continue the employment and/or engagement
of services of Executive with the Company for the period provided in this
Agreement, and the Executive desires to continue such employment with and/or
provide services to the Company, all in accordance with the terms and conditions
set forth below;

      NOW, THEREFORE, for and in consideration of the premises hereof and the
mutual covenants contained herein, the parties hereto hereby covenant and agree
as follows:

1.    Employment.

      (a)   The Company hereby agrees to continue to employ and/or engage the
            services of the Executive, and the Executive hereby accepts such
            employment and/or engagement of services with the Company, for the
            period set forth in Section 2 hereof, subject to the terms and
            conditions hereinafter set forth.

      (b)   The Executive affirms and represents that he is under no obligation
            to any former employer or other party which is in any way
            inconsistent with, or which imposes any restriction upon, the
            Executive's employment hereunder with the Company, the employment of
            the Executive by the Company, or the Executive's undertakings under
            this Agreement.

2.    Term of Employment. Unless earlier terminated by the Executive or the
      Company as provided in this Agreement, the term of the Executive's
      employment and/or engagement under this Agreement shall be for a period
      beginning on January 1, 2004 (the "Effective Date") and ending on the
      third anniversary of the Effective Date, January 1, 2007, provided,
      however, that this Agreement shall automatically renew for successive one
      year periods, unless either party shall notify the other in writing not
      less than thirty (30) days prior to the third anniversary date or any
      successive anniversary date that it does not intend to renew this
      Agreement. Such period, plus any annual renewal periods, or, if the
      Executive's employment or engagement hereunder is earlier terminated as
      provided herein and including termination pursuant to Section 9
      (a)(i)-(iii), such shorter period, is sometimes referred to herein as the
      "Employment Term".

3.    Duties. The Executive shall be employed and/or engaged by the Company as
      Chairman of the Board of Directors or such other position and/or title as
      designated by the Board of Directors and shall endeavor in good faith to
      competently perform such duties as are inherent in his employment and/or
      engagement and shall also perform and discharge such other duties and
      responsibilities as the Board of Directors of the Company shall from time
      to time reasonably determine, not inconsistent with his position as
      Chairman of the Board of Directors and/or any other position and/or title
      as designated by the Board of



      Directors. Executive shall also comply with any Articles of Incorporation
      and By-Laws of the Company, as well as any other applicable rules,
      agreements, policies and/or covenants concerning or related to corporate
      governance of the Company. The Company and the Executive mutually agree
      that the scope of the Executive's duties will require frequent travel and
      the Company specifically authorizes the Executive, for the benefit of the
      Company and the Executive, to perform his duties principally from his
      personal residence in Florida, with such travel to other locations from
      time to time as the Board of Directors of the Company may reasonably
      prescribe. Except as may otherwise be approved in advance by the Board of
      Directors of the Company, and except during vacation periods and
      reasonable periods of absence due to sickness, personal injury or other
      disability, the Executive shall devote his full time during the first year
      of the Employment Term to the services required of him hereunder; provided
      that the foregoing shall not prohibit the Executive from engaging
      in reasonable charitable and community activities. The Executive shall
      render his business services exclusively to the Company and its
      subsidiaries during the first year of the Employment Term and shall use
      his good faith efforts, judgment and energy to improve and advance the
      business and interests of the Company and its subsidiaries in a manner
      consistent with the duties of his position. During the second and
      subsequent years of the Employment Term the Executive is allowed to engage
      in other business activities subject to the terms of Sections 4, 8, and 10
      of this agreement. During the second and subsequent years of the
      Employment Term, the Executive shall reasonably and in good faith
      cooperate with the Company and shall attend and participate in meetings,
      conferences and/or other business events as requested by the Board of
      Directors. During the second and subsequent years of the Employment Term,
      the Executive shall also perform such other acts and/or perform such other
      duties as may be required and/or necessary for the Company and/or the
      Executive to fulfill legal, regulatory and/or compliance obligations,
      fiduciary responsibilities and/or corporate reporting and/or governance
      requirements.

4.    Conflicts of Interest and Compliance. Executive shall not engage in any
      conflict of interest and/or take any actions or engage in any conduct
      which is contrary to the exclusive interests of the Company. Executive
      shall comply with all applicable laws and regulations (federal, state
      and/or local) and shall comply with all applicable directives, orders and
      regulations of any governmental agency or regulatory body including
      federal, state and local agencies and bodies. Executive shall also comply
      with all policies and procedures of the Company and directives of the
      Board of Directors. Executive understands, acknowledges and agrees that
      he/she may hold a position of trust and that fiduciary duties and
      responsibilities may apply under applicable law and that these duties and
      responsibilities may be continuing in nature, even after separation from
      employment and/or engagement of services. Executive agrees to fully and
      faithfully perform and discharge all such duties, responsibilities and
      obligations.

5.    EEO Compliance. Executive shall not engage in any conduct which
      constitutes an unlawful employment practice or which violates any laws or
      regulations (federal, state and/or local) prohibiting discrimination,
      harassment and/or retaliation. Executive acknowledges that the Company is
      an Equal Opportunity Employer and prohibits all forms of unlawful
      discrimination in the terms and conditions of employment and prohibits all
      forms of harassment, including sexual harassment.

                                       2



6.    Salary and Bonus.

      (a)   Salary. As compensation for the services to be performed by the
            Executive hereunder during the Employment Term, the Company shall
            pay the Executive a base salary at the annual rate of not less than
            $350,000 during the first year (2004) of the Employment Term;
            $200,000 during the second year (2005) of the Employment Term; and,
            $175,000 during the third year (2006) and subsequent years of the
            Employment Term (said amount, together with any increases thereto as
            may be determined from time to time by the Compensation Committee of
            the Board of Directors of the Company in its sole discretion, being
            hereinafter referred to as "Salary"). Any Salary payable hereunder
            shall be paid in regular intervals in accordance with the Company's
            payroll practices from time to time in effect, but in no event less
            than monthly.

      (b)   Bonus. The Executive shall be eligible to receive bonus compensation
            from the Company in respect of each fiscal year (or portion thereof)
            occurring during the Employment Term in amounts, if any, as may be
            determined by the Compensation Committee of the Board of Directors
            of the Company in its sole discretion.

      (c)   Withholding, Etc. The payment of any Salary and Bonus under this
            Section 6 shall be subject to applicable withholding and payroll
            taxes, and such other deductions as may be required under the
            Company's employee benefit plans.

7.    Other Benefits.

      During the Employment Term, the Executive shall:

      (a)   be eligible to participate in all employee fringe benefits and
            pension and/or profit sharing plans that may be provided by the
            Company for its senior executive officers in accordance with the
            provision of any such plans, as the same may be in effect from time
            to time;

      (b)   be eligible to participate in all medical and health plans or other
            employee welfare benefit plans that may be provided by the company
            for its senior executive officers in accordance with the provisions
            of any such plans, as the same be in effect from time to time;

      (c)   be entitled to at least 28 vacation/personal days during the first
            year of the Employment Term (2004); the Executive shall also be
            entitled to all paid holidays given by the company to its other
            senior executive officers;

      (d)   be entitled to sick pay and disability benefits in accordance with
            any Company policy that may be applicable to senior executive
            officers from time to time,

      (e)   be entitled to a car allowance at the same level of reimbursement
            received by the Executive during the 2003 calendar year for the
            entire period of the Employment Term; and

                                       3



      (f)   be entitled to reimbursement for all reasonable out-of-pocket
            business expenses incurred by the Executive in the performance of
            his duties hereunder in accordance with company policy that may be
            applicable to senior executive officers from time to time.

8.    Confidential Information. The Executive hereby covenants, agrees and
      acknowledges as follows:

      (a)   The Executive has and will have access to and will participate in
            the development of or be acquainted with confidential or proprietary
            information and trade secrets that directly or indirectly relate to
            the business, prospects, operations and other aspects of the Company
            and any other present or future affiliates, subsidiaries and/or
            related entities of the Company (collectively with the Company, the
            "Companies"), including but not limited to (1) customer lists; the
            identity, lists or descriptions of new or prospective customers;
            financial statements; cost reports or other financial information;
            contract proposals or bidding information, business plans; training
            and operations methods and manuals; personnel records; software
            programs; reports and correspondence; and management systems,
            policies or procedures, including related forms and manuals; (ii)
            information pertaining to future developments such as future
            marketing or acquisition plans or ideas; and (iii) all other
            tangible and intangible property, which are used in the business and
            operations of the Companies but not made public. The information and
            trade secrets relating to the business of the Companies described
            hereinabove in this paragraph (a) are hereinafter referred to
            collectively as the "Confidential Information", provided that the
            term "Confidential Information" shall not include any information
            (x) that is or becomes publicly available (other than as a result of
            violation of this Agreement by the Executive), or (y) that the
            Executive receives or received on a non-confidential basis from a
            source (other than the Companies or any of their representatives)
            that is not prohibited from disclosing such information by a legal,
            contractual or fiduciary obligation (provided, however that the
            Executive shall not be deemed to be in violation of this clause (y)
            unless he has actual knowledge of any such obligation on the party
            of any such source).

      (b)   The Executive shall not disclose, use or make known for his or
            another's benefit any Confidential Information or use such
            Confidential Information in any way except in connection with the
            performance of the Executive's duties under this Agreement. The
            Executive may disclose Confidential Information in response to an
            order or subpoena of a court or governmental agency of competent
            jurisdiction and authority provided, however, notice of such order
            or subpoena shall be immediately communicated to the Company
            telephonically and in writing so that the Company shall have an
            opportunity to intervene and assert its rights to nondisclosure
            prior to any response by Executive to such an order or subpoena and
            in such notice, Executive shall advise as to whether or not he/she
            intends to comply with and/or respond to the order and/or subpoena.

      (c)   The Executive acknowledges and agrees that a remedy at law for any
            breach or threatened breach of the provisions of this Section 8
            would be inadequate and,

                                       4



            therefore, agrees that the Company shall be entitled to injunctive
            relief in addition to any other available rights and remedies in
            case of any such breach or threatened breach; provided, however,
            that nothing contained herein shall be construed as prohibiting the
            Company from pursuing any other rights and remedies available for
            any such breach or threatened breach.

      (d)   The Executive agrees that upon termination of his employment and/or
            engagement with the company for any reason, the Executive shall
            promptly return to the Company all Confidential Information in his
            possession in whatever form maintained (including, without
            limitation, documentation in any format or medium, computer disks
            and other electronic media).

      (e)   The obligations of the Executive under this Section 8 shall, except
            as otherwise provided herein, survive the termination of the
            Employment Term and/or the expiration or termination of this
            Agreement for a period of two years.

9.    Termination.

      (a)   The Executive's employment and/or engagement hereunder shall be
            terminated upon the occurrence of any of the following:

            (i)   death of the Executive;

            (ii)  termination of the Executive's employment hereunder by the
                  Executive at any time (a "Resignation");

            (iii) a Termination for Cause (as defined herein);

            (iv)  a Termination Without Cause (as defined herein);

                  The term "Termination for Cause" shall mean a termination of
                  the Executive's employment and/or engagement hereunder by
                  action of the Board of Directors of the Company at any time,
                  including during the Employment Term, as a result of any of
                  the following with respect to the Executive: (1) conviction of
                  the commission of a felony, (2) acts of dishonesty or moral
                  turpitude which are materially detrimental to the Companies,
                  (3) acts or omissions which the Executive reasonably knew were
                  likely to materially damage the business of the Company, (4)
                  failure by the Executive to obey the reasonable and lawful
                  orders of the Board of Directors of the Company, or (5) gross
                  negligence by the Executive in the performance of, or willful
                  disregard by the Executive of, his obligations hereunder;
                  provided, however, that prior to any termination pursuant to
                  clauses (4) or (5) above, the Board of Directors of the
                  Company shall have provided the Executive with written notice
                  of such action, failure or event and a reasonable period in
                  which to cure the same. This advance notice and cure provision
                  for termination pursuant to clauses (4) or (5) above shall not
                  apply and is not required if giving notice and/or a cure
                  period would be contrary to the best interests of the Company.

                                       5



                  The term "Termination Without Cause" shall mean the Company is
                  giving written notice at any time, including during the
                  Employment Term, to the Executive that the Executive's
                  employment and/or engagement is being terminated or nonrenewed
                  (pursuant to paragraph 2. hereof) other than pursuant to
                  clauses (i), (ii), or (iii) of the first paragraph of this
                  Section 9(a).

      (b)   Notwithstanding anything to the contrary expressed herein, the
            Company shall not be obligated to make any payments to the Executive
            or on his behalf of whatever kind or nature by reason of the
            Executive's cessation of employment and/or engagement pursuant to
            clauses (i), (ii), or (iii) of the first paragraph of this Section
            9(a), other than (i) such amounts, if any, of his Salary as shall be
            accrued and remained unpaid as of the date of said cessation and
            (ii) such other amounts, if any, which may be then otherwise payable
            to the Executive pursuant to the terns of the Company's benefits
            plans or pursuant to Section 7 above.

      (c)   Notwithstanding anything to the contrary expressed herein if the
            Executive's cessation of employment and/or engagement is pursuant to
            clause (iv) of the first paragraph of this Section 9(a) on or after
            January 1st, 2007, the Company shall not be obligated to make any
            payments to the Executive or on his behalf of whatever kind or
            nature other than (i) such amounts, if any, of his Salary as shall
            be accrued and remained unpaid as of the date of said cessation and
            (ii) such other amounts, if any, which may be then otherwise payable
            to the Executive pursuant to the terms of the Company's benefits
            plans or pursuant to Section 7 above.

      (d)   Notwithstanding anything to the contrary expressed herein if the
            Executive's cessation of employment and/or engagement is pursuant to
            clause (iv) of the first paragraph of this Section 9(a) at any time
            before January 1st, 2007 the Employment Term shall be defined as the
            period beginning on January 1st, 2004 and ending on January 1st,
            2007 and the Company shall be obligated to make salary and bonus
            payments to the Executive or on his behalf according to the terms of
            Section 6, and provide the benefits to the Executive or on his
            behalf, and such other amounts, if any, according to the terms of
            the Company's benefit plans or pursuant to Section 7 above, during
            the entire Employment Term. In this regard, the salary, bonus and
            benefits obligations in Section 6 and Section 7 shall continue to
            the date of cessation through the close of business on December 31,
            2006 in the same manner, method, terms and/or installments as if
            employment and/or engagement of services had not ceased. There shall
            not be any right of the Executive to receive any lump sum payments
            and/or any acceleration of any amounts (salary, bonus or otherwise)
            or of any benefits.

10.   Restrictive Covenants.

      10.01 Non-competition and Non-solicitation of Customers

            (a)   The Executive agrees that during the Employment Term (as
                  defined in Section 2 of this Agreement), without the prior
                  written consent of the

                                       6



                  Company, Executive shall refrain, directly or indirectly, and
                  whether as a principal, agent, employee, owner, partner,
                  officer, director, shareholder, member or otherwise, alone or
                  in association with any other person or entity, from carrying
                  on or engaging in a business similar to that of the Company
                  and/or from soliciting customers of the Company within the
                  Designated Area, so long as the Company carries on like a
                  business therein.

            (b)   Definition of Designated Area. The term "Designated Area"
                  shall mean the states, parishes, counties and/or
                  municipalities designated in Attachment "A".

            (c)   Business of the Company. Executive acknowledges and
                  understands that the "business" of the Company involves and
                  relates to the underwriting of risks for highly hazardous
                  worker's compensation insurance and related services.
                  Executive further acknowledges, agrees and represents that
                  he/she understands and knows the business in which the Company
                  is engaged and the scope, activities and/or business pursuits
                  involved in the business of the Company and in the
                  underwriting of risks for highly hazardous worker's
                  compensation insurance and related services. Executive further
                  acknowledges and understands that the non-competition and
                  non-solicitation of customer restrictions in this Agreement
                  prohibit the Executive from engaging, in any capacity and/or
                  any position, and/or from conducting any activities and/or
                  business similar to that of the Company and under the specific
                  terms and conditions of this Agreement.

            (e)   Customers of the Company. For purposes of this Agreement,
                  "customers" shall include, but are not limited to, insured
                  businesses and/or entities who have and/or have had insurance
                  coverage with the Company and insurance agents with whom the
                  Company has contracts, agreements, arrangements and/or any
                  type of business, insurance placement and/or working
                  relationship. Executive acknowledges and represents that
                  he/she understands the nature of the Company's customer
                  relationships and who and/or what comprises its customers.

      10.02 Non-solicitation. Executive shall not, during the Employment Term,
directly or indirectly solicit or induce, or attempt to solicit or induce, any
employee, agent of or consultant to the Company to leave his or her employment
or terminate his or her consultation agreement or similar relationship with the
Company.

      10.03 Amerisafe Designation. As used in this Section 10, Amerisafe, Inc.
and/or the "Company" includes Amerisafe, Inc., American Interstate Insurance
Company, Silver Oak Casualty, Inc. and any and all predecessor entities,
successor entities, affiliate entities, parent companies and subsidiaries. The
parties acknowledge and agree that the restrictive covenants in this Section 10
inure to the benefit of and operate for the interest of all of the
above-mentioned companies and affiliates.

                                       7



      10.04 Remedies. In the event of a breach, or a threatened or attempted
breach, of any provision of this Section 10 by the Executive, the parties
recognize that such a breach would cause irreparable harm to the Company, thus
the Company shall, in addition to all other remedies, be entitled to: (a) a
temporary, preliminary and/or permanent injunction against such breach without
the necessity of showing any actual damages or any irreparable injury; (b) a
decree for the specific performance of this Agreement; and/or (c) damages,
attorney's fees and costs. All remedies in favor of Company shall not be
exclusive, but shall be cumulative.

      10.05 Construction, Reformation and Severability. It is understood and
agreed that, should any portion of any clause or paragraph of this Section 10 be
deemed too broad to permit enforcement to its full extent, or should any portion
of any clause or paragraph of this Section 10 be deemed unreasonable, then said
clause or paragraph shall be reformed and enforced to the maximum extent
permitted by law. Additionally, if any of the provisions of this Section 10 are
ever found by a court of competent jurisdiction to exceed the maximum
enforceable (i) periods of time, (ii) geographic areas of restriction, (iii)
scope of non-competition or non-solicitation and/or (iv) description of the
Company's business or customers, or for any other reason, then such
unenforceable element(s) of this Section 10 shall be reformed and reduced to the
maximum periods of time, geographic areas of restriction, scope of
non-competition or non-solicitation and/or description of the Company's business
that is permitted by law. In this regard, any unenforceable, unreasonable and/or
overly broad provision shall be reformed and/or severed so as to permit
enforcement to the fullest extent permitted by law. Reformation and severability
shall apply.

      10.06 Reasonableness. Executive acknowledges, represents and agrees that
the restrictive covenants in this Section 10 are reasonable in nature, scope,
time and territory and in the terms and conditions set forth herein. Executive
acknowledges, represents and agrees that the Company has expended substantial
cost in training Executive and that the Company has provided him/her with access
to valuable information and has provided him/her with valuable experience. In
addition, Executive acknowledges, represents and agrees that the Company has
placed Executive in contact with its customers and has made Executive part of
its business plans. Executive further acknowledges, represents and agrees that
Executive would not have obtained such training, experience, contacts and
information from other sources without the employment relationship with the
Company. Executive further acknowledges, represents and agrees that the
foregoing have occurred and/or resulted based on the Company's reliance on these
restrictive covenants and Executive's representations and obligations made
herein. Executive further acknowledges, represents and agrees that this Section
10 and the obligations of Executive under these restrictive covenants are
reasonable in order to protect the legitimate interests of the Company.
Executive further acknowledges, represents and agrees that by virtue of his/her
job position, he/she has become an integral and influential component of the
Company's current and future business plans. It is Executive's desire and intent
that this Agreement be given full force and effect.

11.   Non-Assignability.

      (a)   Neither this Agreement nor any right or interest hereunder shall be
            assignable by the Executive or his beneficiaries or legal
            representatives without the Company's prior written consent;
            provided, however, that nothing in this Section 11(a) shall

                                       8



            preclude the Executive from designating a beneficiary to receive any
            benefit payable hereunder upon his death or incapacity.

      (b)   Except as required by law, no right to receive payments under this
            Agreement shall be subject to anticipation, commutation, alienation,
            sale, assignment, encumbrance, charge, pledge, or hypothecation or
            to exclusion, attachment, levy or similar process or to assignment
            by operation of law, and any attempt, voluntary or involuntary, to
            effect any such action shall be null, void and of no effect.

12.   Binding Effect. Without limiting or diminishing the effect of Section 11
      hereof, this Agreement shall inure to the benefit of and be binding upon
      the parties hereto and their respective heirs, successors, legal
      representatives and assigns.

13.   Notices. All notices which are required or may be given pursuant to the
      terms of this Agreement shall be in writing and shall be sufficient in all
      respects if given in writing and (i) delivered personally, (ii) five
      business days after being mailed by certified or registered mail, return
      receipt requested and postage prepaid, (iii) sent via a nationally
      recognized overnight courier, or (iv) sent via facsimile confirmed by
      certified or registered mail, return receipt requested and postage
      prepaid, if to the Company at the Company's principal place of business,
      and if to the Executive, at his home address most recently filed with the
      Company, or to such other address or addresses as either party shall have
      designated in writing to the other party hereto.

14.   Law Governing. This Agreement shall be governed by and construed in
      accordance with the laws of the State of Louisiana and without regard to
      the application of conflict of laws principles and/or conflicts of laws
      and statutory provisions of the State of Louisiana.

15.   Severability. The Executive agrees that in the event that any court of
      competent jurisdiction shall finally hold that any provision of this
      Agreement is void or constitutes an unreasonable restriction against the
      Executive, this agreement shall not be rendered void but shall apply with
      respect to such extent as such court may judicially determine constitutes
      a reasonable restriction under the circumstances. If any part of this
      Agreement is held by a court of competent jurisdiction to be invalid,
      illegible or incapable of being enforced in whole or in part by reason of
      any rule of law or public policy, such part shall be deemed to be severed
      from the remainder of this Agreement for the purpose only of the
      particular legal proceedings in question and all other covenants and
      provisions of this Agreement shall in every other respect continue in full
      force and effect and no covenant or provision shall be deemed dependent
      upon any other covenant or provision. Severability and reformation shall
      apply.

      It is understood and agreed that, should any portion of any clause or
      paragraph of this Agreement be deemed too broad to permit enforcement to
      its full extent, or should any portion of any clause or paragraph of this
      Agreement be deemed unreasonable, then said clause or paragraph shall be
      reformed and enforced to the maximum extent permitted by law.

                                       9



16.   Waiver. Failure to insist upon strict compliance with any of the terms,
      covenants or conditions hereof shall not be deemed a waiver of such term,
      covenant or condition, nor shall any waiver or relinquishment of any right
      or power hereunder at any one or more times be deemed a waiver or
      relinquishment of such right or power at any other time or times.

17.   Entire Agreement; Modifications. This Agreement, with referenced
      Attachment "A," constitutes the entire and final expression of the
      agreement of the parties with respect to the subject matter hereof and
      supersedes all prior and/or contemporaneous agreements, oral and written,
      between the parties hereto with respect to the subject matter hereof. This
      Agreement may be modified or amended only by an instrument in writing
      signed by both parties hereto.

18.   Counterparts. This Agreement may be executed in two or more counterparts,
      each of which shall be deemed an original, but all of which together shall
      constitute one and the same instrument.

                                        AMERISAFE, INC.

                                        BY: /s/ C. Allen Bradley, Jr.
                                            --------------------------
                                            C. Allen Bradley, Jr.

                                        EXECUTIVE:

                                        BY: /s/ Mark R. Anderson
                                            --------------------
                                            Mark R. Anderson

                                       10

EX-10.2

                                                                    Exhibit 10.2

                              EMPLOYMENT AGREEMENT

      EMPLOYMENT AGREEMENT dated as of January 1, 2004 by and between AMERISAFE,
INC., a Texas corporation (the "Company"), and C. Allen Bradley, Jr. (the
"Employee").

                                   WITNESSETH:

      WHEREAS the Company desires to induce the Employee to continue in the
employment by the company for the period provided in this Agreement, and the
Employee is willing to continue such employment with the Company on a full-time
basis, all in accordance with the terms and conditions set forth below;

      NOW, THEREFORE, for and in consideration of the premises hereof and the
mutual covenants contained herein, the parties hereto hereby covenant and agree
as follows:

1.    Employment.

      (a)   The Company hereby agrees to continue to employ the Employee, and
            the Employee hereby accepts such employment with the Company, for
            the period set forth in Section 2 hereof, subject to the terms and
            conditions hereinafter set forth.

      (b)   The Employee affirms and represents that he is under no obligation
            to any former employer or other party which is in any way
            inconsistent with, or which imposes any restriction upon, the
            Employee's employment hereunder with the Company, the employment of
            the Employee by the Company, or the Employee's undertakings under
            this Agreement.

2.    Term of Employment. Unless earlier terminated by the Employee or the
      Company as provided in this Agreement, the term of the Employee's
      employment under this Agreement shall be for a period beginning on January
      1, 2004 (the "Effective Date") and ending on the second anniversary of the
      Effective Date, January 1, 2006, provided, however, that this Agreement
      shall automatically renew for successive one year periods, unless either
      party shall notify the other in writing not less than thirty (30) days
      prior to the second anniversary date or any successive anniversary date
      that it does not intend to renew this Agreement. Such period, plus any
      annual renewal periods, or, if the Employee's employment hereunder is
      earlier terminated as provided herein and including termination pursuant
      to Section 9(a)(i)-(v), such shorter period, is sometimes referred to
      herein as the "Employment Term".

3.    Duties. The Employee shall be employed by the Company as a senior
      executive officer and shall endeavor in good faith to competently perform
      such duties as inherent in his/her employment and/or any designated job
      position and/or as specified by the Company and shall also perform and
      discharge such other employment duties and responsibilities as the Board
      of Directors of the Company shall from time to time reasonably determine,
      not inconsistent with his/her position as a senior executive officer with
      the Company. Employee shall also comply with any By-Laws of the Company,
      as applicable. The Employee shall perform his duties principally at the
      offices of the Company at 2301



      Highway 190 West, DeRidder, Louisiana, with such travel to such other
      locations from time to time as the Board of Directors of the Company may
      reasonably prescribe. Except as may otherwise be approved in advance by
      the Board of Directors of the Company, and except during vacation periods
      and reasonable periods of absence due to sickness, personal injury or
      other disability, the Employee shall devote his full time during normal
      business hours throughout the Employment Term to the services required of
      him hereunder; provided that the foregoing shall not prohibit the Employee
      from engaging in reasonable charitable and community activities. The
      Employee shall render his business services exclusively to the Company and
      its subsidiaries during the Employment Term and shall use his good faith
      efforts, judgment and energy to improve and advance the business and
      interests of the Company and its subsidiaries in a manner consistent with
      the duties of his position.

4.    Conflicts of Interest and Compliance. Employee shall not engage in any
      conflict of interest and/or take any actions or engage in any conduct
      which is contrary to the exclusive interests of the Company. Employee
      shall comply with all applicable laws and regulations (federal, state
      and/or local) and shall comply with all applicable directives, orders and
      regulations of any governmental agency or regulatory body including
      federal, state and local agencies and bodies. Employee shall also comply
      with all policies and procedures of the Company and directives of the
      Board of Directors. Employee understands, acknowledges and agrees that
      he/she may hold a position of trust and that fiduciary duties and
      responsibilities may apply under applicable law and that these duties and
      responsibilities may be continuing in nature, even after separation from
      employment. Employee agrees to fully and faithfully perform and discharge
      all such duties, responsibilities and obligations.

5.    EEO Compliance. Employee shall not engage in any conduct which constitutes
      an unlawful employment practice or which violates any laws or regulations
      (federal, state and/or local) prohibiting discrimination, harassment
      and/or retaliation. Employee acknowledges that the Company is an Equal
      Opportunity Employer and prohibits all forms of unlawful discrimination in
      the terms and conditions of employment and prohibits all forms of
      harassment, including sexual harassment.

6.    Salary and Bonus.

      (a)   Salary. As compensation for the services to be performed by the
            Employee hereunder during the Employment Term, the Company shall pay
            the Employee a base salary at the annual rate of not less than Two
            Hundred Seventy-Five Thousand Dollars ($275,000.00) (said amount,
            together with any increases thereto as may be determined from time
            to time by the Compensation Committee of the Board of Directors of
            the Company in its sole discretion, being hereinafter referred to as
            "Salary"). Any Salary payable hereunder shall be paid in regular
            intervals in accordance with the Company's payroll practices from
            time to time in effect, but in no event less than monthly.

      (b)   Bonus. The Employee shall be eligible to receive bonus compensation
            from the Company in respect of each fiscal year (or portion thereof)
            occurring during the

                                        2



            Employment Term in amounts, if any, as may be determined by the
            Compensation Committee of the Board of Directors of the Company in
            its sole discretion on the basis of performance-based criteria to be
            established from time to time by such Committee in its sole
            discretion.

      (c)   Withholding, Etc. The payment of any Salary and Bonus under this
            Section 6, and the payment of any severance pay pursuant to Section
            9 hereof, shall be subject to applicable withholding and payroll
            taxes and such other deductions as may be required under the
            Company's employee benefit plans.

7.    Other Benefits.

      During the Employment Term, the Employee shall:

      (a)   be eligible to participate in all employee fringe benefits and
            pension and/or profit sharing plans that may be provided by the
            Company for its other senior executive officers in accordance with
            the provision of any such plans, as the same may be in effect from
            time to time;

      (b)   be eligible to participate in all medical and health plans or other
            employee welfare benefit plans that may be provided by the company
            for its other senior executive officers in accordance with the
            provisions of any such plans, as the same be in effect from time to
            time;

      (c)   be entitled to at least 23 vacation/personal days in each calendar
            year; the Employee shall also be entitled to all paid holidays given
            by the company to its other senior executive officers;

      (d)   be entitled to sick pay and disability benefits in accordance with
            any Company policy that may be applicable to other senior executive
            officers from time to time,

      (e)   be entitled to a car allowance consistent with Company practice as
            of the date hereof; and

      (f)   be entitled to reimbursement for all reasonable out-of-pocket
            business expenses incurred by the Employee in the performance of his
            duties hereunder in accordance with company policy that may be
            applicable to senior executive officers from time to time.

8.    Confidential Information. The Employee hereby covenants, agrees and
      acknowledges as follows:

      (a)   The Employee has and will have access to and will participate in the
            development of or be acquainted with confidential or proprietary
            information and trade secrets that directly or indirectly relate to
            the business, prospects, operations and other aspects of the Company
            and any other present or future subsidiaries of the Company
            (collectively with the Company, the "Companies"), including but not
            limited to (1) customer lists; the identity, lists or descriptions
            of new or

                                        3



            prospective customers; financial statements; cost reports or other
            financial information; contract proposals or bidding information,
            business plans; training and operations methods and manuals;
            personnel records; software programs; reports and correspondence;
            and management systems, policies or procedures, including related
            forms and manuals; (ii) information pertaining to future
            developments such as future marketing or acquisition plans or ideas;
            and (iii) all other tangible and intangible property, which are used
            in the business and operations of the Companies but not made public.
            The information and trade secrets relating to the business of the
            Companies described hereinabove in this paragraph (a) are
            hereinafter referred to collectively as the "Confidential
            Information", provided that the term "Confidential Information"
            shall not include any information (x) that is or becomes publicly
            available (other than as a result of violation of this Agreement by
            the Employee), or (y) that the Employee receives or received on a
            non-confidential basis from a source (other than the Companies or
            any of their representatives) that is not prohibited from disclosing
            such information by a legal, contractual or fiduciary obligation
            (provided, however that the Employee shall not be deemed to be in
            violation of this clause (y) unless he has actual knowledge of any
            such obligation on the party of any such source).

      (b)   The Employee shall not disclose, use or make known for his or
            another's benefit any Confidential Information or use such
            Confidential Information in any way except in connection with the
            performance of the Employee's duties under this Agreement. The
            Employee may disclose Confidential Information in response to an
            order or subpoena of a court or governmental agency of competent
            jurisdiction and authority provided, however, notice of such order
            or subpoena shall be immediately communicated to the Company
            telephonically and in writing so that the Company shall have an
            opportunity to intervene and assert its rights to nondisclosure
            prior to any response by Employee to such an order or subpoena and
            in such notice, Employee shall advise as to whether or not he/she
            intends to comply with and/or respond to the order and/or subpoena.

      (c)   The Employee acknowledges and agrees that a remedy at law for any
            breach or threatened breach of the provisions of this Section 8
            would be inadequate and, therefore, agrees that the Company shall be
            entitled to injunctive relief in addition to any other available
            rights and remedies in case of any such breach or threatened breach;
            provided, however, that nothing contained herein shall be construed
            as prohibiting the Company from pursuing any other rights and
            remedies available for any such breach or threatened breach.

      (d)   The Employee agrees that upon termination of his employment with the
            company for any reason, the Employee shall promptly return to the
            Company all Confidential Information in his possession in whatever
            form maintained (including, without limitation, computer disks and
            other electronic media).

      (e)   The obligations of the Employee under this Section 8 shall, except
            as otherwise provided herein, survive the termination of the
            Employment Term and/or the expiration or termination of this
            Agreement for a period of five years.

                                        4



9.    Termination.

      (a)   The Employee's employment hereunder shall be terminated upon the
            occurrence of any of the following:

            (i)   death of the Employee;

            (ii)  the Employee's inability to perform his duties on account of
                  disability or incapacity for a period of one hundred eighty
                  (180) or more days, whether or not consecutive, within any
                  period of twelve (12) consecutive months;

            (iii) a Termination for Cause (as defined herein);

            (iv)  a Termination Without Cause (as defined herein); or

            (v)   termination of the Employee's employment hereunder by the
                  Employee at any time other than a termination by the Employee
                  pursuant to Section 9(a)(iv) hereof (a "Resignation").

                  The term "Termination for Cause" shall mean a termination of
                  the Employee's employment hereunder by action of the Board of
                  Directors of the Company at any time, including during the
                  Employment Term, as a result of any of the following with
                  respect to the Employee: (1) indictment or arrest for the
                  alleged commission of a felony, (2) acts of dishonesty or
                  moral turpitude which are materially detrimental to the
                  Companies, (3) acts or omissions which the Employee reasonably
                  knew were likely to materially damage the business of the
                  Company, (4) failure by the Employee to obey the reasonable
                  and lawful orders of the Board of Directors of the Company, or
                  (5) gross negligence by the Employee in the performance of, or
                  willful disregard by the Employee of, his obligations
                  hereunder; provided, however, that prior to any termination
                  pursuant to clauses (4) or (5) above, the Board of Directors
                  of the Company shall have provided the Employee with written
                  notice of such action, failure or event and a reasonable
                  period in which to cure the same. This advance notice and cure
                  provision for termination pursuant to clauses (4) or (5) above
                  shall not apply and is not required if giving notice and/or a
                  cure period would be contrary to the best interests of the
                  Company.

                  The term "Termination Without Cause" shall mean: (1) the
                  Company is giving written notice at any time, including during
                  the Employment Term, to the Employee that the Employee's
                  employment is being terminated or non-renewed (pursuant to
                  paragraph 2. hereof) other than pursuant to clauses (i), (ii)
                  or (iii) of the first paragraph of this Section 9(a), or (2)
                  the Employee giving written notice to the Company that he is
                  terminating his employment with the Company upon the
                  occurrence of any of the following items:

                                        5



                  (A)   significant adverse change in the nature or scope of the
                        authorities, powers, functions, responsibilities or
                        duties associated with the job position designated
                        and/or existing at the effective date of this Agreement,
                        a reduction in the Employee's Salary, or the termination
                        of the Employee's rights to any employee benefits to
                        which he was entitled pursuant to this Agreement (other
                        than a termination of rights or benefits applicable to
                        all executive officers), any of which is not remedied
                        within 10 calendar days after receipt by the Company of
                        written notice from the Employee of such change,
                        reduction or termination as the case may be;

                  (B)   the Company shall require the Employee to have his
                        principal location of work changed to any location which
                        is in excess of 25 miles from the location thereof as of
                        the date of this Agreement without his prior written
                        consent; or

                  (C)   without limiting the generality or effect of the
                        foregoing, any material breach of this Agreement by the
                        Company or any successor thereto.

                  (D)   a "Change of Control". For purposes of this Agreement
                        and this provision, a Change of Control shall mean the
                        following: (i) sale of all or substantially all of the
                        Company's assets to any person or entity; (ii) a merger,
                        consolidation or other similar business combination of
                        the Company or of the subsidiaries of the Company, taken
                        as a whole (the Subsidiaries"), with or into another
                        company other than AmCOMP Incorporated, with the effect
                        that, immediately following such merger, consolidation
                        or other business combination, the Qualified
                        Shareholders of the Company or the Subsidiaries, taken
                        as a whole, prior to such merger, consolidation or other
                        business combination hold less than 50% of the combined
                        voting power of the then outstanding securities of the
                        surviving company of such merger, consolidation or other
                        business combination ordinarily ( and apart from rights
                        accruing under special circumstances) having the right
                        to vote in the election of directors; OR (iii) a sale,
                        transfer and/or acquisition of a majority of the common
                        stock of the Company to a person or entity that is not a
                        "Qualified Shareholder." For purposes of this Agreement
                        and this provision, a Change of Control shall not mean a
                        public offering of equity securities of the Company
                        registered under the Securities Act of 1933, as amended.
                        For purposes of this Agreement and this provision,
                        "Qualified Shareholders" is defined as and shall mean
                        WCAS VII, L.P. Sprout Group and affiliates of either
                        WCAS VII, L.P. or Sprout Group.

      (b)   In the event that the Employee's employment is terminated at any
            time by a Termination Without Cause, for a 18 month period following
            the effective date of

                                        6



            such termination, the company shall pay (as severance, termination
            pay, contract payout, compensation and/or liquidated damages) the
            Salary that would have otherwise been payable to the Employee during
            such period. This amount will be paid during such period in
            accordance with the Company's then existing payroll practices,
            methods and/or pay periods. In addition, in the event that
            Employee's employment is terminated at any time by Termination
            Without Cause, the Company will pay and/or reimburse Employee for a
            18 month period following such termination the actual cost of COBRA
            continuing health coverage premiums. In this regard, if the Employee
            is eligible for COBRA continuing health benefits and if Employee
            timely elects COBRA continuing health care coverage, the Company
            will pay and/or reimburse up to a maximum of 18 months of COBRA
            continuing health care coverage premiums. It shall be at the
            Company's option and discretion to either pay the COBRA premiums
            directly or to reimburse the Employee for premiums that the Employee
            pays for COBRA continuing health coverage. Any premiums or amounts
            due for COBRA continuing health coverage beyond the 18 month period
            referenced above shall be at the sole cost and expense of Employee
            and will not be paid and/or reimbursed by the Company. The above
            described obligations of the Company (continuation of salary for a
            18 month period following Termination Without Cause and payment of
            COBRA premiums for a 18 month period following Termination Without
            Cause) shall be the exclusive remedies and payment obligations and
            no other amounts or obligations will be due and owing by the Company
            to Employee. In this regard, Termination Without Cause may be
            effectuated at any time during the Employment Term or renewal and
            the only amounts that the Company will be obligated or required to
            pay are the amounts calculated according to the formulas set forth
            above.

      (c)   Notwithstanding anything to the contrary expressed or implied
            herein, except as required by applicable law and except as set forth
            in Section 9(b) above, the Company shall not be obligated to make
            any payments to the Employee or on his behalf of whatever kind or
            nature by reason of the Employee's cessation of employment
            (including, without limitation, by reason of a Termination for
            Cause), other than (i) such amounts, if any, of his Salary as shall
            be accrued and remained unpaid as of the date of said cessation and
            (ii) such other amounts, if any, which may be then otherwise payable
            to the Employee pursuant to the terms of the Company's benefits
            plans or pursuant to Section 7 above.

10.   Restrictive Covenants

      10.01 Noncompetition and Nonsolicitation of Customers.

      (a)   The Employee agrees that during the Noncompete Period (as defined
            herein), without the prior written consent of the Company, Employee
            shall refrain, directly or indirectly, and whether as a principal,
            agent, employee, owner, partner, officer, director, shareholder,
            member or otherwise, alone or in association with any other person
            or entity, from carrying on or engaging in a business similar to
            that of the

                                        7



            Company and/or from soliciting customers of the Company within the
            Designated Area, so long as the Company carries on like a business
            therein.

      (b)   Noncompete Period. For purposes of this Agreement, the "Noncompete
            Period" shall mean the Employment Term plus:

            (i)   in the event that the employment of the Employee is terminated
                  by a Termination Without Cause, a period of 18 months. As
                  such, the Noncompete Period would be the term and duration of
                  employment and would extend beyond termination and/or
                  separation for 18 months; or

            (ii)  in the event that the employment of the Employee is terminated
                  by the Company by a Termination With Cause, or by the
                  Employee's Resignation pursuant to Section 9(v) of this
                  Agreement or the Employee's nonrenewal under Section 2 of this
                  Agreement, the Noncompete Period shall expire upon the
                  expiration, termination and/or separation of the Employee's
                  employment with the Company; provided, however, in such event
                  the Company shall have the exclusive option and absolute right
                  of extending the Noncompete Period for a period of 18 months
                  following the termination and/or separation of employment if
                  the Company: (1) delivers written notice to the Employee
                  irrevocably exercising such option before employment
                  termination and/or separation or within 180 days after
                  employment separation and/or termination and (2) agrees to pay
                  and does pay the employee the Salary and benefit amounts as
                  designated under Section 9(b) of this Agreement for such 18
                  month period. If the Company exercises this option and right
                  and complies with the requirements for same, the Noncompete
                  Period shall be extended for the 18 month period designated
                  and Employee agrees and acknowledges that he/she is bound by
                  such period.

      (c)   Definition of Designated Area. The term "Designated Area" shall mean
            the states, parishes, counties and/or municipalities designated in
            Attachment "A".

      (d)   Business of the Company. Employee acknowledges and understands that
            the "business" of the Company involves and relates to the
            underwriting of risks for worker's compensation insurance and
            related services. Employee further acknowledges, agrees and
            represents that he/she understands and knows the business in which
            the Company is engaged and the scope, activities and/or business
            pursuits involved in the business of the Company and in the
            underwriting of risks for worker's compensation insurance and
            related services. Employee further acknowledges and understands that
            the noncompetition and nonsolicitation of customer restrictions in
            this Agreement prohibit the Employee from engaging, in any capacity
            and/or any position, and/or from conducting any activities and/or
            business similar to that of the Company and under the specific terms
            and conditions of this Agreement.

                                        8



      (e)   Customers of the Company. For purposes of this Agreement,
            "customers" shall include, but are not limited to, insured
            businesses and/or entities who have and/or have had insurance
            coverage with the Company and insurance agents with whom the Company
            has contracts, agreements, arrangements and/or any type of business,
            insurance placement and/or working relationship. Employee
            acknowledges and represents that he/she understands the nature of
            the Company's customer relationships and who and/or what comprises
            its customers.

      10.02 Nonsolicitation. Employee shall not, during the Noncompete Period,
directly or indirectly solicit or induce, or attempt to solicit or induce, any
employee, agent of or consultant to the Company to leave his or her employment
or terminate his or her consultation agreement or similar relationship with the
Company.

      10.03 Amerisafe Designation. As used in this Section 10, Amerisafe, Inc.
and/or the "Company" includes Amerisafe, Inc., American Interstate Insurance
Company, Silver Oak Casualty, Inc. and any and all predecessor entities,
successor entities, affiliate entities, parent companies and subsidiaries. The
parties acknowledge and agree that the restrictive covenants in this Section 10
enure to the benefit of and operate for the interest of all of the
above-mentioned companies and affiliates.

      10.04 Remedies. In the event of a breach, or a threatened or attempted
breach, of any provision of this Section 10 by the Employee, the parties
recognize that such a breach would cause irreparable harm to the Company, thus
the Company shall, in addition to all other remedies, be entitled to: (a) a
temporary, preliminary and/or permanent injunction against such breach without
the necessity of showing any actual damages or any irreparable injury; (b) a
decree for the specific performance of this Agreement; and/or (c) damages,
attorney's fees and costs. All remedies in favor of Company shall not be
exclusive, but shall be cumulative.

      10.05 Construction, Reformation and Severability. It is understood and
agreed that, should any portion of any clause or paragraph of this Section 10 be
deemed too broad to permit enforcement to its full extent, or should any portion
of any clause or paragraph of this Section 10 be deemed unreasonable, then said
clause or paragraph shall be reformed and enforced to the maximum extent
permitted by law. Additionally, if any of the provisions of this Section 10 are
ever found by a court of competent jurisdiction to exceed the maximum
enforceable (i) periods of time, (ii) geographic areas of restriction, (iii)
scope of noncompetition or nonsolicitation and/or (iv) description of the
Company's business or customers, or for any other reason, then such
unenforceable element(s) of this Section 10 shall be reformed and reduced to the
maximum periods of time, geographic areas of restriction, scope of
noncompetition or nonsolicitation and/or description of the Company's business
that is permitted by law. In this regard, any unenforceable, unreasonable and/or
overly broad provision shall be reformed and/or severed so as to permit
enforcement to the fullest extent permitted by law. Reformation and severability
shall apply.

      10.06 Reasonableness. Employee acknowledges, represents and agrees that
the restrictive covenants in this Section 10 are reasonable in nature, scope,
time and territory and in the terms and conditions set forth herein. Employee
acknowledges, represents and agrees that the Company has expended substantial
cost in training Employee and that the Company has

                                        9



provided him/her with access to valuable information and has provided him/her
with valuable experience. In addition, Employee acknowledges, represents and
agrees that the Company has placed Employee in contact with its customers and
has made Employee part of its business plans. Employee further acknowledges,
represents and agrees that Employee would not have obtained such training,
experience, contacts and information from other sources without the employment
relationship with the Company. Employee further acknowledges, represents and
agrees that the foregoing have occurred and/or resulted based on the Company's
reliance on these restrictive covenants and Employee's representations and
obligations made herein. Employee further acknowledges, represents and agrees
that this Section 10 and the obligations of Employee under these restrictive
covenants are reasonable in order to protect the legitimate interests of the
Company. Employee further acknowledges, represents and agrees that by virtue of
his/her job position, he/she has become an integral and influential component of
the Company's current and future business plans. It is Employee's desire and
intent that this Agreement be given full force and effect.

11.   Non-Assignability.

      (a)   Neither this Agreement nor any right or interest hereunder shall be
            assignable by the Employee or his beneficiaries or legal
            representatives without the Company's prior written consent;
            provided, however, that nothing in this Section 11(a) shall preclude
            the Employee from designating a beneficiary to receive any benefit
            payable hereunder upon his death or incapacity.

      (b)   Except as required by law, no right to receive payments under this
            Agreement shall be subject to anticipation, commutation, alienation,
            sale, assignment, encumbrance, charge, pledge, or hypothecation or
            to exclusion, attachment, levy or similar process or to assignment
            by operation of law, and any attempt, voluntary or involuntary, to
            effect any such action shall be null, void and of no effect.

12.   Binding Effect. Without limiting or diminishing the effect of Section 11
      hereof, this Agreement shall inure to the benefit of and be binding upon
      the parties hereto and their respective heirs, successors, legal
      representatives and assigns.

13.   Notices. All notices which are required or may be given pursuant to the
      terms of this Agreement shall be in writing and shall be sufficient in all
      respects if given in writing and (i) delivered personally, (ii) five
      business days after being mailed by certified or registered mail, return
      receipt requested and postage prepaid, (iii) sent via a nationally
      recognized overnight courier, or (iv) sent via facsimile confirmed by
      certified or registered mail, return receipt requested and postage
      prepaid, if to the Company at the Company's principal place of business,
      and if to the Employee, at his home address most recently filed with the
      Company, or to such other address or addresses as either party shall have
      designated in writing to the other party hereto.

                                       10



14.   Law Governing. This Agreement shall be governed by and construed in
      accordance with the laws of the State of Louisiana.

15.   Severability. The Employee agrees that in the event that any court of
      competent jurisdiction shall finally hold that any provision of this
      Agreement is void or constitutes an unreasonable restriction against the
      Employee, this Agreement shall not be rendered void but shall apply with
      respect to such extent as such court may judicially determine constitutes
      a reasonable restriction under the circumstances. If any part of this
      Agreement is held by a court of competent jurisdiction to be invalid,
      illegible or incapable of being enforced in whole or in part by reason of
      any rule of law or public policy, such part shall be deemed to be severed
      from the remainder of this Agreement for the purpose only of the
      particular legal proceedings in question and all other covenants and
      provisions of this Agreement shall in every other respect continue in full
      force and effect and no covenant or provision shall be deemed dependent
      upon any other covenant or provision. Severability and reformation shall
      apply.

      It is understood and agreed that, should any portion of any clause or
      paragraph of this Agreement be deemed too broad to permit enforcement to
      its full extent, or should any portion of any clause or paragraph of this
      Agreement be deemed unreasonable, then said clause or paragraph shall be
      reformed and enforced to the maximum extent permitted by law.

16.   Waiver. Failure to insist upon strict compliance with any of the terms,
      covenants or conditions hereof shall not be deemed a waiver of such term,
      covenant or condition, nor shall any waiver or relinquishment of any right
      or power hereunder at any one or more times be deemed a waiver or
      relinquishment of such right or power at any other time or times.

17.   Entire Agreement; Modifications. This Agreement, with referenced
      Attachment "A," constitutes the entire and final expression of the
      agreement of the parties with respect to the subject matter hereof and
      supersedes all prior and/or contemporaneous agreements, oral and written,
      between the parties hereto with respect to the subject matter hereof. This
      Agreement may be modified or amended only by an instrument in writing
      signed by both parties hereto.

                                       11



18.   Counterparts. This Agreement may be executed in two or more counterparts,
      each of which shall be deemed an original, but all of which together shall
      constitute one and the same instrument.

                                   AMERISAFE, INC.

                                   BY:  /s/ Mark R. Anderson
                                        ----------------------------------------

                                   EMPLOYEE:

                                   BY:  /s/ C. Allen Bradley, Jr.
                                        ----------------------------------------
                                        C. Allen Bradley, Jr.

                                       12



                              EMPLOYMENT AGREEMENT

                                 AMENDMENT NO 1

      This First Amendment to the Employment Agreement dated January 1, 2004 by
and between Amerisafe, Inc., a Texas corporation (the "Company"), and C. Allen
Bradley, Jr. (the "Employee"), hereby amends the Agreement as follows:

      Item 2. Term of Employment

            The paragraph beginning, "Unless earlier terminated by the Employee
      or the Company as provided in this Agreement, the term of the Employee's
      employment under this Agreement shall be for a period beginning on January
      1, 2004 (the "Effective Date") and ending on the second anniversary of the
      Effective Date, January 1, 2006..." is hereby amended to read:

            "Unless earlier terminated by the Employee or the Company as
      provided in this Agreement, the term of the Employee's employment under
      this Agreement shall be for a period beginning on January 1, 2004 (the
      "Effective Date") and ending on the fourth anniversary of the Effective
      Date, January 1, 2008..."

      This Amendment is effective June 17, 2005.

                                   AMERISAFE, Inc.

                                   By:  /s/ Arthur L. Hunt
                                        ----------------------------------------
                                        Arthur L. Hunt, Executive Vice President

      Acknowledged and agreed to June 17, 2005

                                        /s/ C. Allen Bradley, Jr.
                                        ----------------------------------------
                                        C. Allen Bradley, Jr.

EX-10.3

                                                                    Exhibit 10.3

                              EMPLOYMENT AGREEMENT

      EMPLOYMENT AGREEMENT dated as of January 1, 2004 by and between AMERISAFE,
INC., a Texas corporation (the "Company"), and Geoffrey R. Banta (the
"Employee").

                                   WITNESSETH:

      WHEREAS the Company desires to induce the Employee to continue in the
employment by the company for the period provided in this Agreement, and the
Employee is willing to continue such employment with the Company on a full-time
basis, all in accordance with the terms and conditions set forth below;

      NOW, THEREFORE, for and in consideration of the premises hereof and the
mutual covenants contained herein, the parties hereto hereby covenant and agree
as follows:

1.    Employment.

      (a)   The Company hereby agrees to continue to employ the Employee, and
            the Employee hereby accepts such employment with the Company, for
            the period set forth in Section 2 hereof, subject to the terms and
            conditions hereinafter set forth.

      (b)   The Employee affirms and represents that he is under no obligation
            to any former employer or other party which is in any way
            inconsistent with, or which imposes any restriction upon, the
            Employee's employment hereunder with the Company, the employment of
            the Employee by the Company, or the Employee's undertakings under
            this Agreement.

2.    Term of Employment. Unless earlier terminated by the Employee or the
      Company as provided in this Agreement, the term of the Employee's
      employment under this Agreement shall be for a period beginning on January
      1, 2004 (the "Effective Date") and ending on the second anniversary of the
      Effective Date, January 1, 2006, provided, however, that this Agreement
      shall automatically renew for successive one year periods, unless either
      party shall notify the other in writing not less than thirty (30) days
      prior to the second anniversary date or any successive anniversary date
      that it does not intend to renew this Agreement. Such period, plus any
      annual renewal periods, or, if the Employee's employment hereunder is
      earlier terminated as provided herein and including termination pursuant
      to Section 9(a)(i)-(v), such shorter period, is sometimes referred to
      herein as the "Employment Term".

3.    Duties. The Employee shall be employed by the Company as a senior
      executive officer and shall endeavor in good faith to competently perform
      such duties as inherent in his/her employment and/or any designated job
      position and/or as specified by the Company and shall also perform and
      discharge such other employment duties and responsibilities as the Board
      of Directors of the Company shall from time to time reasonably determine,
      not inconsistent with his/her position as a senior executive officer with
      the Company. Employee shall also comply with any By-Laws of the Company,
      as applicable. The Employee shall perform his duties principally at the
      offices of the Company at 2301



      Highway 190 West, DeRidder, Louisiana, with such travel to such other
      locations from time to time as the Board of Directors of the Company may
      reasonably prescribe. Except as may otherwise be approved in advance by
      the Board of Directors of the Company, and except during vacation periods
      and reasonable periods of absence due to sickness, personal injury or
      other disability, the Employee shall devote his full time during normal
      business hours throughout the Employment Term to the services required of
      him hereunder; provided that the foregoing shall not prohibit the Employee
      from engaging in reasonable charitable and community activities. The
      Employee shall render his business services exclusively to the Company and
      its subsidiaries during the Employment Term and shall use his good faith
      efforts, judgment and energy to improve and advance the business and
      interests of the Company and its subsidiaries in a manner consistent with
      the duties of his position.

4.    Conflicts of Interest and Compliance. Employee shall not engage in any
      conflict of interest and/or take any actions or engage in any conduct
      which is contrary to the exclusive interests of the Company. Employee
      shall comply with all applicable laws and regulations (federal, state
      and/or local) and shall comply with all applicable directives, orders and
      regulations of any governmental agency or regulatory body including
      federal, state and local agencies and bodies. Employee shall also comply
      with all policies and procedures of the Company and directives of the
      Board of Directors. Employee understands, acknowledges and agrees that
      he/she may hold a position of trust and that fiduciary duties and
      responsibilities may apply under applicable law and that these duties and
      responsibilities may be continuing in nature, even after separation from
      employment. Employee agrees to fully and faithfully perform and discharge
      all such duties, responsibilities and obligations.

5.    EEO Compliance. Employee shall not engage in any conduct which constitutes
      an unlawful employment practice or which violates any laws or regulations
      (federal, state and/or local) prohibiting discrimination, harassment
      and/or retaliation. Employee acknowledges that the Company is an Equal
      Opportunity Employer and prohibits all forms of unlawful discrimination in
      the terms and conditions of employment and prohibits all forms of
      harassment, including sexual harassment.

6.    Salary and Bonus.

      (a)   Salary. As compensation for the services to be performed by the
            Employee hereunder during the Employment Term, the Company shall pay
            the Employee a base salary at the annual rate of not less than Two
            Hundred Thousand Dollars ($200,000.00) (said amount, together with
            any increases thereto as may be determined from time to time by the
            Compensation Committee of the Board of Directors of the Company in
            its sole discretion, being hereinafter referred to as "Salary"). Any
            Salary payable hereunder shall be paid in regular intervals in
            accordance with the Company's payroll practices from time to time in
            effect, but in no event less than monthly.

      (b)   Bonus. The Employee shall be eligible to receive bonus compensation
            from the Company in respect of each fiscal year (or portion thereof)
            occurring during the

                                       2


            Employment Term in amounts, if any, as may be determined by the
            Compensation Committee of the Board of Directors of the Company in
            its sole discretion on the basis of performance-based criteria to be
            established from time to time by such Committee in its sole
            discretion.

      (c)   Withholding, Etc. The payment of any Salary and Bonus under this
            Section 6, and the payment of any severance pay pursuant to Section
            9 hereof, shall be subject to applicable withholding and payroll
            taxes and such other deductions as may be required under the
            Company's employee benefit plans.

7.    Other Benefits.

      During the Employment Term, the Employee shall:

      (a)   be eligible to participate in all employee fringe benefits and
            pension and/or profit sharing plans that may be provided by the
            Company for its other senior executive officers in accordance with
            the provision of any such plans, as the same may be in effect from
            time to time;

      (b)   be eligible to participate in all medical and health plans or other
            employee welfare benefit plans that may be provided by the company
            for its other senior executive officers in accordance with the
            provisions of any such plans, as the same be in effect from time to
            time;

      (c)   be entitled to at least 23 vacation/personal days in each calendar
            year; the Employee shall also be entitled to all paid holidays given
            by the company to its other senior executive officers;

      (d)   be entitled to sick pay and disability benefits in accordance with
            any Company policy that may be applicable to other senior executive
            officers from time to time,

      (e)   be entitled to a car allowance consistent with Company practice as
            of the date hereof; and

      (f)   be entitled to reimbursement for all reasonable out-of-pocket
            business expenses incurred by the Employee in the performance of his
            duties hereunder in accordance with company policy that may be
            applicable to senior executive officers from time to time.

8.    Confidential Information. The Employee hereby covenants, agrees and
      acknowledges as follows:

      (a)   The Employee has and will have access to and will participate in the
            development of or be acquainted with confidential or proprietary
            information and trade secrets that directly or indirectly relate to
            the business, prospects, operations and other aspects of the Company
            and any other present or future subsidiaries of the Company
            (collectively with the Company, the "Companies"), including but not
            limited to (1) customer lists; the identity, lists or descriptions
            of new or

                                       3


            prospective customers; financial statements; cost reports or other
            financial information; contract proposals or bidding information,
            business plans; training and operations methods and manuals;
            personnel records; software programs; reports and correspondence;
            and management systems, policies or procedures, including related
            forms and manuals; (ii) information pertaining to future
            developments such as future marketing or acquisition plans or ideas;
            and (iii) all other tangible and intangible property, which are used
            in the business and operations of the Companies but not made public.
            The information and trade secrets relating to the business of the
            Companies described hereinabove in this paragraph (a) are
            hereinafter referred to collectively as the "Confidential
            Information", provided that the term "Confidential Information"
            shall not include any information (x) that is or becomes publicly
            available (other than as a result of violation of this Agreement by
            the Employee), or (y) that the Employee receives or received on a
            non-confidential basis from a source (other than the Companies or
            any of their representatives) that is not prohibited from disclosing
            such information by a legal, contractual or fiduciary obligation
            (provided, however that the Employee shall not be deemed to be in
            violation of this clause (y) unless he has actual knowledge of any
            such obligation on the party of any such source).

      (b)   The Employee shall not disclose, use or make known for his or
            another's benefit any Confidential Information or use such
            Confidential Information in any way except in connection with the
            performance of the Employee's duties under this Agreement. The
            Employee may disclose Confidential Information in response to an
            order or subpoena of a court or governmental agency of competent
            jurisdiction and authority provided, however, notice of such order
            or subpoena shall be immediately communicated to the Company
            telephonically and in writing so that the Company shall have an
            opportunity to intervene and assert its rights to nondisclosure
            prior to any response by Employee to such an order or subpoena and
            in such notice, Employee shall advise as to whether or not he/she
            intends to comply with and/or respond to the order and/or subpoena.

      (c)   The Employee acknowledges and agrees that a remedy at law for any
            breach or threatened breach of the provisions of this Section 8
            would be inadequate and, therefore, agrees that the Company shall be
            entitled to injunctive relief in addition to any other available
            rights and remedies in case of any such breach or threatened breach;
            provided, however, that nothing contained herein shall be construed
            as prohibiting the Company from pursuing any other rights and
            remedies available for any such breach or threatened breach.

      (d)   The Employee agrees that upon termination of his employment with the
            company for any reason, the Employee shall promptly return to the
            Company all Confidential Information in his possession in whatever
            form maintained (including, without limitation, computer disks and
            other electronic media).

      (e)   The obligations of the Employee under this Section 8 shall, except
            as otherwise provided herein, survive the termination of the
            Employment Term and/or the expiration or termination of this
            Agreement for a period of five years.

                                       4


9.    Termination.

      (a)   The Employee's employment hereunder shall be terminated upon the
            occurrence of any of the following:

            (i)   death of the Employee;

            (ii)  the Employee's inability to perform his duties on account of
                  disability or incapacity for a period of one hundred eighty
                  (180) or more days, whether or not consecutive, within any
                  period of twelve (12) consecutive months;

            (iii) a Termination for Cause (as defined herein);

            (iv)  a Termination Without Cause (as defined herein); or

            (v)   termination of the Employee's employment hereunder by the
                  Employee at any time other than a termination by the Employee
                  pursuant to Section 9(a)(iv) hereof (a "Resignation").

                  The term "Termination for Cause" shall mean a termination of
                  the Employee's employment hereunder by action of the Board of
                  Directors of the Company at any time, including during the
                  Employment Term, as a result of any of the following with
                  respect to the Employee: (1) indictment or arrest for the
                  alleged commission of a felony, (2) acts of dishonesty or
                  moral turpitude which are materially detrimental to the
                  Companies, (3) acts or omissions which the Employee reasonably
                  knew were likely to materially damage the business of the
                  Company, (4) failure by the Employee to obey the reasonable
                  and lawful orders of the Board of Directors of the Company, or
                  (5) gross negligence by the Employee in the performance of, or
                  willful disregard by the Employee of, his obligations
                  hereunder; provided, however, that prior to any termination
                  pursuant to clauses (4) or (5) above, the Board of Directors
                  of the Company shall have provided the Employee with written
                  notice of such action, failure or event and a reasonable
                  period in which to cure the same. This advance notice and cure
                  provision for termination pursuant to clauses (4) or (5) above
                  shall not apply and is not required if giving notice and/or a
                  cure period would be contrary to the best interests of the
                  Company.

                  The term "Termination Without Cause" shall mean: (1) the
                  Company is giving written notice at any time, including during
                  the Employment Term, to the Employee that the Employee's
                  employment is being terminated or non-renewed (pursuant to
                  paragraph 2. hereof) other than pursuant to clauses (i), (ii)
                  or (iii) of the first paragraph of this Section 9(a), or (2)
                  the Employee giving written notice to the Company that he is
                  terminating his employment with the Company upon the
                  occurrence of any of the following items:

                                       5


                  (A)   significant adverse change in the nature or scope of the
                        authorities, powers, functions, responsibilities or
                        duties associated with the job position designated
                        and/or existing at the effective date of this Agreement,
                        a reduction in the Employee's Salary, or the termination
                        of the Employee's rights to any employee benefits to
                        which he was entitled pursuant to this Agreement (other
                        than a termination of rights or benefits applicable to
                        all executive officers), any of which is not remedied
                        within 10 calendar days after receipt by the Company of
                        written notice from the Employee of such change,
                        reduction or termination as the case may be;

                  (B)   the Company shall require the Employee to have his
                        principal location of work changed to any location which
                        is in excess of 25 miles from the location thereof as of
                        the date of this Agreement without his prior written
                        consent; or

                  (C)   without limiting the generality or effect of the
                        foregoing, any material breach of this Agreement by the
                        Company or any successor thereto.

                  (D)   a "Change of Control". For purposes of this Agreement
                        and this provision, a Change of Control shall mean the
                        following: (i) sale of all or substantially all of the
                        Company's assets to any person or entity; (ii) a merger,
                        consolidation or other similar business combination of
                        the Company or of the subsidiaries of the Company, taken
                        as a whole (the Subsidiaries"), with or into another
                        company other than AmCOMP Incorporated, with the effect
                        that, immediately following such merger, consolidation
                        or other business combination, the Qualified
                        Shareholders of the Company or the Subsidiaries, taken
                        as a whole, prior to such merger, consolidation or other
                        business combination hold less than 50% of the combined
                        voting power of the then outstanding securities of the
                        surviving company of such merger, consolidation or other
                        business combination ordinarily ( and apart from rights
                        accruing under special circumstances) having the right
                        to vote in the election of directors; OR (iii) a sale,
                        transfer and/or acquisition of a majority of the common
                        stock of the Company to a person or entity that is not a
                        "Qualified Shareholder." For purposes of this Agreement
                        and this provision, a Change of Control shall not mean a
                        public offering of equity securities of the Company
                        registered under the Securities Act of 1933, as amended.
                        For purposes of this Agreement and this provision,
                        "Qualified Shareholders" is defined as and shall mean
                        WCAS VII, L.P. Sprout Group and affiliates of either
                        WCAS VII, L.P. or Sprout Group.

      (b)   In the event that the Employee's employment is terminated at any
            time by a Termination Without Cause, for a 12 month period following
            the effective date of

                                        6


            such termination, the company shall pay (as severance, termination
            pay, contract payout, compensation and/or liquidated damages) the
            Salary that would have otherwise been payable to the Employee during
            such period. This amount will be paid during such period in
            accordance with the Company's then existing payroll practices,
            methods and/or pay periods. In addition, in the event that
            Employee's employment is terminated at any time by Termination
            Without Cause, the Company will pay and/or reimburse Employee for a
            12 month period following such termination the actual cost of COBRA
            continuing health coverage premiums. In this regard, if the Employee
            is eligible for COBRA continuing health benefits and if Employee
            timely elects COBRA continuing health care coverage, the Company
            will pay and/or reimburse up to a maximum of 12 months of COBRA
            continuing health care coverage premiums. It shall be at the
            Company's option and discretion to either pay the COBRA premiums
            directly or to reimburse the Employee for premiums that the Employee
            pays for COBRA continuing health coverage. Any premiums or amounts
            due for COBRA continuing health coverage beyond the 12 month period
            referenced above shall be at the sole cost and expense of Employee
            and will not be paid and/or reimbursed by the Company. The above
            described obligations of the Company (continuation of salary for a
            12 month period following Termination Without Cause and payment of
            COBRA premiums for a 12 month period following Termination Without
            Cause) shall be the exclusive remedies and payment obligations and
            no other amounts or obligations will be due and owing by the Company
            to Employee. In this regard, Termination Without Cause may be
            effectuated at any time during the Employment Term or renewal and
            the only amounts that the Company will be obligated or required to
            pay are the amounts calculated according to the formulas set forth
            above.

      (c)   Notwithstanding anything to the contrary expressed or implied
            herein, except as required by applicable law and except as set forth
            in Section 9(b) above, the Company shall not be obligated to make
            any payments to the Employee or on his behalf of whatever kind or
            nature by reason of the Employee's cessation of employment
            (including, without limitation, by reason of a Termination for
            Cause), other than (i) such amounts, if any, of his Salary as shall
            be accrued and remained unpaid as of the date of said cessation and
            (ii) such other amounts, if any, which may be then otherwise payable
            to the Employee pursuant to the terms of the Company's benefits
            plans or pursuant to Section 7 above.

10.   Restrictive Covenants

      10.01 Noncompetition and Nonsolicitation of Customers.

      (a)   The Employee agrees that during the Noncompete Period (as defined
            herein), without the prior written consent of the Company, Employee
            shall refrain, directly or indirectly, and whether as a principal,
            agent, employee, owner, partner, officer, director, shareholder,
            member or otherwise, alone or in association with any other person
            or entity, from carrying on or engaging in a business similar to
            that of the

                                       7


            Company and/or from soliciting customers of the Company within the
            Designated Area, so long as the Company carries on like a business
            therein.

      (b)   Noncompete Period. For purposes of this Agreement, the "Noncompete
            Period" shall mean the Employment Term plus:

            (i)   in the event that the employment of the Employee is terminated
                  by a Termination Without Cause, a period of 12 months. As
                  such, the Noncompete Period would be the term and duration of
                  employment and would extend beyond termination and/or
                  separation for 12 months; or

            (ii)  in the event that the employment of the Employee is terminated
                  by the Company by a Termination With Cause, or by the
                  Employee's Resignation pursuant to Section 9(v) of this
                  Agreement or the Employee's nonrenewal under Section 2 of this
                  Agreement, the Noncompete Period shall expire upon the
                  expiration, termination and/or separation of the Employee's
                  employment with the Company; provided, however, in such event
                  the Company shall have the exclusive option and absolute right
                  of extending the Noncompete Period for a period of 12 months
                  following the termination and/or separation of employment if
                  the Company: (1) delivers written notice to the Employee
                  irrevocably exercising such option before employment
                  termination and/or separation or within 180 days after
                  employment separation and/or termination and (2) agrees to pay
                  and does pay the employee the Salary and benefit amounts as
                  designated under Section 9(b) of this Agreement for such 12
                  month period. If the Company exercises this option and right
                  and complies with the requirements for same, the Noncompete
                  Period shall be extended for the 12 month period designated
                  and Employee agrees and acknowledges that he/she is bound by
                  such period.

      (c)   Definition of Designated Area. The term "Designated Area" shall mean
            the states, parishes, counties and/or municipalities designated in
            Attachment "A".

      (d)   Business of the Company. Employee acknowledges and understands that
            the "business" of the Company involves and relates to the
            underwriting of risks for worker's compensation insurance and
            related services. Employee further acknowledges, agrees and
            represents that he/she understands and knows the business in which
            the Company is engaged and the scope, activities and/or business
            pursuits involved in the business of the Company and in the
            underwriting of risks for worker's compensation insurance and
            related services. Employee further acknowledges and understands that
            the noncompetition and nonsolicitation of customer restrictions in
            this Agreement prohibit the Employee from engaging, in any capacity
            and/or any position, and/or from conducting any activities and/or
            business similar to that of the Company and under the specific terms
            and conditions of this Agreement.

                                       8


      (e)   Customers of the Company. For purposes of this Agreement,
            "customers" shall include, but are not limited to, insured
            businesses and/or entities who have and/or have had insurance
            coverage with the Company and insurance agents with whom the Company
            has contracts, agreements, arrangements and/or any type of business,
            insurance placement and/or working relationship. Employee
            acknowledges and represents that he/she understands the nature of
            the Company's customer relationships and who and/or what comprises
            its customers.

      10.02 Nonsolicitation. Employee shall not, during the Noncompete Period,
directly or indirectly solicit or induce, or attempt to solicit or induce, any
employee, agent of or consultant to the Company to leave his or her employment
or terminate his or her consultation agreement or similar relationship with the
Company.

      10.03 Amerisafe Designation. As used in this Section 10, Amerisafe, Inc.
and/or the "Company" includes Amerisafe, Inc., American Interstate Insurance
Company, Silver Oak Casualty, Inc. and any and all predecessor entities,
successor entities, affiliate entities, parent companies and subsidiaries. The
parties acknowledge and agree that the restrictive covenants in this Section 10
enure to the benefit of and operate for the interest of all of the
above-mentioned companies and affiliates.

      10.04 Remedies. In the event of a breach, or a threatened or attempted
breach, of any provision of this Section 10 by the Employee, the parties
recognize that such a breach would cause irreparable harm to the Company, thus
the Company shall, in addition to all other remedies, be entitled to: (a) a
temporary, preliminary and/or permanent injunction against such breach without
the necessity of showing any actual damages or any irreparable injury; (b) a
decree for the specific performance of this Agreement; and/or (c) damages,
attorney's fees and costs. All remedies in favor of Company shall not be
exclusive, but shall be cumulative.

      10.05 Construction, Reformation and Severability. It is understood and
agreed that, should any portion of any clause or paragraph of this Section 10 be
deemed too broad to permit enforcement to its full extent, or should any portion
of any clause or paragraph of this Section 10 be deemed unreasonable, then said
clause or paragraph shall be reformed and enforced to the maximum extent
permitted by law. Additionally, if any of the provisions of this Section 10 are
ever found by a court of competent jurisdiction to exceed the maximum
enforceable (i) periods of time, (ii) geographic areas of restriction, (iii)
scope of noncompetition or nonsolicitation and/or (iv) description of the
Company's business or customers, or for any other reason, then such
unenforceable element(s) of this Section 10 shall be reformed and reduced to the
maximum periods of time, geographic areas of restriction, scope of
noncompetition or nonsolicitation and/or description of the Company's business
that is permitted by law. In this regard, any unenforceable, unreasonable and/or
overly broad provision shall be reformed and/or severed so as to permit
enforcement to the fullest extent permitted by law. Reformation and severability
shall apply.

      10.06 Reasonableness. Employee acknowledges, represents and agrees that
the restrictive covenants in this Section 10 are reasonable in nature, scope,
time and territory and in the terms and conditions set forth herein. Employee
acknowledges, represents and agrees that the Company has

                                       9


expended substantial cost in training Employee and that the Company has provided
him/her with access to valuable information and has provided him/her with
valuable experience. In addition, Employee acknowledges, represents and agrees
that the Company has placed Employee in contact with its customers and has made
Employee part of its business plans. Employee further acknowledges, represents
and agrees that Employee would not have obtained such training, experience,
contacts and information from other sources without the employment relationship
with the Company. Employee further acknowledges, represents and agrees that the
foregoing have occurred and/or resulted based on the Company's reliance on these
restrictive covenants and Employee's representations and obligations made
herein. Employee further acknowledges, represents and agrees that this Section
10 and the obligations of Employee under these restrictive covenants are
reasonable in order to protect the legitimate interests of the Company. Employee
further acknowledges, represents and agrees that by virtue of his/her job
position, he/she has become an integral and influential component of the
Company's current and future business plans. It is Employee's desire and intent
that this Agreement be given full force and effect.

11.   Non-Assignability.

      (a)   Neither this Agreement nor any right or interest hereunder shall be
            assignable by the Employee or his beneficiaries or legal
            representatives without the Company's prior written consent;
            provided, however, that nothing in this Section 11(a) shall preclude
            the Employee from designating a beneficiary to receive any benefit
            payable hereunder upon his death or incapacity.

      (b)   Except as required by law, no right to receive payments under this
            Agreement shall be subject to anticipation, commutation, alienation,
            sale, assignment, encumbrance, charge, pledge, or hypothecation or
            to exclusion, attachment, levy or similar process or to assignment
            by operation of law, and any attempt, voluntary or involuntary, to
            effect any such action shall be null, void and of no effect.

12.   Binding Effect. Without limiting or diminishing the effect of Section 11
      hereof, this Agreement shall inure to the benefit of and be binding upon
      the parties hereto and their respective heirs, successors, legal
      representatives and assigns.

13.   Notices. All notices which are required or may be given pursuant to the
      terms of this Agreement shall be in writing and shall be sufficient in all
      respects if given in writing and (i) delivered personally, (ii) five
      business days after being mailed by certified or registered mail, return
      receipt requested and postage prepaid, (iii) sent via a nationally
      recognized overnight courier, or (iv) sent via facsimile confirmed by
      certified or registered mail, return receipt requested and postage
      prepaid, if to the Company at the Company's principal place of business,
      and if to the Employee, at his home address most recently filed with the
      Company, or to such other address or addresses as either party shall have
      designated in writing to the other party hereto.

                                       10


14.   Law Governing. This Agreement shall be governed by and construed in
      accordance with the laws of the State of Louisiana.

15.   Severability. The Employee agrees that in the event that any court of
      competent jurisdiction shall finally hold that any provision of this
      Agreement is void or constitutes an unreasonable restriction against the
      Employee, this Agreement shall not be rendered void but shall apply with
      respect to such extent as such court may judicially determine constitutes
      a reasonable restriction under the circumstances. If any part of this
      Agreement is held by a court of competent jurisdiction to be invalid,
      illegible or incapable of being enforced in whole or in part by reason of
      any rule of law or public policy, such part shall be deemed to be severed
      from the remainder of this Agreement for the purpose only of the
      particular legal proceedings in question and all other covenants and
      provisions of this Agreement shall in every other respect continue in full
      force and effect and no covenant or provision shall be deemed dependent
      upon any other covenant or provision. Severability and reformation shall
      apply.

      It is understood and agreed that, should any portion of any clause or
      paragraph of this Agreement be deemed too broad to permit enforcement to
      its full extent, or should any portion of any clause or paragraph of this
      Agreement be deemed unreasonable, then said clause or paragraph shall be
      reformed and enforced to the maximum extent permitted by law.

16.   Waiver. Failure to insist upon strict compliance with any of the terms,
      covenants or conditions hereof shall not be deemed a waiver of such term,
      covenant or condition, nor shall any waiver or relinquishment of any right
      or power hereunder at any one or more times be deemed a waiver or
      relinquishment of such right or power at any other time or times.

17.   Entire Agreement; Modifications. This Agreement, with referenced
      Attachment "A," constitutes the entire and final expression of the
      agreement of the parties with respect to the subject matter hereof and
      supersedes all prior and/or contemporaneous agreements, oral and written,
      between the parties hereto with respect to the subject matter hereof. This
      Agreement may be modified or amended only by an instrument in writing
      signed by both parties hereto.

                                       11


18.   Counterparts. This Agreement may be executed in two or more counterparts,
      each of which shall be deemed an original, but all of which together shall
      constitute one and the same instrument.

                                              AMERISAFE, INC.

                                              BY: /s/ C. Allen Bradley, Jr.
                                                  ------------------------------

                                              Employee:

                                              /s/ Geoffrey R. Banta
                                              ---------------------------------
                                              Signature

                                       12


                              EMPLOYMENT AGREEMENT

                                 AMENDMENT NO 1

      This First Amendment to the Employment Agreement dated January 1, 2004 by
and between Amerisafe, Inc., a Texas corporation (the "Company"), and Geoffrey
R. Banta (the "Employee"), hereby amends the Agreement as follows:

      Item 2. Term of Employment

            The paragraph beginning, "Unless earlier terminated by the Employee
      or the Company as provided in this Agreement, the term of the Employee's
      employment under this Agreement shall be for a period beginning on January
      1, 2004 (the "Effective Date") and ending on the second anniversary of the
      Effective Date, January 1, 2006..." is hereby amended to read:

            "Unless earlier terminated by the Employee or the Company as
      provided in this Agreement, the term of the Employee's employment under
      this Agreement shall be for a period beginning on January 1, 2004 (the
      "Effective Date") and ending on the fourth anniversary of the Effective
      Date, January 1, 2008..."

      This Amendment is effective June 17, 2005.

                                              AMERISAFE, Inc.

                                              By: /s/ C. Allen Bradley, Jr.
                                                  -----------------------------
                                                  C. Allen Bradley, Jr.,
                                                  President and CEO

      Acknowledged and agreed to June 17, 2005

                                                  /s/ Geoffrey R. Banta
                                                  ------------------------------
                                                  Geoffrey R. Banta

EX-10.4

                                                                    Exhibit 10.4

                              EMPLOYMENT AGREEMENT

      EMPLOYMENT AGREEMENT dated as of January 1, 2004 by and between AMERISAFE,
INC., a Texas corporation (the "Company"), and Arthur L. Hunt (the "Employee").

                                   WITNESSETH:

      WHEREAS the Company desires to induce the Employee to continue in the
employment by the company for the period provided in this Agreement, and the
Employee is willing to continue such employment with the Company on a full-time
basis, all in accordance with the terms and conditions set forth below;

      NOW, THEREFORE, for and in consideration of the premises hereof and the
mutual covenants contained herein, the parties hereto hereby covenant and agree
as follows:

1.    Employment.

      (a)   The Company hereby agrees to continue to employ the Employee, and
            the Employee hereby accepts such employment with the Company, for
            the period set forth in Section 2 hereof, subject to the terms and
            conditions hereinafter set forth.

      (b)   The Employee affirms and represents that he is under no obligation
            to any former employer or other party which is in any way
            inconsistent with, or which imposes any restriction upon, the
            Employee's employment hereunder with the Company, the employment of
            the Employee by the Company, or the Employee's undertakings under
            this Agreement.

2.    Term of Employment. Unless earlier terminated by the Employee or the
      Company as provided in this Agreement, the term of the Employee's
      employment under this Agreement shall be for a period beginning on January
      1, 2004 (the "Effective Date") and ending on the second anniversary of the
      Effective Date, January 1, 2006, provided, however, that this Agreement
      shall automatically renew for successive one year periods, unless either
      party shall notify the other in writing not less than thirty (30) days
      prior to the second anniversary date or any successive anniversary date
      that it does not intend to renew this Agreement. Such period, plus any
      annual renewal periods, or, if the Employee's employment hereunder is
      earlier terminated as provided herein and including termination pursuant
      to Section 9(a)(i)-(v), such shorter period, is sometimes referred to
      herein as the "Employment Term".

3.    Duties. The Employee shall be employed by the Company as a senior
      executive officer and shall endeavor in good faith to competently perform
      such duties as inherent in his/her employment and/or any designated job
      position and/or as specified by the Company and shall also perform and
      discharge such other employment duties and responsibilities as the Board
      of Directors of the Company shall from time to time reasonably determine,
      not inconsistent with his/her position as a senior executive officer with
      the Company. Employee shall also comply with any By-Laws of the Company,
      as applicable. The Employee shall perform his duties principally at the
      offices of the Company at 2301



      Highway 190 West, DeRidder, Louisiana, with such travel to such other
      locations from time to time as the Board of Directors of the Company may
      reasonably prescribe. Except as may otherwise be approved in advance by
      the Board of Directors of the Company, and except during vacation periods
      and reasonable periods of absence due to sickness, personal injury or
      other disability, the Employee shall devote his full time during normal
      business hours throughout the Employment Term to the services required of
      him hereunder; provided that the foregoing shall not prohibit the Employee
      from engaging in reasonable charitable and community activities. The
      Employee shall render his business services exclusively to the Company and
      its subsidiaries during the Employment Term and shall use his good faith
      efforts, judgment and energy to improve and advance the business and
      interests of the Company and its subsidiaries in a manner consistent with
      the duties of his position.

4.    Conflicts of Interest and Compliance. Employee shall not engage in any
      conflict of interest and/or take any actions or engage in any conduct
      which is contrary to the exclusive interests of the Company. Employee
      shall comply with all applicable laws and regulations (federal, state
      and/or local) and shall comply with all applicable directives, orders and
      regulations of any governmental agency or regulatory body including
      federal, state and local agencies and bodies. Employee shall also comply
      with all policies and procedures of the Company and directives of the
      Board of Directors. Employee understands, acknowledges and agrees that
      he/she may hold a position of trust and that fiduciary duties and
      responsibilities may apply under applicable law and that these duties and
      responsibilities may be continuing in nature, even after separation from
      employment. Employee agrees to fully and faithfully perform and discharge
      all such duties, responsibilities and obligations.

5.    EEO Compliance. Employee shall not engage in any conduct which constitutes
      an unlawful employment practice or which violates any laws or regulations
      (federal, state and/or local) prohibiting discrimination, harassment
      and/or retaliation. Employee acknowledges that the Company is an Equal
      Opportunity Employer and prohibits all forms of unlawful discrimination in
      the terms and conditions of employment and prohibits all forms of
      harassment, including sexual harassment.

6.    Salary and Bonus.

      (a)   Salary. As compensation for the services to be performed by the
            Employee hereunder during the Employment Term, the Company shall pay
            the Employee a base salary at the annual rate of not less than Two
            Hundred Fifteen Thousand Dollars ($215,000.00) (said amount,
            together with any increases thereto as may be determined from time
            to time by the Compensation Committee of the Board of Directors of
            the Company in its sole discretion, being hereinafter referred to as
            "Salary"). Any Salary payable hereunder shall be paid in regular
            intervals in accordance with the Company's payroll practices from
            time to time in effect, but in no event less than monthly.

      (b)   Bonus. The Employee shall be eligible to receive bonus compensation
            from the Company in respect of each fiscal year (or portion thereof)
            occurring during the

                                       2


            Employment Term in amounts, if any, as may be determined by the
            Compensation Committee of the Board of Directors of the Company in
            its sole discretion on the basis of performance-based criteria to be
            established from time to time by such Committee in its sole
            discretion.

      (c)   Withholding, Etc. The payment of any Salary and Bonus under this
            Section 6, and the payment of any severance pay pursuant to Section
            9 hereof, shall be subject to applicable withholding and payroll
            taxes and such other deductions as may be required under the
            Company's employee benefit plans.

7.    Other Benefits.

      During the Employment Term, the Employee shall:

      (a)   be eligible to participate in all employee fringe benefits and
            pension and/or profit sharing plans that may be provided by the
            Company for its other senior executive officers in accordance with
            the provision of any such plans, as the same may be in effect from
            time to time;

      (b)   be eligible to participate in all medical and health plans or other
            employee welfare benefit plans that may be provided by the company
            for its other senior executive officers in accordance with the
            provisions of any such plans, as the same be in effect from time to
            time;

      (c)   be entitled to at least 23 vacation/personal days in each calendar
            year; the Employee shall also be entitled to all paid holidays given
            by the company to its other senior executive officers;

      (d)   be entitled to sick pay and disability benefits in accordance with
            any Company policy that may be applicable to other senior executive
            officers from time to time,

      (e)   be entitled to a car allowance consistent with Company practice as
            of the date hereof; and

      (f)   be entitled to reimbursement for all reasonable out-of-pocket
            business expenses incurred by the Employee in the performance of his
            duties hereunder in accordance with company policy that may be
            applicable to senior executive officers from time to time.

8.    Confidential Information. The Employee hereby covenants, agrees and
      acknowledges as follows:

      (a)   The Employee has and will have access to and will participate in the
            development of or be acquainted with confidential or proprietary
            information and trade secrets that directly or indirectly relate to
            the business, prospects, operations and other aspects of the Company
            and any other present or future subsidiaries of the Company
            (collectively with the Company, the "Companies"), including but not
            limited to (1) customer lists; the identity, lists or descriptions
            of new or

                                       3


            prospective customers; financial statements; cost reports or other
            financial information; contract proposals or bidding information,
            business plans; training and operations methods and manuals;
            personnel records; software programs; reports and correspondence;
            and management systems, policies or procedures, including related
            forms and manuals; (ii) information pertaining to future
            developments such as future marketing or acquisition plans or ideas;
            and (iii) all other tangible and intangible property, which are used
            in the business and operations of the Companies but not made public.
            The information and trade secrets relating to the business of the
            Companies described hereinabove in this paragraph (a) are
            hereinafter referred to collectively as the "Confidential
            Information", provided that the term "Confidential Information"
            shall not include any information (x) that is or becomes publicly
            available (other than as a result of violation of this Agreement by
            the Employee), or (y) that the Employee receives or received on a
            non-confidential basis from a source (other than the Companies or
            any of their representatives) that is not prohibited from disclosing
            such information by a legal, contractual or fiduciary obligation
            (provided, however that the Employee shall not be deemed to be in
            violation of this clause (y) unless he has actual knowledge of any
            such obligation on the party of any such source).

      (b)   The Employee shall not disclose, use or make known for his or
            another's benefit any Confidential Information or use such
            Confidential Information in any way except in connection with the
            performance of the Employee's duties under this Agreement. The
            Employee may disclose Confidential Information in response to an
            order or subpoena of a court or governmental agency of competent
            jurisdiction and authority provided, however, notice of such order
            or subpoena shall be immediately communicated to the Company
            telephonically and in writing so that the Company shall have an
            opportunity to intervene and assert its rights to nondisclosure
            prior to any response by Employee to such an order or subpoena and
            in such notice, Employee shall advise as to whether or not he/she
            intends to comply with and/or respond to the order and/or subpoena.

      (c)   The Employee acknowledges and agrees that a remedy at law for any
            breach or threatened breach of the provisions of this Section 8
            would be inadequate and, therefore, agrees that the Company shall be
            entitled to injunctive relief in addition to any other available
            rights and remedies in case of any such breach or threatened breach;
            provided, however, that nothing contained herein shall be construed
            as prohibiting the Company from pursuing any other rights and
            remedies available for any such breach or threatened breach.

      (d)   The Employee agrees that upon termination of his employment with the
            company for any reason, the Employee shall promptly return to the
            Company all Confidential Information in his possession in whatever
            form maintained (including, without limitation, computer disks and
            other electronic media).

      (e)   The obligations of the Employee under this Section 8 shall, except
            as otherwise provided herein, survive the termination of the
            Employment Term and/or the expiration or termination of this
            Agreement for a period of five years.

                                       4


9.    Termination.

      (a)   The Employee's employment hereunder shall be terminated upon the
            occurrence of any of the following:

            (i)   death of the Employee;

            (ii)  the Employee's inability to perform his duties on account of
                  disability or incapacity for a period of one hundred eighty
                  (180) or more days, whether or not consecutive, within any
                  period of twelve (12) consecutive months;

            (iii) a Termination for Cause (as defined herein);

            (iv)  a Termination Without Cause (as defined herein); or

            (v)   termination of the Employee's employment hereunder by the
                  Employee at any time other than a termination by the Employee
                  pursuant to Section 9(a)(iv) hereof (a "Resignation").

                  The term "Termination for Cause" shall mean a termination of
                  the Employee's employment hereunder by action of the Board of
                  Directors of the Company at any time, including during the
                  Employment Term, as a result of any of the following with
                  respect to the Employee: (1) indictment or arrest for the
                  alleged commission of a felony, (2) acts of dishonesty or
                  moral turpitude which are materially detrimental to the
                  Companies, (3) acts or omissions which the Employee reasonably
                  knew were likely to materially damage the business of the
                  Company, (4) failure by the Employee to obey the reasonable
                  and lawful orders of the Board of Directors of the Company, or
                  (5) gross negligence by the Employee in the performance of, or
                  willful disregard by the Employee of, his obligations
                  hereunder; provided, however, that prior to any termination
                  pursuant to clauses (4) or (5) above, the Board of Directors
                  of the Company shall have provided the Employee with written
                  notice of such action, failure or event and a reasonable
                  period in which to cure the same. This advance notice and cure
                  provision for termination pursuant to clauses (4) or (5) above
                  shall not apply and is not required if giving notice and/or a
                  cure period would be contrary to the best interests of the
                  Company.

                  The term "Termination Without Cause" shall mean: (1) the
                  Company is giving written notice at any time, including during
                  the Employment Term, to the Employee that the Employee's
                  employment is being terminated or non-renewed (pursuant to
                  paragraph 2. hereof) other than pursuant to clauses (i), (ii)
                  or (iii) of the first paragraph of this Section 9(a), or (2)
                  the Employee giving written notice to the Company that he is
                  terminating his employment with the Company upon the
                  occurrence of any of the following items:

                                       5


                  (A)   significant adverse change in the nature or scope of the
                        authorities, powers, functions, responsibilities or
                        duties associated with the job position designated
                        and/or existing at the effective date of this Agreement,
                        a reduction in the Employee's Salary, or the termination
                        of the Employee's rights to any employee benefits to
                        which he was entitled pursuant to this Agreement (other
                        than a termination of rights or benefits applicable to
                        all executive officers), any of which is not remedied
                        within 10 calendar days after receipt by the Company of
                        written notice from the Employee of such change,
                        reduction or termination as the case may be;

                  (B)   the Company shall require the Employee to have his
                        principal location of work changed to any location which
                        is in excess of 25 miles from the location thereof as of
                        the date of this Agreement without his prior written
                        consent; or

                  (C)   without limiting the generality or effect of the
                        foregoing, any material breach of this Agreement by the
                        Company or any successor thereto.

                  (D)   a "Change of Control". For purposes of this Agreement
                        and this provision, a Change of Control shall mean the
                        following: (i) sale of all or substantially all of the
                        Company's assets to any person or entity; (ii) a merger,
                        consolidation or other similar business combination of
                        the Company or of the subsidiaries of the Company, taken
                        as a whole (the Subsidiaries"), with or into another
                        company other than AmCOMP Incorporated, with the effect
                        that, immediately following such merger, consolidation
                        or other business combination, the Qualified
                        Shareholders of the Company or the Subsidiaries, taken
                        as a whole, prior to such merger, consolidation or other
                        business combination hold less than 50% of the combined
                        voting power of the then outstanding securities of the
                        surviving company of such merger, consolidation or other
                        business combination ordinarily ( and apart from rights
                        accruing under special circumstances) having the right
                        to vote in the election of directors; OR (iii) a sale,
                        transfer and/or acquisition of a majority of the common
                        stock of the Company to a person or entity that is not a
                        "Qualified Shareholder." For purposes of this Agreement
                        and this provision, a Change of Control shall not mean a
                        public offering of equity securities of the Company
                        registered under the Securities Act of 1933, as amended.
                        For purposes of this Agreement and this provision,
                        "Qualified Shareholders" is defined as and shall mean
                        WCAS VII, L.P. Sprout Group and affiliates of either
                        WCAS VII, L.P. or Sprout Group.

      (b)   In the event that the Employee's employment is terminated at any
            time by a Termination Without Cause, for a 12 month period following
            the effective date of

                                       6


            such termination, the company shall pay (as severance, termination
            pay, contract payout, compensation and/or liquidated damages) the
            Salary that would have otherwise been payable to the Employee during
            such period. This amount will be paid during such period in
            accordance with the Company's then existing payroll practices,
            methods and/or pay periods. In addition, in the event that
            Employee's employment is terminated at any time by Termination
            Without Cause, the Company will pay and/or reimburse Employee for a
            12 month period following such termination the actual cost of COBRA
            continuing health coverage premiums. In this regard, if the Employee
            is eligible for COBRA continuing health benefits and if Employee
            timely elects COBRA continuing health care coverage, the Company
            will pay and/or reimburse up to a maximum of 12 months of COBRA
            continuing health care coverage premiums. It shall be at the
            Company's option and discretion to either pay the COBRA premiums
            directly or to reimburse the Employee for premiums that the Employee
            pays for COBRA continuing health coverage. Any premiums or amounts
            due for COBRA continuing health coverage beyond the 12 month period
            referenced above shall be at the sole cost and expense of Employee
            and will not be paid and/or reimbursed by the Company. The above
            described obligations of the Company (continuation of salary for a
            12 month period following Termination Without Cause and payment of
            COBRA premiums for a 12 month period following Termination Without
            Cause) shall be the exclusive remedies and payment obligations and
            no other amounts or obligations will be due and owing by the Company
            to Employee. In this regard, Termination Without Cause may be
            effectuated at any time during the Employment Term or renewal and
            the only amounts that the Company will be obligated or required to
            pay are the amounts calculated according to the formulas set forth
            above.

      (c)   Notwithstanding anything to the contrary expressed or implied
            herein, except as required by applicable law and except as set forth
            in Section 9(b) above, the Company shall not be obligated to make
            any payments to the Employee or on his behalf of whatever kind or
            nature by reason of the Employee's cessation of employment
            (including, without limitation, by reason of a Termination for
            Cause), other than (i) such amounts, if any, of his Salary as shall
            be accrued and remained unpaid as of the date of said cessation and
            (ii) such other amounts, if any, which may be then otherwise payable
            to the Employee pursuant to the terms of the Company's benefits
            plans or pursuant to Section 7 above.

10.   Restrictive Covenants

      10.01 Noncompetition and Nonsolicitation of Customers.

      (a)   The Employee agrees that during the Noncompete Period (as defined
            herein), without the prior written consent of the Company, Employee
            shall refrain, directly or indirectly, and whether as a principal,
            agent, employee, owner, partner, officer, director, shareholder,
            member or otherwise, alone or in association with any other person
            or entity, from carrying on or engaging in a business similar to
            that of the

                                       7


            Company and/or from soliciting customers of the Company within the
            Designated Area, so long as the Company carries on like a business
            therein.

      (b)   Noncompete Period. For purposes of this Agreement, the "Noncompete
            Period" shall mean the Employment Term plus:

            (i)   in the event that the employment of the Employee is terminated
                  by a Termination Without Cause, a period of 12 months. As
                  such, the Noncompete Period would be the term and duration of
                  employment and would extend beyond termination and/or
                  separation for 12 months; or

            (ii)  in the event that the employment of the Employee is terminated
                  by the Company by a Termination With Cause, or by the
                  Employee's Resignation pursuant to Section 9(v) of this
                  Agreement or the Employee's nonrenewal under Section 2 of this
                  Agreement, the Noncompete Period shall expire upon the
                  expiration, termination and/or separation of the Employee's
                  employment with the Company; provided, however, in such event
                  the Company shall have the exclusive option and absolute right
                  of extending the Noncompete Period for a period of 12 months
                  following the termination and/or separation of employment if
                  the Company: (1) delivers written notice to the Employee
                  irrevocably exercising such option before employment
                  termination and/or separation or within 180 days after
                  employment separation and/or termination and (2) agrees to pay
                  and does pay the employee the Salary and benefit amounts as
                  designated under Section 9(b) of this Agreement for such 12
                  month period. If the Company exercises this option and right
                  and complies with the requirements for same, the Noncompete
                  Period shall be extended for the 12 month period designated
                  and Employee agrees and acknowledges that he/she is bound by
                  such period.

      (c)   Definition of Designated Area. The term "Designated Area" shall mean
            the states, parishes, counties and/or municipalities designated in
            Attachment "A".

      (d)   Business of the Company. Employee acknowledges and understands that
            the "business" of the Company involves and relates to the
            underwriting of risks for worker's compensation insurance and
            related services. Employee further acknowledges, agrees and
            represents that he/she understands and knows the business in which
            the Company is engaged and the scope, activities and/or business
            pursuits involved in the business of the Company and in the
            underwriting of risks for worker's compensation insurance and
            related services. Employee further acknowledges and understands that
            the noncompetition and nonsolicitation of customer restrictions in
            this Agreement prohibit the Employee from engaging, in any capacity
            and/or any position, and/or from conducting any activities and/or
            business similar to that of the Company and under the specific terms
            and conditions of this Agreement.

                                       8


      (e)   Customers of the Company. For purposes of this Agreement,
            "customers" shall include, but are not limited to, insured
            businesses and/or entities who have and/or have had insurance
            coverage with the Company and insurance agents with whom the Company
            has contracts, agreements, arrangements and/or any type of business,
            insurance placement and/or working relationship. Employee
            acknowledges and represents that he/she understands the nature of
            the Company's customer relationships and who and/or what comprises
            its customers.

      10.02 Nonsolicitation. Employee shall not, during the Noncompete Period,
directly or indirectly solicit or induce, or attempt to solicit or induce, any
employee, agent of or consultant to the Company to leave his or her employment
or terminate his or her consultation agreement or similar relationship with the
Company.

      10.03 Amerisafe Designation. As used in this Section 10, Amerisafe, Inc.
and/or the "Company" includes Amerisafe, Inc., American Interstate Insurance
Company, Silver Oak Casualty, Inc. and any and all predecessor entities,
successor entities, affiliate entities, parent companies and subsidiaries. The
parties acknowledge and agree that the restrictive covenants in this Section 10
enure to the benefit of and operate for the interest of all of the
above-mentioned companies and affiliates.

      10.04 Remedies. In the event of a breach, or a threatened or attempted
breach, of any provision of this Section 10 by the Employee, the parties
recognize that such a breach would cause irreparable harm to the Company, thus
the Company shall, in addition to all other remedies, be entitled to: (a) a
temporary, preliminary and/or permanent injunction against such breach without
the necessity of showing any actual damages or any irreparable injury; (b) a
decree for the specific performance of this Agreement; and/or (c) damages,
attorney's fees and costs. All remedies in favor of Company shall not be
exclusive, but shall be cumulative.

      10.05 Construction, Reformation and Severability. It is understood and
agreed that, should any portion of any clause or paragraph of this Section 10 be
deemed too broad to permit enforcement to its full extent, or should any portion
of any clause or paragraph of this Section 10 be deemed unreasonable, then said
clause or paragraph shall be reformed and enforced to the maximum extent
permitted by law. Additionally, if any of the provisions of this Section 10 are
ever found by a court of competent jurisdiction to exceed the maximum
enforceable (i) periods of time, (ii) geographic areas of restriction, (iii)
scope of noncompetition or nonsolicitation and/or (iv) description of the
Company's business or customers, or for any other reason, then such
unenforceable element(s) of this Section 10 shall be reformed and reduced to the
maximum periods of time, geographic areas of restriction, scope of
noncompetition or nonsolicitation and/or description of the Company's business
that is permitted by law. In this regard, any unenforceable, unreasonable and/or
overly broad provision shall be reformed and/or severed so as to permit
enforcement to the fullest extent permitted by law. Reformation and severability
shall apply.

      10.06 Reasonableness. Employee acknowledges, represents and agrees that
the restrictive covenants in this Section 10 are reasonable in nature, scope,
time and territory and in the terms and conditions set forth herein. Employee
acknowledges, represents and agrees that the Company has expended substantial
cost in training Employee and that the Company has

                                       9


provided him/her with access to valuable information and has provided him/her
with valuable experience. In addition, Employee acknowledges, represents and
agrees that the Company has placed Employee in contact with its customers and
has made Employee part of its business plans. Employee further acknowledges,
represents and agrees that Employee would not have obtained such training,
experience, contacts and information from other sources without the employment
relationship with the Company. Employee further acknowledges, represents and
agrees that the foregoing have occurred and/or resulted based on the Company's
reliance on these restrictive covenants and Employee's representations and
obligations made herein. Employee further acknowledges, represents and agrees
that this Section 10 and the obligations of Employee under these restrictive
covenants are reasonable in order to protect the legitimate interests of the
Company. Employee further acknowledges, represents and agrees that by virtue of
his/her job position, he/she has become an integral and influential component of
the Company's current and future business plans. It is Employee's desire and
intent that this Agreement be given full force and effect.

11.   Non-Assignability.

      (a)   Neither this Agreement nor any right or interest hereunder shall be
            assignable by the Employee or his beneficiaries or legal
            representatives without the Company's prior written consent;
            provided, however, that nothing in this Section 11(a) shall preclude
            the Employee from designating a beneficiary to receive any benefit
            payable hereunder upon his death or incapacity.

      (b)   Except as required by law, no right to receive payments under this
            Agreement shall be subject to anticipation, commutation, alienation,
            sale, assignment, encumbrance, charge, pledge, or hypothecation or
            to exclusion, attachment, levy or similar process or to assignment
            by operation of law, and any attempt, voluntary or involuntary, to
            effect any such action shall be null, void and of no effect.

12.   Binding Effect. Without limiting or diminishing the effect of Section 11
      hereof, this Agreement shall inure to the benefit of and be binding upon
      the parties hereto and their respective heirs, successors, legal
      representatives and assigns.

13.   Notices. All notices which are required or may be given pursuant to the
      terms of this Agreement shall be in writing and shall be sufficient in all
      respects if given in writing and (i) delivered personally, (ii) five
      business days after being mailed by certified or registered mail, return
      receipt requested and postage prepaid, (iii) sent via a nationally
      recognized overnight courier, or (iv) sent via facsimile confirmed by
      certified or registered mail, return receipt requested and postage
      prepaid, if to the Company at the Company's principal place of business,
      and if to the Employee, at his home address most recently filed with the
      Company, or to such other address or addresses as either party shall have
      designated in writing to the other party hereto.

                                       10


14.   Law Governing. This Agreement shall be governed by and construed in
      accordance with the laws of the State of Louisiana.

15.   Severability. The Employee agrees that in the event that any court of
      competent jurisdiction shall finally hold that any provision of this
      Agreement is void or constitutes an unreasonable restriction against the
      Employee, this Agreement shall not be rendered void but shall apply with
      respect to such extent as such court may judicially determine constitutes
      a reasonable restriction under the circumstances. If any part of this
      Agreement is held by a court of competent jurisdiction to be invalid,
      illegible or incapable of being enforced in whole or in part by reason of
      any rule of law or public policy, such part shall be deemed to be severed
      from the remainder of this Agreement for the purpose only of the
      particular legal proceedings in question and all other covenants and
      provisions of this Agreement shall in every other respect continue in full
      force and effect and no covenant or provision shall be deemed dependent
      upon any other covenant or provision. Severability and reformation shall
      apply.

      It is understood and agreed that, should any portion of any clause or
      paragraph of this Agreement be deemed too broad to permit enforcement to
      its full extent, or should any portion of any clause or paragraph of this
      Agreement be deemed unreasonable, then said clause or paragraph shall be
      reformed and enforced to the maximum extent permitted by law.

16.   Waiver. Failure to insist upon strict compliance with any of the terms,
      covenants or conditions hereof shall not be deemed a waiver of such term,
      covenant or condition, nor shall any waiver or relinquishment of any right
      or power hereunder at any one or more times be deemed a waiver or
      relinquishment of such right or power at any other time or times.

17.   Entire Agreement; Modifications. This Agreement, with referenced
      Attachment "A," constitutes the entire and final expression of the
      agreement of the parties with respect to the subject matter hereof and
      supersedes all prior and/or contemporaneous agreements, oral and written,
      between the parties hereto with respect to the subject matter hereof. This
      Agreement may be modified or amended only by an instrument in writing
      signed by both parties hereto.

                                       11


18.   Counterparts. This Agreement may be executed in two or more counterparts,
      each of which shall be deemed an original, but all of which together shall
      constitute one and the same instrument.

                                              AMERISAFE, INC.

                                              BY: /s/ C. Allen Bradley, Jr.
                                                  ------------------------------

                                              EMPLOYEE:

                                              /s/ Arthur L. Hunt
                                              ---------------------------------
                                              Arthur L. Hunt

                                       12


                              EMPLOYMENT AGREEMENT

                                 AMENDMENT NO 1

      This First Amendment to the Employment Agreement dated January 1, 2004 by
and between Amerisafe, Inc., a Texas corporation (the "Company"), and Arthur L.
Hunt (the "Employee"), hereby amends the Agreement as follows:

      Item 2. Term of Employment

            The paragraph beginning, "Unless earlier terminated by the Employee
      or the Company as provided in this Agreement, the term of the Employee's
      employment under this Agreement shall be for a period beginning on January
      1, 2004 (the "Effective Date") and ending on the second anniversary of the
      Effective Date, January 1, 2006..." is hereby amended to read:

            "Unless earlier terminated by the Employee or the Company as
      provided in this Agreement, the term of the Employee's employment under
      this Agreement shall be for a period beginning on January 1, 2004 (the
      "Effective Date") and ending on the fourth anniversary of the Effective
      Date, January 1, 2008..."

      This Amendment is effective June 17, 2005.

                                              AMERISAFE, Inc.

                                              By: /s/ C. Allen Bradley, Jr.
                                                  -----------------------------
                                                  C. Allen Bradley, Jr.,
                                                  President and CEO

      Acknowledged and agreed to June 17, 2005

                                                  /s/ Arthur L. Hunt
                                                  ------------------------------
                                                  Arthur L. Hunt

EX-10.5

                                                                    Exhibit 10.5

                              EMPLOYMENT AGREEMENT

      EMPLOYMENT AGREEMENT dated as of January 1, 2004 by and between AMERISAFE,
INC., a Texas corporation (the "Company"), and Craig P. Leach (the "Employee").

                                   WITNESSETH:

      WHEREAS the Company desires to induce the Employee to continue in the
employment by the company for the period provided in this Agreement, and the
Employee is willing to continue such employment with the Company on a full-time
basis, all in accordance with the terms and conditions set forth below;

      NOW, THEREFORE, for and in consideration of the premises hereof and the
mutual covenants contained herein, the parties hereto hereby covenant and agree
as follows:

1.    Employment.

      (a)   The Company hereby agrees to continue to employ the Employee, and
            the Employee hereby accepts such employment with the Company, for
            the period set forth in Section 2 hereof, subject to the terms and
            conditions hereinafter set forth.

      (b)   The Employee affirms and represents that he is under no obligation
            to any former employer or other party which is in any way
            inconsistent with, or which imposes any restriction upon, the
            Employee's employment hereunder with the Company, the employment of
            the Employee by the Company, or the Employee's undertakings under
            this Agreement.

2.    Term of Employment. Unless earlier terminated by the Employee or the
      Company as provided in this Agreement, the term of the Employee's
      employment under this Agreement shall be for a period beginning on January
      1, 2004 (the "Effective Date") and ending on the second anniversary of the
      Effective Date, January 1, 2006, provided, however, that this Agreement
      shall automatically renew for successive one year periods, unless either
      party shall notify the other in writing not less than thirty (30) days
      prior to the second anniversary date or any successive anniversary date
      that it does not intend to renew this Agreement. Such period, plus any
      annual renewal periods, or, if the Employee's employment hereunder is
      earlier terminated as provided herein and including termination pursuant
      to Section 9(a)(i)-(v), such shorter period, is sometimes referred to
      herein as the "Employment Term".

3.    Duties. The Employee shall be employed by the Company as a senior
      executive officer and shall endeavor in good faith to competently perform
      such duties as inherent in his/her employment and/or any designated job
      position and/or as specified by the Company and shall also perform and
      discharge such other employment duties and responsibilities as the Board
      of Directors of the Company shall from time to time reasonably determine,
      not inconsistent with his/her position as a senior executive officer with
      the Company. Employee shall also comply with any By-Laws of the Company,
      as applicable. The Employee shall perform his duties principally at the
      offices of the Company at 2301



      Highway 190 West, DeRidder, Louisiana, with such travel to such other
      locations from time to time as the Board of Directors of the Company may
      reasonably prescribe. Except as may otherwise be approved in advance by
      the Board of Directors of the Company, and except during vacation periods
      and reasonable periods of absence due to sickness, personal injury or
      other disability, the Employee shall devote his full time during normal
      business hours throughout the Employment Term to the services required of
      him hereunder; provided that the foregoing shall not prohibit the Employee
      from engaging in reasonable charitable and community activities. The
      Employee shall render his business services exclusively to the Company and
      its subsidiaries during the Employment Term and shall use his good faith
      efforts, judgment and energy to improve and advance the business and
      interests of the Company and its subsidiaries in a manner consistent with
      the duties of his position.

4.    Conflicts of Interest and Compliance. Employee shall not engage in any
      conflict of interest and/or take any actions or engage in any conduct
      which is contrary to the exclusive interests of the Company. Employee
      shall comply with all applicable laws and regulations (federal, state
      and/or local) and shall comply with all applicable directives, orders and
      regulations of any governmental agency or regulatory body including
      federal, state and local agencies and bodies. Employee shall also comply
      with all policies and procedures of the Company and directives of the
      Board of Directors. Employee understands, acknowledges and agrees that
      he/she may hold a position of trust and that fiduciary duties and
      responsibilities may apply under applicable law and that these duties and
      responsibilities may be continuing in nature, even after separation from
      employment. Employee agrees to fully and faithfully perform and discharge
      all such duties, responsibilities and obligations.

5.    EEO Compliance. Employee shall not engage in any conduct which constitutes
      an unlawful employment practice or which violates any laws or regulations
      (federal, state and/or local) prohibiting discrimination, harassment
      and/or retaliation. Employee acknowledges that the Company is an Equal
      Opportunity Employer and prohibits all forms of unlawful discrimination in
      the terms and conditions of employment and prohibits all forms of
      harassment, including sexual harassment.

6.    Salary and Bonus.

      (a)   Salary. As compensation for the services to be performed by the
            Employee hereunder during the Employment Term, the Company shall pay
            the Employee a base salary at the annual rate of not less than Two
            Hundred Fifteen Thousand Dollars ($215,000.00) (said amount,
            together with any increases thereto as may be determined from time
            to time by the Compensation Committee of the Board of Directors of
            the Company in its sole discretion, being hereinafter referred to as
            "Salary"). Any Salary payable hereunder shall be paid in regular
            intervals in accordance with the Company's payroll practices from
            time to time in effect, but in no event less than monthly.

      (b)   Bonus. The Employee shall be eligible to receive bonus compensation
            from the Company in respect of each fiscal year (or portion thereof)
            occurring during the

                                       2


            Employment Term in amounts, if any, as may be determined by the
            Compensation Committee of the Board of Directors of the Company in
            its sole discretion on the basis of performance-based criteria to be
            established from time to time by such Committee in its sole
            discretion.

      (c)   Withholding, Etc. The payment of any Salary and Bonus under this
            Section 6, and the payment of any severance pay pursuant to Section
            9 hereof, shall be subject to applicable withholding and payroll
            taxes and such other deductions as may be required under the
            Company's employee benefit plans.

7.    Other Benefits.

      During the Employment Term, the Employee shall:

      (a)   be eligible to participate in all employee fringe benefits and
            pension and/or profit sharing plans that may be provided by the
            Company for its other senior executive officers in accordance with
            the provision of any such plans, as the same may be in effect from
            time to time;

      (b)   be eligible to participate in all medical and health plans or other
            employee welfare benefit plans that may be provided by the company
            for its other senior executive officers in accordance with the
            provisions of any such plans, as the same be in effect from time to
            time;

      (c)   be entitled to at least 23 vacation/personal days in each calendar
            year; the Employee shall also be entitled to all paid holidays given
            by the company to its other senior executive officers;

      (d)   be entitled to sick pay and disability benefits in accordance with
            any Company policy that may be applicable to other senior executive
            officers from time to time,

      (e)   be entitled to a car allowance consistent with Company practice as
            of the date hereof; and

      (f)   be entitled to reimbursement for all reasonable out-of-pocket
            business expenses incurred by the Employee in the performance of his
            duties hereunder in accordance with company policy that may be
            applicable to senior executive officers from time to time.

8.    Confidential Information. The Employee hereby covenants, agrees and
      acknowledges as follows:

      (a)   The Employee has and will have access to and will participate in the
            development of or be acquainted with confidential or proprietary
            information and trade secrets that directly or indirectly relate to
            the business, prospects, operations and other aspects of the Company
            and any other present or future subsidiaries of the Company
            (collectively with the Company, the "Companies"), including but not
            limited to (1) customer lists; the identity, lists or descriptions
            of new or

                                       3


            prospective customers; financial statements; cost reports or other
            financial information; contract proposals or bidding information,
            business plans; training and operations methods and manuals;
            personnel records; software programs; reports and correspondence;
            and management systems, policies or procedures, including related
            forms and manuals; (ii) information pertaining to future
            developments such as future marketing or acquisition plans or ideas;
            and (iii) all other tangible and intangible property, which are used
            in the business and operations of the Companies but not made public.
            The information and trade secrets relating to the business of the
            Companies described hereinabove in this paragraph (a) are
            hereinafter referred to collectively as the "Confidential
            Information", provided that the term "Confidential Information"
            shall not include any information (x) that is or becomes publicly
            available (other than as a result of violation of this Agreement by
            the Employee), or (y) that the Employee receives or received on a
            non-confidential basis from a source (other than the Companies or
            any of their representatives) that is not prohibited from disclosing
            such information by a legal, contractual or fiduciary obligation
            (provided, however that the Employee shall not be deemed to be in
            violation of this clause (y) unless he has actual knowledge of any
            such obligation on the party of any such source).

      (b)   The Employee shall not disclose, use or make known for his or
            another's benefit any Confidential Information or use such
            Confidential Information in any way except in connection with the
            performance of the Employee's duties under this Agreement. The
            Employee may disclose Confidential Information in response to an
            order or subpoena of a court or governmental agency of competent
            jurisdiction and authority provided, however, notice of such order
            or subpoena shall be immediately communicated to the Company
            telephonically and in writing so that the Company shall have an
            opportunity to intervene and assert its rights to nondisclosure
            prior to any response by Employee to such an order or subpoena and
            in such notice, Employee shall advise as to whether or not he/she
            intends to comply with and/or respond to the order and/or subpoena.

      (c)   The Employee acknowledges and agrees that a remedy at law for any
            breach or threatened breach of the provisions of this Section 8
            would be inadequate and, therefore, agrees that the Company shall be
            entitled to injunctive relief in addition to any other available
            rights and remedies in case of any such breach or threatened breach;
            provided, however, that nothing contained herein shall be construed
            as prohibiting the Company from pursuing any other rights and
            remedies available for any such breach or threatened breach.

      (d)   The Employee agrees that upon termination of his employment with the
            company for any reason, the Employee shall promptly return to the
            Company all Confidential Information in his possession in whatever
            form maintained (including, without limitation, computer disks and
            other electronic media).

      (e)   The obligations of the Employee under this Section 8 shall, except
            as otherwise provided herein, survive the termination of the
            Employment Term and/or the expiration or termination of this
            Agreement for a period of five years.

                                       4


9.    Termination.

      (a)   The Employee's employment hereunder shall be terminated upon the
            occurrence of any of the following:

            (i)   death of the Employee;

            (ii)  the Employee's inability to perform his duties on account of
                  disability or incapacity for a period of one hundred eighty
                  (180) or more days, whether or not consecutive, within any
                  period of twelve (12) consecutive months;

            (iii) a Termination for Cause (as defined herein);

            (iv)  a Termination Without Cause (as defined herein); or

            (v)   termination of the Employee's employment hereunder by the
                  Employee at any time other than a termination by the Employee
                  pursuant to Section 9(a)(iv) hereof (a "Resignation").

                  The term "Termination for Cause" shall mean a termination of
                  the Employee's employment hereunder by action of the Board of
                  Directors of the Company at any time, including during the
                  Employment Term, as a result of any of the following with
                  respect to the Employee: (1) indictment or arrest for the
                  alleged commission of a felony, (2) acts of dishonesty or
                  moral turpitude which are materially detrimental to the
                  Companies, (3) acts or omissions which the Employee reasonably
                  knew were likely to materially damage the business of the
                  Company, (4) failure by the Employee to obey the reasonable
                  and lawful orders of the Board of Directors of the Company, or
                  (5) gross negligence by the Employee in the performance of, or
                  willful disregard by the Employee of, his obligations
                  hereunder; provided, however, that prior to any termination
                  pursuant to clauses (4) or (5) above, the Board of Directors
                  of the Company shall have provided the Employee with written
                  notice of such action, failure or event and a reasonable
                  period in which to cure the same. This advance notice and cure
                  provision for termination pursuant to clauses (4) or (5) above
                  shall not apply and is not required if giving notice and/or a
                  cure period would be contrary to the best interests of the
                  Company.

                  The term "Termination Without Cause" shall mean: (1) the
                  Company is giving written notice at any time, including during
                  the Employment Term, to the Employee that the Employee's
                  employment is being terminated or non-renewed (pursuant to
                  paragraph 2. hereof) other than pursuant to clauses (i), (ii)
                  or (iii) of the first paragraph of this Section 9(a), or (2)
                  the Employee giving written notice to the Company that he is
                  terminating his employment with the Company upon the
                  occurrence of any of the following items:

                                       5


                  (A)   significant adverse change in the nature or scope of the
                        authorities, powers, functions, responsibilities or
                        duties associated with the job position designated
                        and/or existing at the effective date of this Agreement,
                        a reduction in the Employee's Salary, or the termination
                        of the Employee's rights to any employee benefits to
                        which he was entitled pursuant to this Agreement (other
                        than a termination of rights or benefits applicable to
                        all executive officers), any of which is not remedied
                        within 10 calendar days after receipt by the Company of
                        written notice from the Employee of such change,
                        reduction or termination as the case may be;

                  (B)   the Company shall require the Employee to have his
                        principal location of work changed to any location which
                        is in excess of 25 miles from the location thereof as of
                        the date of this Agreement without his prior written
                        consent; or

                  (C)   without limiting the generality or effect of the
                        foregoing, any material breach of this Agreement by the
                        Company or any successor thereto.

                  (D)   a "Change of Control". For purposes of this Agreement
                        and this provision, a Change of Control shall mean the
                        following: (i) sale of all or substantially all of the
                        Company's assets to any person or entity; (ii) a merger,
                        consolidation or other similar business combination of
                        the Company or of the subsidiaries of the Company, taken
                        as a whole (the Subsidiaries"), with or into another
                        company other than AmCOMP Incorporated, with the effect
                        that, immediately following such merger, consolidation
                        or other business combination, the Qualified
                        Shareholders of the Company or the Subsidiaries, taken
                        as a whole, prior to such merger, consolidation or other
                        business combination hold less than 50% of the combined
                        voting power of the then outstanding securities of the
                        surviving company of such merger, consolidation or other
                        business combination ordinarily ( and apart from rights
                        accruing under special circumstances) having the right
                        to vote in the election of directors; OR (iii) a sale,
                        transfer and/or acquisition of a majority of the common
                        stock of the Company to a person or entity that is not a
                        "Qualified Shareholder." For purposes of this Agreement
                        and this provision, a Change of Control shall not mean a
                        public offering of equity securities of the Company
                        registered under the Securities Act of 1933, as amended.
                        For purposes of this Agreement and this provision,
                        "Qualified Shareholders" is defined as and shall mean
                        WCAS VII, L.P. Sprout Group and affiliates of either
                        WCAS VII, L.P. or Sprout Group.

      (b)   In the event that the Employee's employment is terminated at any
            time by a Termination Without Cause, for a 12 month period following
            the effective date of

                                       6


            such termination, the company shall pay (as severance, termination
            pay, contract payout, compensation and/or liquidated damages) the
            Salary that would have otherwise been payable to the Employee during
            such period. This amount will be paid during such period in
            accordance with the Company's then existing payroll practices,
            methods and/or pay periods. In addition, in the event that
            Employee's employment is terminated at any time by Termination
            Without Cause, the Company will pay and/or reimburse Employee for a
            12 month period following such termination the actual cost of COBRA
            continuing health coverage premiums. In this regard, if the Employee
            is eligible for COBRA continuing health benefits and if Employee
            timely elects COBRA continuing health care coverage, the Company
            will pay and/or reimburse up to a maximum of 12 months of COBRA
            continuing health care coverage premiums. It shall be at the
            Company's option and discretion to either pay the COBRA premiums
            directly or to reimburse the Employee for premiums that the Employee
            pays for COBRA continuing health coverage. Any premiums or amounts
            due for COBRA continuing health coverage beyond the 12 month period
            referenced above shall be at the sole cost and expense of Employee
            and will not be paid and/or reimbursed by the Company. The above
            described obligations of the Company (continuation of salary for a
            12 month period following Termination Without Cause and payment of
            COBRA premiums for a 12 month period following Termination Without
            Cause) shall be the exclusive remedies and payment obligations and
            no other amounts or obligations will be due and owing by the Company
            to Employee. In this regard, Termination Without Cause may be
            effectuated at any time during the Employment Term or renewal and
            the only amounts that the Company will be obligated or required to
            pay are the amounts calculated according to the formulas set forth
            above.

      (c)   Notwithstanding anything to the contrary expressed or implied
            herein, except as required by applicable law and except as set forth
            in Section 9(b) above, the Company shall not be obligated to make
            any payments to the Employee or on his behalf of whatever kind or
            nature by reason of the Employee's cessation of employment
            (including, without limitation, by reason of a Termination for
            Cause), other than (i) such amounts, if any, of his Salary as shall
            be accrued and remained unpaid as of the date of said cessation and
            (ii) such other amounts, if any, which may be then otherwise payable
            to the Employee pursuant to the terms of the Company's benefits
            plans or pursuant to Section 7 above.

10.   Restrictive Covenants

      10.01 Noncompetition and Nonsolicitation of Customers.

      (a)   The Employee agrees that during the Noncompete Period (as defined
            herein), without the prior written consent of the Company, Employee
            shall refrain, directly or indirectly, and whether as a principal,
            agent, employee, owner, partner, officer, director, shareholder,
            member or otherwise, alone or in association with any other person
            or entity, from carrying on or engaging in a business similar to
            that of the

                                       7


            Company and/or from soliciting customers of the Company within the
            Designated Area, so long as the Company carries on like a business
            therein.

      (b)   Noncompete Period. For purposes of this Agreement, the "Noncompete
            Period" shall mean the Employment Term plus:

            (i)   in the event that the employment of the Employee is terminated
                  by a Termination Without Cause, a period of 12 months. As
                  such, the Noncompete Period would be the term and duration of
                  employment and would extend beyond termination and/or
                  separation for 12 months; or

            (ii)  in the event that the employment of the Employee is terminated
                  by the Company by a Termination With Cause, or by the
                  Employee's Resignation pursuant to Section 9(v) of this
                  Agreement or the Employee's nonrenewal under Section 2 of this
                  Agreement, the Noncompete Period shall expire upon the
                  expiration, termination and/or separation of the Employee's
                  employment with the Company; provided, however, in such event
                  the Company shall have the exclusive option and absolute right
                  of extending the Noncompete Period for a period of 12 months
                  following the termination and/or separation of employment if
                  the Company: (1) delivers written notice to the Employee
                  irrevocably exercising such option before employment
                  termination and/or separation or within 180 days after
                  employment separation and/or termination and (2) agrees to pay
                  and does pay the employee the Salary and benefit amounts as
                  designated under Section 9(b) of this Agreement for such 12
                  month period. If the Company exercises this option and right
                  and complies with the requirements for same, the Noncompete
                  Period shall be extended for the 12 month period designated
                  and Employee agrees and acknowledges that he/she is bound by
                  such period.

      (c)   Definition of Designated Area. The term "Designated Area" shall mean
            the states, parishes, counties and/or municipalities designated in
            Attachment "A".

      (d)   Business of the Company. Employee acknowledges and understands that
            the "business" of the Company involves and relates to the
            underwriting of risks for worker's compensation insurance and
            related services. Employee further acknowledges, agrees and
            represents that he/she understands and knows the business in which
            the Company is engaged and the scope, activities and/or business
            pursuits involved in the business of the Company and in the
            underwriting of risks for worker's compensation insurance and
            related services. Employee further acknowledges and understands that
            the noncompetition and nonsolicitation of customer restrictions in
            this Agreement prohibit the Employee from engaging, in any capacity
            and/or any position, and/or from conducting any activities and/or
            business similar to that of the Company and under the specific terms
            and conditions of this Agreement.

                                       8


      (e)   Customers of the Company. For purposes of this Agreement,
            "customers" shall include, but are not limited to, insured
            businesses and/or entities who have and/or have had insurance
            coverage with the Company and insurance agents with whom the Company
            has contracts, agreements, arrangements and/or any type of business,
            insurance placement and/or working relationship. Employee
            acknowledges and represents that he/she understands the nature of
            the Company's customer relationships and who and/or what comprises
            its customers.

      10.02 Nonsolicitation. Employee shall not, during the Noncompete Period,
directly or indirectly solicit or induce, or attempt to solicit or induce, any
employee, agent of or consultant to the Company to leave his or her employment
or terminate his or her consultation agreement or similar relationship with the
Company.

      10.03 Amerisafe Designation. As used in this Section 10, Amerisafe, Inc.
and/or the "Company" includes Amerisafe, Inc., American Interstate Insurance
Company, Silver Oak Casualty, Inc. and any and all predecessor entities,
successor entities, affiliate entities, parent companies and subsidiaries. The
parties acknowledge and agree that the restrictive covenants in this Section 10
enure to the benefit of and operate for the interest of all of the
above-mentioned companies and affiliates.

      10.04 Remedies. In the event of a breach, or a threatened or attempted
breach, of any provision of this Section 10 by the Employee, the parties
recognize that such a breach would cause irreparable harm to the Company, thus
the Company shall, in addition to all other remedies, be entitled to: (a) a
temporary, preliminary and/or permanent injunction against such breach without
the necessity of showing any actual damages or any irreparable injury; (b) a
decree for the specific performance of this Agreement; and/or (c) damages,
attorney's fees and costs. All remedies in favor of Company shall not be
exclusive, but shall be cumulative.

      10.05 Construction, Reformation and Severability. It is understood and
agreed that, should any portion of any clause or paragraph of this Section 10 be
deemed too broad to permit enforcement to its full extent, or should any portion
of any clause or paragraph of this Section 10 be deemed unreasonable, then said
clause or paragraph shall be reformed and enforced to the maximum extent
permitted by law. Additionally, if any of the provisions of this Section 10 are
ever found by a court of competent jurisdiction to exceed the maximum
enforceable (i) periods of time, (ii) geographic areas of restriction, (iii)
scope of noncompetition or nonsolicitation and/or (iv) description of the
Company's business or customers, or for any other reason, then such
unenforceable element(s) of this Section 10 shall be reformed and reduced to the
maximum periods of time, geographic areas of restriction, scope of
noncompetition or nonsolicitation and/or description of the Company's business
that is permitted by law. In this regard, any unenforceable, unreasonable and/or
overly broad provision shall be reformed and/or severed so as to permit
enforcement to the fullest extent permitted by law. Reformation and severability
shall apply.

      10.06 Reasonableness. Employee acknowledges, represents and agrees that
the restrictive covenants in this Section 10 are reasonable in nature, scope,
time and territory and in the terms and conditions set forth herein. Employee
acknowledges, represents and agrees that the Company has expended substantial
cost in training Employee and that the Company has

                                       9


provided him/her with access to valuable information and has provided him/her
with valuable experience. In addition, Employee acknowledges, represents and
agrees that the Company has placed Employee in contact with its customers and
has made Employee part of its business plans. Employee further acknowledges,
represents and agrees that Employee would not have obtained such training,
experience, contacts and information from other sources without the employment
relationship with the Company. Employee further acknowledges, represents and
agrees that the foregoing have occurred and/or resulted based on the Company's
reliance on these restrictive covenants and Employee's representations and
obligations made herein. Employee further acknowledges, represents and agrees
that this Section 10 and the obligations of Employee under these restrictive
covenants are reasonable in order to protect the legitimate interests of the
Company. Employee further acknowledges, represents and agrees that by virtue of
his/her job position, he/she has become an integral and influential component of
the Company's current and future business plans. It is Employee's desire and
intent that this Agreement be given full force and effect.

11.   Non-Assignability.

      (a)   Neither this Agreement nor any right or interest hereunder shall be
            assignable by the Employee or his beneficiaries or legal
            representatives without the Company's prior written consent;
            provided, however, that nothing in this Section 11(a) shall preclude
            the Employee from designating a beneficiary to receive any benefit
            payable hereunder upon his death or incapacity.

      (b)   Except as required by law, no right to receive payments under this
            Agreement shall be subject to anticipation, commutation, alienation,
            sale, assignment, encumbrance, charge, pledge, or hypothecation or
            to exclusion, attachment, levy or similar process or to assignment
            by operation of law, and any attempt, voluntary or involuntary, to
            effect any such action shall be null, void and of no effect.

12.   Binding Effect. Without limiting or diminishing the effect of Section 11
      hereof, this Agreement shall inure to the benefit of and be binding upon
      the parties hereto and their respective heirs, successors, legal
      representatives and assigns.

13.   Notices. All notices which are required or may be given pursuant to the
      terms of this Agreement shall be in writing and shall be sufficient in all
      respects if given in writing and (i) delivered personally, (ii) five
      business days after being mailed by certified or registered mail, return
      receipt requested and postage prepaid, (iii) sent via a nationally
      recognized overnight courier, or (iv) sent via facsimile confirmed by
      certified or registered mail, return receipt requested and postage
      prepaid, if to the Company at the Company's principal place of business,
      and if to the Employee, at his home address most recently filed with the
      Company, or to such other address or addresses as either party shall have
      designated in writing to the other party hereto.

                                       10


14.   Law Governing. This Agreement shall be governed by and construed in
      accordance with the laws of the State of Louisiana.

15.   Severability. The Employee agrees that in the event that any court of
      competent jurisdiction shall finally hold that any provision of this
      Agreement is void or constitutes an unreasonable restriction against the
      Employee, this Agreement shall not be rendered void but shall apply with
      respect to such extent as such court may judicially determine constitutes
      a reasonable restriction under the circumstances. If any part of this
      Agreement is held by a court of competent jurisdiction to be invalid,
      illegible or incapable of being enforced in whole or in part by reason of
      any rule of law or public policy, such part shall be deemed to be severed
      from the remainder of this Agreement for the purpose only of the
      particular legal proceedings in question and all other covenants and
      provisions of this Agreement shall in every other respect continue in full
      force and effect and no covenant or provision shall be deemed dependent
      upon any other covenant or provision. Severability and reformation shall
      apply.

      It is understood and agreed that, should any portion of any clause or
      paragraph of this Agreement be deemed too broad to permit enforcement to
      its full extent, or should any portion of any clause or paragraph of this
      Agreement be deemed unreasonable, then said clause or paragraph shall be
      reformed and enforced to the maximum extent permitted by law.

16.   Waiver. Failure to insist upon strict compliance with any of the terms,
      covenants or conditions hereof shall not be deemed a waiver of such term,
      covenant or condition, nor shall any waiver or relinquishment of any right
      or power hereunder at any one or more times be deemed a waiver or
      relinquishment of such right or power at any other time or times.

17.   Entire Agreement; Modifications. This Agreement, with referenced
      Attachment "A," constitutes the entire and final expression of the
      agreement of the parties with respect to the subject matter hereof and
      supersedes all prior and/or contemporaneous agreements, oral and written,
      between the parties hereto with respect to the subject matter hereof. This
      Agreement may be modified or amended only by an instrument in writing
      signed by both parties hereto.

                                       11


18.   Counterparts. This Agreement may be executed in two or more counterparts,
      each of which shall be deemed an original, but all of which together shall
      constitute one and the same instrument.

                                            AMERISAFE, INC.

                                            By: /s/ C. Allen Bradley, Jr.
                                               --------------------------

                                            EMPLOYEE:

                                            /s/ Craig P. Leach
                                            -----------------------------
                                            Craig P. Leach

                                       12


                              EMPLOYMENT AGREEMENT

                                 AMENDMENT NO 1

      This First Amendment to the Employment Agreement dated January 1, 2004 by
and between Amerisafe, Inc., a Texas corporation (the "Company"), and Craig P.
Leach (the "Employee"), hereby amends the Agreement as follows:

      Item 2. Term of Employment

            The paragraph beginning, "Unless earlier terminated by the Employee
      or the Company as provided in this Agreement, the term of the Employee's
      employment under this Agreement shall be for a period beginning on January
      1, 2004 (the "Effective Date") and ending on the second anniversary of the
      Effective Date, January 1, 2006..." is hereby amended to read:

            "Unless earlier terminated by the Employee or the Company as
      provided in this Agreement, the term of the Employee's employment under
      this Agreement shall be for a period beginning on January 1, 2004 (the
      "Effective Date") and ending on the fourth anniversary of the Effective
      Date, January 1, 2008..."

      This Amendment is effective June 17, 2005.

                                  AMERISAFE, Inc.

                                  By: /s/ C. Allen Bradley, Jr.
                                      ----------------------------------------
                                      C. Allen Bradley, Jr., President and CEO

      Acknowledged and agreed to June 17, 2005

                                  /s/ Craig P. Leach
                                  ---------------------------------------------
                                  Craig P. Leach

EX-10.6

                                                                    Exhibit 10.6

                                 AMERISAFE, INC.

                           2005 EQUITY INCENTIVE PLAN

      1. PURPOSE. The purpose of the 2005 Equity Incentive Plan is to attract
and retain officers and other key employees for the Company and its Subsidiaries
and to provide to such persons appropriate incentives and rewards for superior
performance.

      2. DEFINITIONS. As used in this Plan,

            (a) "Award" means any award of Option Rights, Restricted Stock or
Restricted Stock Units granted under the Plan.

            (b) "Award Agreement" means a written agreement setting forth the
terms, conditions and restrictions of the Award granted to the Participant. An
Award Agreement may be an "Option Award Agreement," a "Restricted Stock Award
Agreement" or a "Restricted Stock Unit Award Agreement."

            (c) "Board" means the Board of Directors of the Company and, to the
extent of any delegation by the Board to a committee (or subcommittee thereof)
pursuant to Section 12 of this Plan, such committee (or subcommittee).

            (d) "Change in Control" has the meaning provided in Section 9 of
this Plan.

            (e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.

            (f) "Common Shares" means the shares of common stock, par value
$0.01 per share, of the Company or any security into which such Common Shares
may be changed by reason of any transaction or event of the type referred to in
Section 8 of this Plan.

            (g) "Company" means AMERISAFE, Inc., a Texas corporation.

            (h) "Covered Employee" means a Participant who is, or is determined
by the Board to be likely to become, a "covered employee" within the meaning of
Section 162(m) of the Code (or any successor provision).

            (i) "Date of Grant" means the date specified by the Board on which
an Award will become effective (which date will not be earlier than the date on
which the Board takes action with respect thereto).

            (j) "Director" means a member of the Board of Directors of the
Company.

            (k) "Effective Date" means _______ __, 2005.



            (l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder, as such law, rules and
regulations may be amended from time to time.

            (m) "Incentive Stock Options" means Option Rights that are intended
to qualify as "incentive stock options" under Section 422 of the Code or any
successor provision.

            (n) "Incumbent Directors" means the individuals who, as of the
Effective Date, are Directors of the Company and any individual becoming a
Director subsequent to the date thereof whose election, nomination for election
by the Company's shareholders, or appointment, was approved by a vote of at
least two-thirds of the then Incumbent Directors (either by a specific vote or
by approval of the proxy statement of the Company in which such person is named
as a nominee for Director, without objection to such nomination); provided,
however, that an individual shall not be an Incumbent Director if such
individual's election or appointment to the Board occurs as a result of an
actual or threatened election contest (as described in Rule 14a-12(c) of the
Exchange Act) with respect to the election or removal of Directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board.

            (o) "Management Objectives" means the measurable performance
objective or objectives established pursuant to this Plan for, when so
determined by the Board, Participants who have received grants of Option Rights,
Restricted Stock or Restricted Stock Units. Management Objectives may be
described in terms of Company-wide objectives or objectives that are related to
the performance of the individual Participant or of the Subsidiary, division,
department, region or function within the Company or Subsidiary in which the
Participant is employed. The Management Objectives may be made relative to the
performance of other companies. The Management Objectives applicable to any
Award to a Covered Employee will be based on specified levels of or growth in
one or more of the following criteria:

            1.    cash flow/net assets ratio;

            2.    return on total capital;

            3.    return on equity;

            4.    earnings per share growth;

            5.    revenue growth;

            6.    total return to shareholders;

            7.    loss ratio; and

            8.    premium volume.

            If the Board determines that a change in the business, operations,
corporate structure or capital structure of the Company, or the manner in which
it conducts its business, or other events or circumstances render the Management
Objectives unsuitable, the Board may in its discretion modify such Management
Objectives or the related minimum acceptable level of achievement, in whole or
in part, as the Board deems appropriate and equitable, except in the case of a
Covered Employee where such action would result in the loss of the otherwise
available exemption of the Award under Section 162(m) of the Code. In such case,
the Board will not make any modification of the Management Objectives or minimum
acceptable level of achievement with respect to such Covered Employee.

                                       2


            (p) "Market Value per Share" means, as of any particular date, (i)
the closing sale price per Common Share on that date (or if there are no sales
on that date, on the next preceding trading date during which a sale occurred)
as reported on the Nasdaq National Market System, or if the Common Shares are
not then-traded on the Nasdaq National Market System, the principal exchange on
which the Common Shares are then trading, or (ii) if clause (i) does not apply,
the fair value of the Common Shares as determined by the Board.

            (q) "Optionee" means the optionee named in an Award Agreement
evidencing an outstanding Option Right.

            (r) "Option Price" means the purchase price payable on exercise of
an Option Right.

            (s) "Option Right" means the right to purchase Common Shares upon
exercise of an option granted pursuant to Section 4 of this Plan.

            (t) "Participant" means a person who is selected by the Board to
receive benefits under this Plan and who is at the time an officer or other key
employee of the Company or any one or more of its Subsidiaries, or who has
agreed to commence serving in any of such capacities within 90 days of the Date
of Grant. The term "Participant" shall also include any person who provides
services to the Company (other than in the capacity as a member of the Board) or
a Subsidiary that are equivalent to those typically provided by an employee.

            (u) "Person" means any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).

            (v) "Plan" means this 2005 Equity Incentive Plan.

            (w) "Restricted Stock" means Common Shares granted or sold pursuant
to Section 5 of this Plan as to which neither the substantial risk of forfeiture
nor the prohibition on transfers has expired.

            (x) "Restriction Period" means the period of time during which
Restricted Stock Units are subject to a substantial risk of forfeiture (based on
the passage of time, the achievement of performance goals, or upon the
occurrence of other events as determined by the Board, in its discretion), as
provided in Section 6 of this Plan.

            (y) "Restricted Stock Unit" means an award made pursuant to Section
6 of this Plan of the right to receive Common Shares or cash at the end of a
specified period.

            (z) "Subsidiary" means a corporation, company or other entity (i)
more than 50 percent of whose outstanding shares or other securities
(representing the right to vote for the election of directors or other managing
authority) are, or (ii) which does not have outstanding shares or other
securities (as may be the case in a partnership, limited liability company,
business trust or other legal entity), but more than 50 percent of whose
ownership interest representing the right generally to make decisions for such
entity is, now or hereafter, owned or controlled, directly or indirectly, by the
Company except that for purposes of determining whether any person may be a
Participant for purposes of any grant of Incentive Stock Options, "Subsidiary"
means any corporation in which the Company owns or controls, directly or
indirectly, more than

                                       3


50 percent of the total combined voting power represented by all classes of
stock issued by such corporation.

            (aa) "Voting Securities" means, at any time, (i) the securities
entitled to vote generally in the election of Directors in the case of the
Company, or (ii) the securities entitled to vote generally in the election of
members of the board of directors or similar body in the case of another legal
entity.

      3. SHARES AVAILABLE UNDER THE PLAN.

            (a) Subject to adjustment as provided in Section 3(b) and Section 8
of this Plan, the number of Common Shares that may be issued or transferred (i)
upon the exercise of Option Rights, (ii) as Restricted Stock and released from
substantial risks of forfeiture thereof, or (iii) as Restricted Stock Units,
shall not exceed in the aggregate __________ Common Shares. Such shares may be
authorized but unissued shares or treasury shares or a combination of the
foregoing.

            (b) The number of shares available in Section 3(a) above shall be
adjusted to account for shares relating to Awards that expire or are canceled or
forfeited. Upon payment in cash of the benefit provided by any Award granted
under this Plan, any shares that were covered by that Award shall again be
available for issue or transfer hereunder.

            (c) Notwithstanding anything in this Section 3 or elsewhere in this
Plan to the contrary but subject to adjustment as provided in Section 8 of this
Plan, (i) the aggregate number of Common Shares actually issued or transferred
by the Company upon the exercise of Incentive Stock Options will not exceed
___________ Common Shares; (ii) no Participant will be granted Option Rights,
Restricted Stock or Restricted Stock Units during the term of the Plan, in the
aggregate, for more than ________ Common Shares during any calendar year; (iii)
the number of shares issued as Restricted Stock and Restricted Stock Units
(after taking into account any forfeitures, expirations, cancellations or
transfers upon expiration of any withholding amount) will not during the term of
the Plan in the aggregate exceed ____________ Common Shares.

      4. OPTION RIGHTS. The Board may, from time to time and upon such terms and
conditions as it may determine, authorize the granting to Participants of
options to purchase Common Shares. Each such grant may utilize any or all of the
authorizations, and will be subject to all of the requirements contained in the
following provisions:

            (a) Each grant will specify the number of Common Shares covered by
such grant, subject to the limitations set forth in Section 3 of this Plan.

            (b) Each grant will specify an Option Price per share, which may not
be less than the Market Value per Share on the Date of Grant.

            (c) Each grant will specify the date or event (which may include the
achievement of specified Management Objectives) when all or any portion of the
Option Right is to become exercisable, and may provide for the earlier exercise
of such Option Right in the event of a Change in Control. Notwithstanding the
foregoing, no Option Right will be exercisable more than 10 years from the Date
of Grant.

                                       4


            (d) Each grant will specify whether the Option Price will be payable
(i) in cash or by check acceptable to the Company or by wire transfer of
immediately available funds, (ii) by the actual or constructive transfer to the
Company of Common Shares owned by the Optionee for at least 6 months having a
Market Value per Share at the time of exercise equal to the total Option Price,
or (iii) by a combination of such methods of payment.

            (e) To the extent permitted by law, any grant may provide for
deferred payment of the Option Price from the proceeds of sale through a bank or
broker on a date satisfactory to the Company of some or all of the shares to
which such exercise relates.

            (f) Successive grants may be made to the same Participant whether or
not any Option Rights previously granted to such Participant remain unexercised.

            (g) Option Rights granted under this Plan may be (i) options,
including, without limitation, Incentive Stock Options, that are intended to
qualify under particular provisions of the Code, (ii) options that are not
intended so to qualify, or (iii) combinations of the foregoing.

            (h) Each grant of Option Rights shall be evidenced by an Award
Agreement, which shall specify whether the Option Right is intended to be an
Incentive Stock Option. Each Award Agreement shall be subject to the Plan and
shall contain such terms and provisions, consistent with this Plan, as the Board
may approve, and, if the Board shall so provide, may require the satisfaction or
achievement of certain Management Objectives as a condition to the exercise
thereof.

      5. RESTRICTED STOCK. The Board may also authorize the grant or sale of
Restricted Stock to Participants. Each such grant or sale may utilize any or all
of the authorizations, and will be subject to all of the requirements, contained
in the following provisions:

            (a) Each such grant or sale will constitute an immediate transfer of
the ownership of Common Shares to the Participant in consideration of the
performance of services, entitling such Participant to voting, dividend and
other ownership rights, but subject to the substantial risk of forfeiture and
restrictions on transfer as provided in this Plan or the applicable Award
Agreement.

            (b) Each such grant or sale may be made without additional
consideration or in consideration of a payment by such Participant that is less
than the Market Value per Share at the Date of Grant.

            (c) Each such grant or sale will provide that the Restricted Stock
covered by such grant or sale will be subject to a "substantial risk of
forfeiture" within the meaning of Section 83 of the Code for a period to be
determined by the Board at the Date of Grant and set forth in an Award
Agreement. Notwithstanding the foregoing, each such grant may provide for the
earlier lapse of such substantial risk of forfeiture upon (i) the Participant
achieving Management Objectives specified in such grant, or (ii) a Change in
Control.

            (d) Each such grant or sale will provide that during the period for
which such substantial risk of forfeiture is to continue, the transferability of
the Restricted Stock will be prohibited or restricted in the manner and to the
extent prescribed by the Board at the Date of

                                       5


Grant (which restrictions may include, without limitation, rights of repurchase
or first refusal in the Company or provisions subjecting the Restricted Stock to
a continuing substantial risk of forfeiture in the hands of any transferee).

            (e) Any such grant or sale of Restricted Stock may require that any
or all dividends or other distributions paid thereon during the period of such
restrictions be automatically deferred and reinvested in additional shares of
Restricted Stock, which may be subject to the same restrictions as the
underlying award.

            (f) Each grant or sale of Restricted Stock will be evidenced by an
Award Agreement and will contain such terms and provisions, consistent with this
Plan, as the Board may approve. Unless otherwise directed by the Board, all
certificates representing shares of Restricted Stock will be held in custody by
the Company until all restrictions thereon will have lapsed, together with a
stock power or powers executed by the Participant in whose name such
certificates are registered, endorsed in blank and covering such Shares.

      6. RESTRICTED STOCK UNITS. The Board may also authorize the grant or sale
of Restricted Stock Units to Participants. Each such grant or sale may utilize
any or all of the authorizations, and will be subject to all of the requirements
contained in the following provisions:

            (a) Each such grant or sale will constitute the agreement by the
Company to deliver Common Shares or cash to the Participant in the future in
consideration of the performance of services, but subject to the fulfillment of
such conditions during the Restriction Period as the Board may specify.

            (b) Each such grant or sale may be made without additional
consideration or in consideration of a payment by such Participant that is less
than the Market Value per Share at the Date of Grant.

            (c) Each such grant or sale will be subject to a Restriction Period
as determined by the Board at the Date of Grant, and may provide for the earlier
lapse or other modification of such Restriction Period upon (i) the Participant
achieving Management Objectives specified in such grant or (ii) a Change in
Control.

            (d) During the Restriction Period, the Participant will have no
right to transfer any rights under his or her Restricted Stock Units and will
have no rights of ownership in the Restricted Stock Units and will have no right
to vote them, but the Board may, at or after the Date of Grant, authorize the
payment of dividend equivalents on such Restricted Stock Units on either a
current or deferred or contingent basis.

            (e) Each grant or sale of Restricted Stock Units will be evidenced
by an Award Agreement and will contain such terms and provisions, consistent
with this Plan, as the Board may approve.

                                       6


      7. TRANSFERABILITY. Except as otherwise determined by the Board, no Award
shall be transferable by a Participant other than by will or the laws of descent
and distribution. Except as otherwise determined by the Board, Option Rights
shall be exercisable during the Optionee's lifetime only by him or her or by his
or her guardian or legal representative.

      8. ADJUSTMENTS. The Board may make or provide for such adjustments in the
numbers of Common Shares covered by outstanding Option Rights and Restricted
Stock Units granted hereunder and in the kind of securities covered thereby as
the Board, in its sole discretion, exercised in good faith, may determine is
equitably required to prevent dilution or enlargement of the rights of
Participants or Optionees that otherwise would result from (a) any stock
dividend, stock split, combination of shares, recapitalization or other change
in the capital structure of the Company, or (b) any merger, consolidation,
spin-off, split- off, spin-out, split-up, reorganization, partial or complete
liquidation or other distribution of assets, issuance of rights or warrants to
purchase securities, or (c) any other corporate transaction or event having an
effect similar to any of the foregoing. Moreover, in the event of any such
transaction or event, the Board, in its discretion, may provide in substitution
for any or all outstanding Awards under this Plan such alternative consideration
as it, in good faith, may determine to be equitable in the circumstances and may
require in connection therewith the surrender of all Awards so replaced. The
Board may also make or provide for such adjustments in the numbers of shares
specified in Section 3 of this Plan as the Board in its sole discretion,
exercised in good faith, may determine is appropriate to reflect any transaction
or event described in this Section 8; provided, however, that any such
adjustment to the number specified in Section 3(c)(i) will be made only if and
to the extent that such adjustment would not cause any Option intended to
qualify as an Incentive Stock Option to fail so to qualify.

      9. CHANGE IN CONTROL. For purposes of this Plan, except as may be
otherwise defined in an individual Participant's Award Agreement, a "Change in
Control" shall mean the occurrence of any of the following events:

            (a) the acquisition by any Person of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of
the then outstanding Voting Securities of the Company; provided, however, that
for purposes of this Section 9(a), the following acquisitions shall not
constitute a Change in Control: (A) any acquisition by the Company or a
Subsidiary of Voting Securities, (B) any acquisition of Voting Securities by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any Subsidiary or (C) any acquisition of Voting Securities by any Person
pursuant to a Business Combination that complies with clauses (A), (B) and (C)
of Section 9(c) below;

            (b) a majority of the Board ceases to be comprised of Incumbent
Directors;

            (c) consummation of a reorganization, merger or consolidation, a
sale or other disposition of all or substantially all of the assets of the
Company or other transaction (each, a "Business Combination"), unless, in each
case, immediately following the Business Combination, (A) all or substantially
all of the individuals and entities who were the beneficial owners of Voting
Securities immediately prior to the Business Combination beneficially own,
directly or indirectly, more than 50% of the combined voting power of the then
outstanding Voting Securities of the entity resulting from the Business
Combination (including, without limitation, an entity which as a result of such
transaction owns the Company or all or

                                       7


substantially all of the Company's assets either directly or through one or more
subsidiaries), (B) no Person (other than the Company, such entity resulting from
the Business Combination, or any employee benefit plan (or related trust)
sponsored or maintained by the Company, any Subsidiary or such entity resulting
from the Business Combination) beneficially owns, directly or indirectly, 35% or
more of the combined voting power of the then outstanding Voting Securities of
the entity resulting from the Business Combination; provided, however, that no
Person will be treated for purposes of this Section 9(c) as beneficially owning
35% or more of the Voting Securities of the entity resulting from the Business
Combination solely as a result of the Voting Securities held in the Company
prior to consummation of the Business Combination and (C) at least a majority of
the members of the board of directors of the entity resulting from the Business
Combination were Incumbent Directors at the time of the execution of the initial
agreement or of the action of the Board providing for the Business Combination;
or

            (d) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company, except pursuant to a Business
Combination that complies with clauses (A), (B) and (C) of Section 9(c) hereof.

      Notwithstanding anything to the contrary contained in this Section 9, a
Person who holds 35% or more of the Voting Securities of the Company on the
Effective Date will not be deemed to have acquired 35% or more of the Voting
Securities of the Company for purposes of Section 9(a) of this Plan (and as a
result, such circumstance shall not constitute a Change in Control) unless after
the Effective Date such person acquires, in one or more transactions, additional
Voting Securities of the Company representing 1% or more of the then outstanding
Voting Securities of the Company it being understood that an increase in the
percentage of Voting Securities held by a Person as a result of the Company's
repurchase of Voting Securities of the Company is not an acquisition of Voting
Securities by such Person.

      10. FRACTIONAL SHARES. The Company will not be required to issue any
fractional Common Shares pursuant to this Plan. The Board may provide for the
elimination of fractions or for the settlement of fractions in cash.

      11. WITHHOLDING TAXES. To the extent that the Company is required to
withhold federal, state, local or foreign taxes in connection with any payment
made or benefit realized by a Participant or other person under this Plan, and
the amounts available to the Company for such withholding are insufficient, it
will be a condition to the receipt of such payment or the realization of such
benefit that the Participant or such other person make arrangements satisfactory
to the Board for payment of the balance of such taxes required to be withheld,
which arrangements (in the discretion of the Board) may include relinquishment
of a portion of such benefit.

      12. ADMINISTRATION OF THE PLAN.

            (a) This Plan will be administered by the Board, which may from time
to time delegate all or any part of its authority under this Plan to the
Compensation Committee of the Board (or a subcommittee thereof), as constituted
from time to time. To the extent of any such delegation, references in this Plan
to the Board will be deemed to be references to such committee or subcommittee.

                                       8


            (b) The interpretation and construction by the Board of any
provision of this Plan or of any Award Agreement and any determination by the
Board pursuant to any provision of this Plan or of any such Award Agreement will
be final and conclusive. No member of the Board will be liable for any such
action or determination made in good faith.

      13. AMENDMENTS AND OTHER MATTERS

            (a) The Board may at any time and from time to time amend the Plan
in whole or in part; provided, however, that any amendment (i) which must be
approved by the shareholders of the Company in order to comply with applicable
law or the rules of the Nasdaq National Market System or, if the Common Shares
are not traded on the Nasdaq National Market System, the principal national
securities exchange upon which the Common Shares are traded or quoted, or (ii)
which would increase the benefits accruing to Participants, increase the
aggregate number of Common Shares that may be issued under the Plan or
materially modify the eligibility requirements for participating in the Plan,
will not be effective unless and until the shareholders of the Company have
approved such amendment.

            (b) The Board will not, without the further approval of the
shareholders of the Company, authorize the amendment of any outstanding Option
Right to reduce the Option Price. Furthermore, no Option Right will be cancelled
and replaced with awards having a lower Option Price without further approval of
the shareholders of the Company. This Section 13(b) is intended to prohibit the
repricing of "underwater" Option Rights and will not be construed to prohibit
the adjustments provided for in Section 8 of this Plan.

            (c) The Board also may permit Participants to elect to defer the
issuance of Common Shares or the settlement of Awards in cash under the Plan
pursuant to such rules, procedures or programs as it may establish for purposes
of this Plan. The Board also may provide that deferred issuances and settlements
include the payment or crediting of dividend equivalents or interest on the
deferral amounts.

            (d) In case of termination of employment by reason of death,
disability or normal or early retirement, or in the case of hardship or other
special circumstances, of a Participant who holds an Option Right not
immediately exercisable in full, or any shares of Restricted Stock as to which
the substantial risk of forfeiture or the prohibition or restriction on transfer
has not lapsed, or any Restricted Stock Units as to which the Restriction Period
has not been completed, the Board may, in its sole discretion, accelerate the
time at which such Option Right or other Award may be exercised or the time at
which such substantial risk of forfeiture or prohibition or restriction on
transfer will lapse or the time when such Restriction Period will end or may
waive any other limitation or requirement under any such Award.

            (e) This Plan will not confer upon any Participant any right with
respect to continuance of employment or other service with the Company or any
Subsidiary, nor will it interfere in any way with any right the Company or any
Subsidiary would otherwise have to terminate such Participant's employment or
other service at any time.

            (f) The Board may amend the terms of any Award granted under this
Plan prospectively or retroactively but, subject to Section 8, no such amendment
shall impair the rights of any holder without his or her consent.

                                       9


      14. GOVERNING LAW. The Plan and all grants and Awards and actions taken
thereunder shall be governed by and construed in accordance with the internal
substantive laws of the State of Texas.

      15. TERMINATION. This plan will expire on the tenth anniversary of the
Effective Date (the "Expiration Date"). No grant will be made under this Plan
after the Expiration Date, but all grants made on or prior to such date will
continue in effect thereafter subject to the terms thereof and of this Plan. The
Board may, in its discretion, terminate this Plan at any time. Termination of
this Plan will not affect the rights of Participants or their successors under
any Awards outstanding hereunder and not exercised in full on the date of
termination.

      16. GENERAL PROVISIONS.

            (a) No Award under this Plan may be exercised by the holder thereof
if such exercise, and the receipt of cash or stock thereunder, would be, in the
opinion of counsel selected by the Board, contrary to law or the regulations of
any duly constituted authority having jurisdiction over this Plan.

            (b) Absence on leave approved by an officer of the Company or any of
its Subsidiaries shall not be considered interruption or termination of service
of any employee for any purposes of this Plan or Awards granted hereunder,
except that no Awards may be granted to an employee while he or she is absent on
leave.

            (c) No Participant shall have any rights as a shareholder with
respect to any Common Shares subject to Awards granted to him or her under this
Plan prior to the date as of which he or she is actually recorded as the holder
of such Common Shares upon the stock records of the Company.

            (d) All notices under this Plan will be in writing, and if to the
Company, will be delivered to the Secretary of the Company or mailed to its
principal executive office, addressed to the attention of the Secretary; and if
to a Participant, shall be delivered personally or mailed to the Participant at
the address appearing in the records of the Company or Subsidiary. Such address
may be changed at any time by written notice to the other party.

                                       10

EX-10.7

                                                                    Exhibit 10.7

                                AMERISAFE, INC.
                           2005 EQUITY INCENTIVE PLAN
                     INCENTIVE STOCK OPTION AWARD AGREEMENT

      THIS OPTION AWARD AGREEMENT (this "Agreement"), dated as of __________, is
entered into between AMERISAFE, INC. a Texas corporation (the "Company"), and
____________________ ("Optionee"). Capitalized terms used herein but not defined
shall have the meanings assigned to those terms in the AMERISAFE, Inc. 2005
Equity Incentive Plan (the "Plan").

      1. Grant of Option Right. Pursuant to the Plan, the Company hereby grants
to Optionee, as a Participant in the Plan and effective as of the Date of Grant
(as defined in Section 3), an option right ("Option Right") to purchase ___
shares ("Option Shares") of the Company's common stock, par value $0.01 per
share ("Common Shares"), at the price of $_________ per share (the "Option
Price").

      2. Type of Option Right. The Option Right is intended to qualify as an
"incentive stock option" within the meaning of Section 422 of the Code.

      3. Date of Grant. The effective date of the grant of this Option Right is
_______ ("Date of Grant").

      4. Date of Expiration. This Option Right shall expire on the tenth
anniversary of the Date of Grant (the "Date of Expiration"), unless earlier
terminated under Section 7(a).

      5. Vesting of Option Right.

            (a) Except as otherwise provided in this Agreement, the Option Right
      shall become vested and exercisable to the extent of 20% of the Option
      Shares on each of the first five anniversaries of the Date of Grant;
      provided, however, that if the Board determines that Optionee has
      satisfied the management objectives established by the Board and attached
      as Appendix A hereto as of the ____ anniversary of the Date of Grant, the
      Option Right shall become fully vested and exercisable on the ____
      anniversary of the Date of Grant.

            (b) Notwithstanding the provisions of Section 5(a) above, the Option
      Right shall become immediately vested and exercisable in full upon the
      occurrence of a Change in Control, as defined in the Plan.

            (c) Notwithstanding Section 5(a) above, the Board, in its sole
      discretion, may determine within 60 days following one of the events
      described in clauses (i) through (iii) below that the Option Right shall
      become immediately exercisable in full (i) if Optionee becomes permanently
      disabled (as determined by the Board), (ii) if Optionee dies while an
      employee of the Company or a Subsidiary, (iii) if Optionee retires at or
      after the earliest voluntary retirement age permitted by his or her
      employer or with the consent of the Board, or (iv) under other special
      circumstances.



      6. Manner of Exercise.

            (a) To the extent that the Option Right is exercisable in accordance
      with Section 5, the Option Right may be exercised by Optionee at any time,
      or from time to time, in whole or in part on or prior to the Termination
      Date; provided, however, that Optionee must exercise the Option Right in
      multiples of 100 Option Shares unless fewer than 100 Option Shares are
      available for purchase by Optionee under this Agreement at the time of
      exercise.

            (b) Optionee shall exercise the Option Right by delivering a signed
      written notice to the Company, which notice shall specify the number of
      Option Shares to be purchased and be accompanied by payment in full of the
      Option Price and any required taxes (as provided in the Plan) for the
      number of Option Shares specified for purchase; provided, however, that
      payment of the Option Price may be deferred and paid from the proceeds of
      sale through a bank or broker on a date satisfactory to the Company of
      some or all of the shares to which such exercise relates.

            (c) The Option Price shall be payable (i) in cash or by check
      acceptable to the Company or by wire transfer of immediately available
      funds, (ii) by the actual or constructive transfer to the Company of
      Common Shares owned by Optionee for at least six months having a Market
      Value per Share at the time of exercise equal to the total Option Price,
      or (iii) by a combination of such methods of payment.

            (d) The Company's obligation to deliver Option Shares to Optionee is
      subject to and conditioned upon Optionee satisfying all tax obligations
      associated with Optionee's exercise of the Option Right. The Company and
      its Subsidiaries, as applicable, shall be entitled to deduct from any
      payment otherwise due to Optionee the amount necessary to satisfy all such
      taxes.

            (e) Upon full payment of the Option Price and satisfaction of all
      applicable tax obligations, and subject to the applicable terms and
      conditions of the Plan and the terms and conditions of this Agreement, the
      Company will cause certificates for the Option Shares purchased hereunder
      to be delivered to Optionee.

      7. Termination.

            (a) The Option Right shall terminate on the earliest of the
      following dates (such date, the "Termination Date"):

                  (i) 90 days after Optionee's employment with the Company or a
            Subsidiary is terminated for any reason other than permanent
            disability (as determined by the Board) or death; provided, however,
            that Optionee's Option Right shall terminate immediately if Optionee
            is terminated for cause. For purposes of the foregoing, termination
            for cause shall [mean the involuntary termination of Optionee's
            employment initiated by Optionee's employer for any of the
            disciplinary reasons set forth in the employee handbook of
            Optionee's employer] [be as defined in Optionee's employment
            agreement] as in effect at the time of termination.



                  (ii) One year after Optionee becomes permanently disabled (as
            determined by the Board) or dies, if Optionee dies or becomes
            permanently disabled while an employee of the Company or Subsidiary;
            or

                  (iii) The Date of Expiration.

            (b) Subject to Section 5(c), during the 90-day period referred to in
      Section 7(a)(i) above and the one-year period referred to in Section
      7(a)(ii) above, the Option Right may be exercised only to the extent that,
      at the time that Optionee ceases to be an employee of the Company or a
      Subsidiary, it is exercisable pursuant to Section 5 hereof.

            (c) For the purposes of this Agreement, the continuous employment of
      Optionee with the Company or a Subsidiary shall not be deemed to have been
      interrupted, and Optionee shall not be deemed to have ceased to be an
      employee of the Company or Subsidiary by reason of (i) the transfer of
      Optionee's employment among the Company and its Subsidiaries, (ii) an
      approved leave of absence of not more than 90 days, or (iii) the period of
      any leave of absence required to be granted by the Company under any law,
      rule, regulation or contract applicable to Optionee's employment with the
      Company or any Subsidiary.

      8. Share Certificates. All certificates evidencing Option Shares purchased
pursuant hereto, and any certificates for Common Shares issued as dividends on,
in exchange of, or as replacements for, certificates evidencing Option Shares
which, in the opinion of counsel for the Company, are subject to similar legal
requirements, shall have endorsed thereon before issuance such restrictive or
other legends as the Company (upon advice of counsel) may deem necessary or
advisable. The Company and any transfer agent shall not be required to register
or record the transfer of any such shares unless and until the Company or its
transfer agent shall have received from Optionee's counsel an opinion, in a form
satisfactory to the Company, that any such transfer will not be in violation of
any applicable law, rule or regulation. Optionee agrees not to sell, assign,
pledge or otherwise dispose of any Option Shares or any Common Shares that are
subject to restrictions on transfer described in this Section 8 without the
Company first receiving such an opinion.

      9. Transfer. The Option Right may not be transferred by Optionee except by
will or the laws of descent and distribution and may not be exercised during the
lifetime of Optionee except by Optionee or Optionee's guardian or legal
representative acting on behalf of Optionee in a fiduciary capacity under state
law and court supervision.

      10. Disqualifying Dispositions. If within one year of exercising the
Option Right, Optionee sells, assigns or transfers such Common Shares, Optionee
agrees to provide immediate written notice to the Company of such disposition
including the date, number of shares and consideration received for such
disposition.

      11. Compliance with Law. The Company shall make reasonable efforts to
comply with all applicable federal or state securities laws; provided, however,
that notwithstanding any



other provision of this Agreement, the Option Right shall not be exercisable if
the exercise and issuance of the Option Shares would result in a violation of
any such laws.

      12. Employment Rights. This Agreement shall not confer on Optionee any
right with respect to the continuance of employment or other service with the
Company or any Subsidiary. No provision of this Agreement shall limit in any way
whatsoever any right that the Company or a Subsidiary may otherwise have to
terminate the employment of Optionee at any time.

      13. Communications. All notices, demands and other communications required
or permitted hereunder or designated to be given with respect to the rights or
interests covered by this Agreement shall be deemed to have been properly given
or delivered when delivered personally or sent by certified or registered mail,
return receipt requested, U.S. mail or reputable overnight carrier, with full
postage prepaid and addressed to the parties as follows:

      If to the Company, at:   the Company's principal executive attention of
                               the Secretary office, addressed to the

      If to Optionee, at:      Optionee's address provided by Optionee on the
                               last page hereof

Either the Company or Optionee may change the above designated address by
written notice to the other specifying such new address.

      14. Interpretation. The interpretation and construction of this Agreement
by the Board shall be final and conclusive. No member of the Board shall be
liable for any such action or determination made in good faith.

      15. Amendments. The Plan may be amended, suspended or terminated and this
Agreement may be amended by the Board for purposes of satisfying changes in the
law or for any other lawful purposes, provided that (i) no such action shall
adversely affect Optionee's rights under this Agreement without Optionee's
consent, and (ii) all such amendments shall be in writing.

      16. Integration. The Option Right is granted pursuant to the Plan.
Notwithstanding anything in this Agreement to the contrary, this Agreement is
subject to all of the terms and conditions of the Plan, a copy of which has been
made available to the Optionee and is available upon request to the Secretary at
the address specified in Section 13 and which is incorporated herein by
reference. As such, this Agreement and the Plan embody the entire agreement and
understanding of the Company and Optionee and supersede any prior understandings
or agreements, whether written or oral, with respect to the Option Right.

      17. Severance. In the event that one or more of the provisions of this
Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof and the remaining provisions hereof shall continue
to be valid and fully enforceable.



      18. Governing Law. This Agreement is made under, and shall be construed in
accordance with, the laws of the State of Texas, without regard to the conflict
of laws principles thereof.

      19. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

              [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]



      IN WITNESS WHEREOF, this Agreement is executed by a duly authorized
representative of the Company on the day and year first above written.

                                   AMERISAFE, INC.

                                   By:  ________________________________________

                                   Name: _______________________________________

                                   Title: ______________________________________

The undersigned Optionee hereby acknowledges receipt of an executed original of
this Agreement and accepts the Option Right subject to the applicable terms and
conditions of the Plan and the terms and conditions hereinabove set forth.

Date: _________________________         _____________________________
                                        Optionee

OPTIONEE: Please complete/update the following information, as applicable.

Name:                           ________________________________________
                                ________________________________________
Home Address:                   ________________________________________
                                ________________________________________
Social Security Number:         ________________________________________

EX-10.8

                                                                    Exhibit 10.8

                                 AMERISAFE, INC.
                           2005 EQUITY INCENTIVE PLAN
                    NONQUALIFIED STOCK OPTION AWARD AGREEMENT

      THIS OPTION AWARD AGREEMENT (this "Agreement"), dated as of __________, is
entered into between AMERISAFE, INC. a Texas corporation (the "Company"), and
____________________ ("Optionee"). Capitalized terms used herein but not defined
shall have the meanings assigned to those terms in the AMERISAFE, Inc. 2005
Equity Incentive Plan (the "Plan").

      1. Grant of Option Right. Pursuant to the Plan, the Company hereby grants
to Optionee, as a Participant in the Plan and effective as of the Date of Grant
(as defined in Section 3), an option right ("Option Right") to purchase ___
shares ("Option Shares") of the Company's common stock, par value $0.01 per
share ("Common Shares"), at the price of $_________ per share (the "Option
Price").

      2. Type of Option Right. The Option Right is intended to be a nonqualified
stock option and shall not be treated as an "incentive stock option" within the
meaning of Section 422 of the Code.

      3. Date of Grant. The effective date of the grant of this Option Right is
_______ ("Date of Grant").

      4. Date of Expiration. This Option Right shall expire on the tenth
anniversary of the Date of Grant (the "Date of Expiration"), unless earlier
terminated under Section 7(a).

      5. Vesting of Option Right.

            (a) Except as otherwise provided in this Agreement, the Option Right
      shall become vested and exercisable to the extent of 20% of the Option
      Shares on each of the first five anniversaries of the Date of Grant;
      provided, however, that if the Board determines that Optionee has
      satisfied the management objectives established by the Board and attached
      as Appendix A hereto as of the ____ anniversary of the Date of Grant, the
      Option Right shall become fully vested and exercisable on the ____
      anniversary of the Date of Grant.

            (b) Notwithstanding the provisions of Section 5(a) above, the Option
      Right shall become immediately vested and exercisable in full upon the
      occurrence of a Change in Control, as defined in the Plan.

            (c) Notwithstanding Section 5(a) above, the Board, in its sole
      discretion, may determine within 60 days following one of the events
      described in clauses (i) through (iii) below that the Option Right shall
      become immediately exercisable in full (i) if Optionee becomes permanently
      disabled (as determined by the Board), (ii) if Optionee dies while an
      employee of the Company or a Subsidiary, (iii) if Optionee retires at or
      after the earliest voluntary retirement age permitted by his or her
      employer or with the consent of the Board, or (iv) under other special
      circumstances.



      6. Manner of Exercise.

            (a) To the extent that the Option Right is exercisable in accordance
      with Section 5, the Option Right may be exercised by Optionee at any time,
      or from time to time, in whole or in part on or prior to the Termination
      Date; provided, however, that Optionee must exercise the Option Right in
      multiples of 100 Option Shares unless fewer than 100 Option Shares are
      available for purchase by Optionee under this Agreement at the time of
      exercise.

            (b) Optionee shall exercise the Option Right by delivering a signed
      written notice to the Company, which notice shall specify the number of
      Option Shares to be purchased and be accompanied by payment in full of the
      Option Price and any required taxes (as provided in the Plan) for the
      number of Option Shares specified for purchase; provided, however, that
      payment of the Option Price may be deferred and paid from the proceeds of
      sale through a bank or broker on a date satisfactory to the Company of
      some or all of the shares to which such exercise relates.

            (c) The Option Price shall be payable (i) in cash or by check
      acceptable to the Company or by wire transfer of immediately available
      funds, (ii) by the actual or constructive transfer to the Company of
      Common Shares owned by Optionee for at least six months having a Market
      Value per Share at the time of exercise equal to the total Option Price,
      or (iii) by a combination of such methods of payment.

            (d) The Company's obligation to deliver Option Shares to Optionee is
      subject to and conditioned upon Optionee satisfying all tax obligations
      associated with Optionee's exercise of the Option Right. The Company and
      its Subsidiaries, as applicable, shall be entitled to deduct from any
      payment otherwise due to Optionee the amount necessary to satisfy all such
      taxes.

            (e) Upon full payment of the Option Price and satisfaction of all
      applicable tax obligations, and subject to the applicable terms and
      conditions of the Plan and the terms and conditions of this Agreement, the
      Company will cause certificates for the Option Shares purchased hereunder
      to be delivered to Optionee.

      7. Termination.

            (a) The Option Right shall terminate on the earliest of the
      following dates (such date, the "Termination Date"):

                  (i) 90 days after Optionee's employment with the Company or a
            Subsidiary is terminated for any reason other than permanent
            disability (as determined by the Board) or death; provided, however,
            that Optionee's Option Right shall terminate immediately if Optionee
            is terminated for cause. For purposes of the foregoing, termination
            for cause shall [mean the involuntary termination of Optionee's
            employment initiated by Optionee's employer for any of the
            disciplinary reasons set forth in the employee handbook of
            Optionee's employer] [be as defined in Optionee's employment
            agreement] as in effect at the time of termination.



                  (ii) One year after Optionee becomes permanently disabled (as
            determined by the Board) or dies, if Optionee dies or becomes
            permanently disabled while an employee of the Company or Subsidiary;
            or

                  (iii) The Date of Expiration.

            (b) Subject to Section 5(c), during the 90-day period referred to in
      Section 7(a)(i) above and the one-year period referred to in Section
      7(a)(ii) above, the Option Right may be exercised only to the extent that,
      at the time that Optionee ceases to be an employee of the Company or a
      Subsidiary, it is exercisable pursuant to Section 5 hereof.

            (c) For the purposes of this Agreement, the continuous employment of
      Optionee with the Company or a Subsidiary shall not be deemed to have been
      interrupted, and Optionee shall not be deemed to have ceased to be an
      employee of the Company or Subsidiary by reason of (i) the transfer of
      Optionee's employment among the Company and its Subsidiaries, (ii) an
      approved leave of absence of not more than 90 days, or (iii) the period of
      any leave of absence required to be granted by the Company under any law,
      rule, regulation or contract applicable to Optionee's employment with the
      Company or any Subsidiary.

      8. Share Certificates. All certificates evidencing Option Shares purchased
pursuant hereto, and any certificates for Common Shares issued as dividends on,
in exchange of, or as replacements for, certificates evidencing Option Shares
which, in the opinion of counsel for the Company, are subject to similar legal
requirements, shall have endorsed thereon before issuance such restrictive or
other legends as the Company (upon advice of counsel) may deem necessary or
advisable. The Company and any transfer agent shall not be required to register
or record the transfer of any such shares unless and until the Company or its
transfer agent shall have received from Optionee's counsel an opinion, in a form
satisfactory to the Company, that any such transfer will not be in violation of
any applicable law, rule or regulation. Optionee agrees not to sell, assign,
pledge or otherwise dispose of any Option Shares or any Common Shares that are
subject to restrictions on transfer described in this Section 8 without the
Company first receiving such an opinion.

      9. Transfer. The Option Right may not be transferred by Optionee except by
will or the laws of descent and distribution and may not be exercised during the
lifetime of Optionee except by Optionee or Optionee's guardian or legal
representative acting on behalf of Optionee in a fiduciary capacity under state
law and court supervision.

      10. Compliance with Law. The Company shall make reasonable efforts to
comply with all applicable federal or state securities laws; provided, however,
that notwithstanding any other provision of this Agreement, the Option Right
shall not be exercisable if the exercise and issuance of the Option Shares would
result in a violation of any such laws.

      11. Employment Rights. This Agreement shall not confer on Optionee any
right with respect to the continuance of employment or other service with the
Company or any Subsidiary.



No provision of this Agreement shall limit in any way whatsoever any right that
the Company or a Subsidiary may otherwise have to terminate the employment of
Optionee at any time.

      12. Communications. All notices, demands and other communications required
or permitted hereunder or designated to be given with respect to the rights or
interests covered by this Agreement shall be deemed to have been properly given
or delivered when delivered personally or sent by certified or registered mail,
return receipt requested, U.S. mail or reputable overnight carrier, with full
postage prepaid and addressed to the parties as follows:

      If to the Company, at:     the Company's principal executive office,
                                 addressed to the attention of the Secretary

      If to Optionee, at:        Optionee's address provided by Optionee on the
                                 last page   hereof

Either the Company or Optionee may change the above designated address by
written notice to the other specifying such new address.

      13. Interpretation. The interpretation and construction of this Agreement
by the Board shall be final and conclusive. No member of the Board shall be
liable for any such action or determination made in good faith.

      14. Amendments. The Plan may be amended, suspended or terminated and this
Agreement may be amended by the Board for purposes of satisfying changes in the
law or for any other lawful purposes, provided that (i) no such action shall
adversely affect Optionee's rights under this Agreement without Optionee's
consent, and (ii) all such amendments shall be in writing.

      15. Integration. The Option Right is granted pursuant to the Plan.
Notwithstanding anything in this Agreement to the contrary, this Agreement is
subject to all of the terms and conditions of the Plan, a copy of which has been
made available to the Optionee and is available upon request to the Secretary at
the address specified in Section 12 and which is incorporated herein by
reference. As such, this Agreement and the Plan embody the entire agreement and
understanding of the Company and Optionee and supersede any prior understandings
or agreements, whether written or oral, with respect to the Option Right.

      16. Severance. In the event that one or more of the provisions of this
Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof and the remaining provisions hereof shall continue
to be valid and fully enforceable.

      17. Governing Law. This Agreement is made under, and shall be construed in
accordance with, the laws of the State of Texas, without regard to the conflict
of laws principles thereof.

      18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.



      IN WITNESS WHEREOF, this Agreement is executed by a duly authorized
representative of the Company on the day and year first above written.

                                AMERISAFE, INC.

                                By: ____________________________________________

                                Name: __________________________________________

                                Title: _________________________________________

The undersigned Optionee hereby acknowledges receipt of an executed original of
this Agreement and accepts the Option Right subject to the applicable terms and
conditions of the Plan and the terms and conditions hereinabove set forth.

Date: _____________________          ___________________________________________
                                     Optionee

OPTIONEE: Please complete/update the following information, as applicable.

Name:                           ____________________________________________

Home Address:                   ____________________________________________

                                ____________________________________________

                                ____________________________________________

Social Security Number:         ____________________________________________

EX-10.9

                                                                    Exhibit 10.9

                                 AMERISAFE, INC.

                2005 NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN

1.          PURPOSE. The purpose of this 2005 Non-Employee Director Restricted
      Stock Plan is to attract and retain qualified individuals who are not
      employed by the Company to serve as Directors.

2.          DEFINITIONS. As used in this Plan,

      (a)         "Annual Grant" means a grant of Restricted Stock to a
            Non-Employee Director in accordance with Section 5 of this Plan.

      (b)         "Annual Meeting" means the Company's annual meeting of
            shareholders.

      (c)         "Award" means any award of an Initial Grant or Annual Grant
            under this Plan.

      (d)         "Award Agreement" means a written agreement between the
            Company and a Non-Employee Director setting forth the terms,
            conditions and restrictions of the Award granted to the Non-Employee
            Director.

      (e)         "Board" means the Board of Directors of the Company.

      (f)         "Change in Control" shall have the meaning provided in
            Section 6 of this Plan.

      (g)         "Common Shares" means the shares of common stock, par value
            $0.01 per share, of the Company or any security into which such
            Common Shares may be changed by reason of any transaction or event
            of the type referred to in Section 3(b) of this Plan.

      (h)         "Company" means AMERISAFE, Inc., a Texas corporation.

      (i)         "Date of Grant" means (i) with respect to an Initial Grant,
            the close of business on the date on which the Non-Employee
            Director is first elected or appointed to the Board, and (ii)
            with respect to an Annual Grant, the date on which the Annual
            Meeting in any calendar year is first convened.

      (j)         "Director" means a member of the Board.

      (k)         "Effective Date" means __________, 2005.

      (l)         "Exchange Act" means the Securities Exchange Act of 1934, as
            amended, and the rules and regulations thereunder, as such law,
            rules and regulations may be amended from time to time.



      (m)         "Incumbent Directors" means the individuals who, as of the
            Effective Date, are Directors of the Company and any individual
            becoming a Director subsequent to the date thereof whose election,
            nomination for election by the Company's shareholders, or
            appointment, was approved by a vote of at least two-thirds of the
            then Incumbent Directors (either by a specific vote or by approval
            of the proxy statement of the Company in which such person is named
            as a nominee for Director, without objection to such nomination);
            provided, however, that an individual shall not be an Incumbent
            Director if such individual's election or appointment to the Board
            occurs as a result of an actual or threatened election contest (as
            described in Rule 14a-12(c) of the Exchange Act) with respect to the
            election or removal of Directors or other actual or threatened
            solicitation of proxies or consents by or on behalf of a Person
            other than the Board.

      (n)         "Initial Grant" means a grant of shares of Restricted Stock to
            a Non-Employee Director in accordance with Section 4 of this Plan.

      (o)         "Market Value per Share" means, as of any particular date, (i)
            the closing sale price per Common Share on that date (or if there
            are no sales on that date, on the next preceding trading date during
            which a sale occurred) as reported on the Nasdaq National Market
            System, or if the Common Shares are not then-traded on the Nasdaq
            National Market System, the principal exchange on which the Common
            Shares are then trading, or (ii) if clause (i) does not apply, the
            fair value of the Common Shares as determined by the Board.

      (p)         "Non-Employee Director" means each member of the Board from
            time to time who is not an employee of the Company or any of its
            Affiliates.

      (q)         "Person" means any individual, entity or group (within the
            meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).

      (r)         "Plan" means this 2005 Non-Employee Director Plan.

      (s)         "Restricted Stock" means Common Shares as to which neither the
            substantial risk of forfeiture nor the prohibition on transfers
            referred to in Section 4 or Section 5 of this Plan has lapsed.

      (t)         "Subsidiary" means a corporation, company or other entity (i)
            more than 50 percent of whose outstanding shares or other securities
            (representing the right to vote for the election of directors or
            other managing authority) are, or (ii) which does not have
            outstanding shares or other securities (as may be the case in a
            partnership, limited liability company, business trust or other
            legal entity), but more than 50 percent of whose ownership interest
            representing the right generally to make decisions for such entity
            is, now or hereafter, owned or controlled, directly or indirectly,
            by the Company.

      (u)         "Total Disability" means the permanent or total disability of
            a Non-Employee Director, as determined by the Board in good faith.

                                       2


      (v)         "Voting Securities" means, at any time, (i) the securities
            entitled to vote generally in the election of Directors in the case
            of the Company, or (ii) the securities entitled to vote generally in
            the election of members of the board of directors or similar body in
            the case of another legal entity.

3.          SHARES AVAILABLE UNDER THE PLAN.

      (a)         Subject to adjustment as provided in Section 3(b) of this
            Plan, the number of Common Shares that may be issued or transferred
            as Restricted Stock and released from substantial risk of forfeiture
            thereof shall not exceed in the aggregate ______ Common Shares. Such
            shares may be authorized but unissued shares or treasury shares or a
            combination of the foregoing.

      (b)         The number of shares available in Section 3(a) above shall be
            adjusted to account for shares relating to Awards that are
            forfeited. The number and type of shares available in Section 3(a)
            shall also automatically be adjusted to reflect (a) any stock split,
            combination of shares, recapitalization or other change in the
            capital structure of the Company, (b) any merger, consolidation,
            spin-off, split-off, spin-out, split-up, reorganization, partial or
            complete liquidation or other distribution of assets, issuance of
            rights or warrants to purchase securities, or (c) any other
            corporate transaction or event having an effect similar to any of
            the foregoing.

4.          INITIAL GRANTS

      (a)         Without any further action of the Board, each person who is
            elected or appointed for the first time to be a Non-Employee
            Director shall automatically receive an Initial Grant determined by
            dividing $_______ (prorated as determined below in this Section
            4(a)) by the Market Value per Share on the Date of Grant; provided,
            however, that the number of shares of Restricted Stock shall be
            rounded downward such that no fractional share shall be issued. If
            any such person is so elected or appointed other than at an Annual
            Meeting, the Initial Grant shall be prorated for the number of whole
            months that such Non-Employee Director will serve until the first
            anniversary of the immediately preceding Annual Meeting.

      (b)         In lieu of the Initial Grant contemplated by Section 4(a),
            each person who is, or will become, a Non-Employee Director upon the
            consummation of the Company's initial public offering (the "IPO") of
            its Common Shares shall, without further action by the Board,
            automatically receive an Initial Grant determined by dividing
            $_______ (prorated as determined below in this Section 4(b)) by the
            initial price to the public in the IPO; provided, however, that the
            number of shares of Restricted Stock shall be rounded down such that
            no fractional share shall be issued. The Initial Grant to be made
            pursuant to this Section 4(b) shall be prorated for the number of
            whole months that such Non-Employee Director will serve from the
            consummation of the IPO to the first anniversary of May 31, 2005.

                                       3


      (c)         Each Initial Grant shall constitute an immediate transfer of
            the ownership of shares of Restricted Stock to the Non-Employee
            Director, entitling such Non-Employee Director to voting, dividend
            and other ownership rights, but subject to the substantial risk of
            forfeiture and restrictions on transfer set forth in this Section 4.

      (d)         Each Initial Grant shall provide that the shares of Restricted
            Stock covered by such Initial Grant shall be subject to a
            "substantial risk of forfeiture" until the first Annual Meeting
            after the Date of Grant. Each Initial Grant shall provide that the
            Non-Employee Director shall forfeit the shares of Restricted Stock
            covered by such Initial Grant if such Non-Employee Director
            terminates his or her service with the Company while such shares of
            Restricted Stock are subject to a substantial risk of forfeiture.
            Notwithstanding the foregoing, each such Initial Grant shall provide
            for the immediate lapse of such substantial risk of forfeiture in
            the event of (i) the Non-Employee Director's death or Total
            Disability, or (ii) upon a Change in Control.

      (e)         Each Initial Grant shall require that any and all dividends or
            other distributions (other than cash dividends) declared or
            otherwise distributed thereon be subject to the same restrictions as
            the underlying Initial Grant.

      (f)         Each Initial Grant shall provide that during the period for
            which such substantial risk of forfeiture has not lapsed, the shares
            of Restricted Stock shall not be sold or otherwise transferred,
            other than by will or the laws of descent and distribution.

      (g)         Each Initial Grant shall be evidenced by an Award Agreement,
            which shall contain such terms and provisions not inconsistent with
            this Plan as the Board may approve. Unless otherwise directed by the
            Board, all certificates representing shares of Restricted Stock
            shall be held in custody by the Company until all restrictions
            thereon shall have lapsed, together with a stock power or powers
            executed by the Non-Employee Director in whose name such
            certificates are registered, endorsed in blank.

5.          ANNUAL GRANTS

      (a)         Commencing with the Annual Meeting in 2006, each Non-Employee
            Director who is then elected as a Non-Employee Director shall,
            without any further action of the Board, automatically receive an
            Annual Grant determined by dividing $_______ by the Market Value per
            Share on the Date of Grant; provided, however, that the number of
            shares of Restricted Stock shall be rounded downward such that no
            fractional share shall be issued.

      (b)         Each Annual Grant shall constitute an immediate transfer of
            the ownership of shares of Restricted Stock to the Non-Employee
            Director, entitling such Non-Employee Director to voting, dividend
            and other ownership rights, but subject to

                                       4


            the substantial risk of forfeiture and restrictions on transfer set
            forth in this Section 5.

      (c)         Each Annual Grant shall provide that the shares of Restricted
            Stock covered by such Annual Grant shall be subject to a
            "substantial risk of forfeiture" until the first Annual Meeting
            after the Date of Grant. Each Annual Grant shall provide that the
            Non-Employee Director shall forfeit the shares of Restricted Stock
            covered by such Annual Grant if such Non-Employee Director
            terminates his or her service with the Company while such shares of
            Restricted Stock are subject to a substantial risk of forfeiture.
            Notwithstanding the foregoing, each such Annual Grant shall provide
            for the immediate lapse of such substantial risk of forfeiture in
            the event of (i) the Non-Employee Director's death or Total
            Disability, or (ii) upon a Change in Control.

      (d)         Each Annual Grant shall provide that during the period for
            which such substantial risk of forfeiture has not lapsed, the shares
            of Restricted Stock shall not be sold or otherwise transferred,
            other than by will or the laws of descent and distribution.

      (e)         Each Annual Grant shall require that any and all dividends or
            other distributions (other than cash dividends) declared or
            otherwise distributed thereon be subject to the same restrictions as
            the underlying Annual Grant.

      (f)         Each Annual Grant shall be evidenced by an Award Agreement,
            which shall contain such terms and provisions not inconsistent with
            this Plan as the Board may approve. Unless otherwise directed by the
            Board, all certificates representing Restricted Stock shall be held
            in custody by the Company until all restrictions thereon shall have
            lapsed, together with a stock power or powers executed by the
            Non-Employee Director in whose name such certificates are
            registered, endorsed in blank.

6.          CHANGE IN CONTROL. For purposes of this Plan, except as may be
      otherwise defined in an Award Agreement, a "Change in Control" shall
      mean the occurrence of any of the following events:

      (a)         the acquisition by any Person of beneficial ownership (within
            the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35%
            or more of the then outstanding Voting Securities of the Company;
            provided, however, that for purposes of this Section 6(a), the
            following acquisitions shall not constitute a Change in Control: (A)
            any acquisition by the Company or a Subsidiary of Voting Securities,
            (B) any acquisition of Voting Securities by any employee benefit
            plan (or related trust) sponsored or maintained by the Company or
            any Subsidiary or (C) any acquisition of Voting Securities by any
            Person pursuant to a Business Combination that complies with clauses
            (A), (B) and (C) of Section 6(c) below;

      (b)         a majority of the Board ceases to be comprised of Incumbent
            Directors;

                                       5


      (c)         consummation of a reorganization, merger or consolidation, a
            sale or other disposition of all or substantially all of the assets
            of the Company or other transaction (each, a "Business
            Combination"), unless, in each case, immediately following the
            Business Combination, (A) all or substantially all of the
            individuals and entities who were the beneficial owners of Voting
            Securities immediately prior to the Business Combination
            beneficially own, directly or indirectly, more than 50% of the
            combined voting power of the then outstanding Voting Securities of
            the entity resulting from the Business Combination (including,
            without limitation, an entity which as a result of such transaction
            owns the Company or all or substantially all of the Company's assets
            either directly or through one or more subsidiaries), (B) no Person
            (other than the Company, such entity resulting from the Business
            Combination, or any employee benefit plan (or related trust)
            sponsored or maintained by the Company, any Subsidiary or such
            entity resulting from the Business Combination) beneficially owns,
            directly or indirectly, 35% or more of the combined voting power of
            the then outstanding Voting Securities of the entity resulting from
            the Business Combination; provided, however, that no Person will be
            treated for purposes of this Section 6(c) as beneficially owning 35%
            or more of the Voting Securities of the entity resulting from the
            Business Combination solely as a result of the Voting Securities
            held in the Company prior to consummation of the Business
            Combination and (C) at least a majority of the members of the board
            of directors of the entity resulting from the Business Combination
            were Incumbent Directors at the time of the execution of the initial
            agreement or of the action of the Board providing for the Business
            Combination; or

      (d)         approval by the shareholders of the Company of a complete
            liquidation or dissolution of the Company, except pursuant to a
            Business Combination that complies with clauses (A), (B) and (C) of
            Section 6(c) hereof.

      Notwithstanding anything to the contrary contained in this Section 6, a
Person who holds 35% or more of the Voting Securities of the Company on the
Effective Date will not be deemed to have acquired 35% or more of the Voting
Securities of the Company for purposes of Section 6(a) of this Plan (and as a
result, such circumstance shall not constitute a Change in Control) unless after
the Effective Date such person acquires, in one or more transactions, additional
Voting Securities of the Company representing 1% or more of the then outstanding
Voting Securities of the Company it being understood that an increase in the
percentage of Voting Securities held by a Person as a result of the Company's
repurchase of Voting Securities of the Company is not an acquisition of Voting
Securities by such Person.

7.          FRACTIONAL SHARES. The Company shall not issue any fractional
      Common Shares pursuant to this Plan.

8.          ADMINISTRATION OF THE PLAN.

      (a)         This Plan shall be administered by the Board, which may from
            time to time delegate all or any part of its authority under this
            Plan to a committee of the Board (or a subcommittee thereof). To the
            extent of any such delegation,

                                       6


            references in this Plan to the Board shall be deemed to be
            references to such committee or subcommittee.

      (b)         The interpretation and construction by the Board of any
            provision of this Plan or of any Award Agreement, and any
            determination by the Board pursuant to any provision of this Plan or
            of any such Award Agreement, shall be final and conclusive. No
            member of the Board shall be liable for any such action or
            determination made in good faith.

9.          AMENDMENT AND TERMINATION OF PLAN. The Board may from time to time
      and at any time amend or terminate the Plan in whole or in part; provided,
      however, that any amendment (i) which must be approved by the shareholders
      of the Company in order to comply with applicable law or the rules of the
      principal exchange on which the Common Shares are traded or quoted, or
      (ii) which would increase the benefits accruing to Non-Employee Directors,
      increase the aggregate number of Common Shares that may be issued under
      the Plan or materially modify the eligibility requirements for
      participating in the Plan, shall not be effective unless and until the
      shareholders of the Company have approved such amendment. Notwithstanding
      anything to the contrary set forth in this Plan, following the IPO in the
      event the common stock of the Company is no longer listed for trading with
      a national securities exchange or the Nasdaq National Market System, then
      all future grants under this Plan shall be suspended until the Board shall
      take further action with respect thereto.

10.         GOVERNING LAW. All issues concerning construction, validity and
      interpretation of this Plan and all Awards granted hereunder shall be
      governed by the law of the State of Texas, without regard to such state's
      conflict of laws rules.

11.         GENERAL PROVISIONS.

      (a)         Nothing in the Plan shall be deemed to create any obligation
            on the part of the Board to nominate any Director for reelection by
            the Company's shareholders or to limit the rights of the
            shareholders to remove any Director.

      (b)         All notices under this Plan shall be in writing, and if to the
            Company, shall be delivered to the Secretary of the Company or
            mailed to its principal executive office addressed to the attention
            of the Secretary; and if to a Non-Employee Director, shall be
            delivered personally or mailed to the Non-Employee Director at the
            address appearing on the records of the Company. Such addresses may
            be changed at any time by written notice to the other party.

                                       7

EX-10.10

                                                                   Exhibit 10.10

                                 AMERISAFE, INC.
                2005 NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN
                        RESTRICTED STOCK AWARD AGREEMENT

      THIS RESTRICTED STOCK AWARD AGREEMENT (this "Agreement"), dated as of
__________, is entered into between AMERISAFE, INC., a Texas corporation (the
"Company"), and ____________________ ("Grantee"). Capitalized terms used herein
but not defined shall have the meanings assigned to those terms in the
AMERISAFE, Inc. 2005 Non-Employee Director Restricted Stock Plan (the "Plan").

                              W I T N E S S E T H:

      A. Grantee is a Non-Employee Director;

      B. Pursuant to the terms of the Plan, on ____________, [the date Grantee
was first elected or appointed to the Board] [the date of the Annual Meeting]
("Date of Grant"), Grantee was automatically granted shares ("Restricted Stock")
of the Company's stock, par value $0.01 per share ("Common Shares");

      NOW, THEREFORE, in consideration of these premises and the covenants and
agreements set forth in this Agreement, the Company and Grantee agree as
follows:

      1. Grant of Restricted Stock. The Company hereby grants to Grantee,
effective as of the Date of Grant, _____ shares of Restricted Stock.
Certificates evidencing shares of Restricted Stock, and any certificates for
Common Shares issued as dividends on, in exchange of, or as replacements for,
certificates evidencing shares of Restricted Stock, shall bear legends referring
to the restrictions set forth herein and any other restrictive legends as the
Company (upon advice of counsel) may deem necessary or advisable. Until such
time as all restrictions have lapsed and the shares of Restricted Stock have
become nonforfeitable, the Company shall retain the certificates evidencing the
same.

      2. Restrictions on Transfer. The shares of Restricted Stock may not be
transferred, sold, pledged, exchanged, assigned or otherwise encumbered or
disposed of by Grantee unless and until they have become nonrestricted and
nonforfeitable in accordance with Section 3 hereof; provided, however, that
Grantee's interest in the shares of Restricted Stock may be transferred by will
or the laws of descent and distribution. Any purported transfer, encumbrance or
other disposition of the shares of Restricted Stock that is in violation of this
Section 2 shall be null and void, and the other party to any such purported
transaction shall not obtain any rights to or interest in the shares of
Restricted Stock.

      3. Lapse of Restrictions.

            (a) The shares of Restricted Stock shall become nonrestricted and
      nonforfeitable on the date of the first Annual Meeting after the Date of
      Grant, unless earlier forfeited in accordance with Section 4.



            (b) Notwithstanding the provisions of Section 3(a) above, all shares
      of Restricted Stock shall become immediately nonrestricted and
      nonforfeitable upon the occurrence of a Change in Control, as defined in
      the Plan.

            (c) Notwithstanding the provisions of Section 3(a) above, all shares
      of Restricted Stock shall become immediately nonrestricted and
      nonforfeitable if Grantee's service on the Board terminates because
      Grantee becomes permanently disabled (as determined by the Board) or dies.

      4. Forfeiture of Restricted Stock.

            (a) Any of the shares of Restricted Stock that remain forfeitable in
      accordance with Section 3 hereof shall be forfeited if Grantee's service
      on the Board ceases for any reason other than Grantee's permanent
      disability (as determined by the Board in its sole discretion) or death
      prior to such shares becoming nonforfeitable.

            (b) In the event of a forfeiture, the certificate(s) representing
      shares of Restricted Stock that have been forfeited shall be cancelled.

      5. Dividend, Voting and Other Rights. Grantee shall have all of the rights
of a shareholder with respect to the shares of Restricted Stock, including the
right to vote the shares of Restricted Stock and receive any cash dividends that
may be paid thereon; provided, however, that any non-cash dividend or other
distribution, including any additional Common Shares that Grantee may become
entitled to receive pursuant to a share dividend or other securities as a result
of a merger or reorganization in which the Company is the surviving corporation
or any other change in the capital structure of the Company shall be subject to
the same restrictions as the shares of Restricted Stock and otherwise pursuant
to the terms of this Agreement.

      6. Communications. All notices, demands and other communications required
or permitted hereunder or designated to be given with respect to the rights or
interests covered by this Agreement shall be deemed to have been properly given
or delivered when delivered personally or sent by certified or registered mail,
return receipt requested, U.S. mail or reputable overnight carrier, with full
postage prepaid and addressed to the parties as follows:

      If to the Company, at:  the Company's principal executive office,
                              addressed to the attention of the Secretary

      If to Grantee, at:      Grantee's address provided by Grantee on the last
                              page hereof

Either the Company or Grantee may change the above designated address by written
notice to the other specifying such new address.

      7. Interpretation. The interpretation and construction of this Agreement
by the Board shall be final and conclusive. No member of the Board shall be
liable for any such action or determination made in good faith.

                                       2


      8. Amendments. The Plan may be amended, suspended or terminated and this
Agreement may be amended or canceled by the Board for purposes of satisfying
changes in the law or for any other lawful purposes, provided that (i) no such
action shall adversely affect Grantee's rights under this Agreement without
Grantee's consent, and (ii) all such amendments shall be in writing.

      9. Integration. The shares of Restricted Stock are granted pursuant to the
Plan. Notwithstanding anything in this Agreement to the contrary, this Agreement
is subject to all of the terms and conditions of the Plan, a copy of which has
been made available to Grantee and is available upon request to the Secretary at
the address specified in Section 6 hereof and which is incorporated herein by
reference. As such, this Agreement and the Plan embody the entire agreement and
understanding of the Company and Grantee and supersede any prior understandings
or agreements, whether written or oral, with respect to the shares of Restricted
Stock.

      10. Severance. In the event that one or more of the provisions of this
Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof and the remaining provisions hereof shall continue
to be valid and fully enforceable.

      11. Governing Law. This Agreement is made under, and shall be construed in
accordance with, the laws of the State of Texas, without regard to conflict of
laws principles thereof.

      12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

                                       3


      IN WITNESS WHEREOF, this Agreement is executed by a duly authorized
representative of the Company on the day and year first above written.

                                AMERISAFE, INC.

                                By: ______________________________________
                                Name: ____________________________________
                                Title: ___________________________________

The undersigned Grantee acknowledges receipt of an executed original of this
Agreement and accepts the shares of Restricted Stock subject to the applicable
terms and conditions of the Plan and the terms and conditions hereinabove set
forth.

Date: _______________________         _____________________________
                                      Grantee

GRANTEE: Please complete/update the following information.

Name:                            ____________________________________________

Home Address:                    ____________________________________________

                                 ____________________________________________

                                 ____________________________________________

Social Security Number:          ____________________________________________

                                       4

EX-10.11

                                                                   Exhibit 10.11

                                 AMERISAFE, INC.

                            INDEMNIFICATION AGREEMENT

      This Indemnification Agreement (this "AGREEMENT") is made and entered into
as of the ______ day of ________________ 2005, by and between AMERISAFE, Inc., a
Texas corporation (the "CORPORATION"), and ________________ ("INDEMNITEE").

                                    RECITALS

      A. It is critically important to the Corporation and its shareholders that
the Corporation be able to attract and retain the most capable persons
reasonably available to serve as directors and officers of the Corporation.

      B. In recognition of the need for corporations to be able to induce
capable and responsible persons to accept positions in corporate management,
Texas law authorizes (and in some instances requires) corporations to indemnify
their directors and officers, and further authorizes corporations to purchase
and maintain insurance for the benefit of their directors and officers.

      C. Recent federal legislation and rules adopted by the Securities and
Exchange Commission and the national securities exchanges have imposed
additional disclosure and corporate governance obligations on directors and
officers of public companies and have exposed such directors and officers to new
and substantially broadened civil liabilities.

      D. These legislative and regulatory initiatives have also exposed
directors and officers of public companies to a significantly greater risk of
criminal proceedings, with attendant defense costs and potential criminal fines
and penalties.

      E. Indemnitee is a director and/or officer of the Corporation and his/her
willingness to serve in such capacity is predicated, in substantial part, upon
the Corporation's willingness to indemnify him/her in accordance with the
principles reflected above, to the full extent permitted by the laws of the
State of Texas, and upon the other undertakings set forth in this Agreement.

      F. Therefore, in recognition of the need to provide Indemnitee with
substantial protection against personal liability, in order to procure
Indemnitee's continued service as a director and/or officer of the Corporation
and to enhance Indemnitee's ability to serve the Corporation in an effective
manner, and in order to provide such protection pursuant to express contract
rights (intended to be enforceable irrespective of, among other things, any
amendment to the Corporation's Second Amended and Restated Articles of
Incorporation (the "ARTICLES") or Second Amended and Restated Bylaws (the
"BYLAWS") or any change in the composition of the Corporation's Board of
Directors (the "BOARD")), the Corporation wishes to provide in this Agreement
for the indemnification of and the advancement of Expenses (as defined in
Article I) to Indemnitee as set forth in this Agreement and for the continued
coverage of Indemnitee under the Corporation's directors' and officers'
liability insurance policies.



      G. In light of the considerations referred to in the preceding recitals,
it is the Corporation's intention and desire that the provisions of this
Agreement be construed liberally, subject to their express terms, to maximize
the protections to be provided to Indemnitee hereunder.

      NOW, THEREFORE, in order to induce Indemnitee to continue to serve in
his/her present capacity, the Corporation and Indemnitee hereby agree as
follows:

                                   ARTICLE I
                               CERTAIN DEFINITIONS

      As used herein, the following words and terms shall have the following
respective meanings (whether singular or plural):

      "CLAIM" means an actual or threatened claim or request for relief.

      "CORPORATE STATUS" means the status of a person as a current or former
director or officer of the Corporation or, at the request of the Corporation, as
a current or former director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic
corporation, employee benefit plan, other enterprise or other entity.

      "DISINTERESTED DIRECTOR" means a director of the Corporation who is not
and was not a party to the Proceeding or Claim in respect of which
indemnification is sought by Indemnitee.

      "EXPENSES" means all attorneys' fees, retainers, court costs, transcript
costs, fees of experts, witness fees, travel expenses, duplicating costs,
printing costs, telephone charges, postage, delivery service fees and all other
disbursements or expenses of the types customarily incurred in connection with
prosecuting, defending, preparing to prosecute or defend, investigating or being
or preparing to be a witness in a Proceeding.

      "INCUMBENT DIRECTORS" means the individuals who, as of the date hereof,
are directors of the Corporation and any individual becoming a director
subsequent to the date hereof whose election, nomination for election by the
Corporation's shareholders, or appointment, was approved by a vote of at least
two-thirds of the then-Incumbent Directors (either by a specific vote or by
approval of the proxy statement of the Corporation in which such person is named
as a nominee for director, without objection to such nomination); provided,
however, that an individual shall not be an Incumbent Director if such
individual's election or appointment to the Board occurs as a result of an
actual or threatened election contest (as described in Rule 14a-12(c) under the
Securities Exchange Act of 1934, as amended) with respect to the election or
removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board.

      "INDEPENDENT COUNSEL" means a law firm, or a member of a law firm, that is
experienced in matters of corporation law and neither presently is, nor in the
past five years has been, retained to represent: (i) the Corporation or
Indemnitee in any matter material to either such party (other than with respect
to matters concerning Indemnitee under this Agreement, or of other indemnitees
under similar indemnification agreements), or (ii) any other named (or, as to a

                                       2


threatened matter, reasonably likely to be named) party in the Proceeding or
Claim giving rise to a claim for indemnification hereunder. Notwithstanding the
foregoing, Independent Counsel shall not include any person who, under the
applicable standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Corporation or Indemnitee in an
action to determine Indemnitee's rights under this Agreement.

      "OFFICIAL CAPACITY" means (a) when used with respect to a director, the
office of director in the Corporation, and (b) when used with respect to a
person other than a director, the elective or appointive office in the
Corporation held by the officer or the employment or agency relationship
undertaken by the employee or agent on behalf of the Corporation, but neither
clause (a) nor (b) includes service for any other foreign or domestic
corporation or any employee benefit plan, other enterprise or other entity.

      "PROCEEDING" means any threatened, pending or completed action, suit or
other proceeding, whether civil, criminal, administrative, arbitrative or
investigative (except one initiated by Indemnitee pursuant to Article V of this
Agreement to enforce his/her rights under this Agreement), any appeal in such an
action, suit or proceeding, and any inquiry or investigation that could lead to
such an action, suit or proceeding.

                                   ARTICLE II
                                 INDEMNIFICATION

      Section 2.1 General. The Corporation shall indemnify, and advance Expenses
to, Indemnitee to the full extent permitted by applicable law in effect on the
date hereof and to such greater extent as applicable law may thereafter from
time to time permit. The rights of Indemnitee provided under the preceding
sentence shall include, but shall not be limited to, the right to be indemnified
and to have Expenses advanced in all Proceedings to the full extent permitted by
Article 2.02-1 of the Texas Business Corporation Act (the "TBCA") (or any
successor provision). The provisions set forth in this Agreement are provided in
addition to and as a means of furtherance and implementation of, and not in
limitation of, the obligations expressed in this Article II.

      Section 2.2 Additional Indemnity of the Corporation. Indemnitee shall be
entitled to indemnification pursuant to this Section 2.2 if, by reason of
his/her Corporate Status, he/she is, or is threatened to be made, a party to any
Proceeding (except to the extent limited by Section 2.3). Pursuant to this
Section 2.2, Indemnitee shall be indemnified against judgments, penalties
(including excise and similar taxes), fines, settlements and reasonable Expenses
actually incurred by him/her or on his/her behalf in connection with such
Proceeding or any Claim therein, if (a) he/she conducted himself/herself in good
faith, (b) he/she reasonably believed: (i) in the case of conduct in his/her
Official Capacity, that his/her conduct was in the Corporation's best interests;
and (ii) in all other cases, that his/her conduct was at least not opposed to
the Corporation's best interests, and (c) in the case of any criminal
Proceeding, had no reasonable cause to believe his/her conduct was unlawful.
Nothing in this Section 2.2 shall limit the benefits of Section 2.1 or any other
Section hereunder.

                                       3


      Section 2.3 Limitation on Indemnity. The indemnification otherwise
available to Indemnitee under Section 2.2 shall be limited to the extent set
forth in this Section 2.3. In the event that Indemnitee is found liable to the
Corporation or is found liable on the basis that personal benefit was improperly
received by Indemnitee, whether or not the benefit resulted from an action taken
in Indemnitee's Official Capacity, Indemnitee shall, with respect to the Claim
in the Proceeding in which such finding is made, be indemnified only against
reasonable Expenses actually incurred by him/her in connection with that Claim.
Notwithstanding the foregoing, no indemnification against such Expenses shall be
made in respect of any Claim in such Proceeding as to which Indemnitee shall
have been adjudged to be liable for willful or intentional misconduct in the
performance of his/her duty to the Corporation; provided, however, that, if
applicable law so permits, indemnification against such Expenses shall
nevertheless be made by the Corporation in such event if and only to the extent
that the court in which such Proceeding shall have been brought or is pending,
shall determine.

                                  ARTICLE III
                                    EXPENSES

      Section 3.1 Expenses of a Party Who Is Wholly or Partly Successful.
Indemnitee shall be indemnified against all reasonable Expenses incurred by
him/her in connection with any Proceeding to which Indemnitee is a party by
reason of his/her Corporate Status and in which Indemnitee is wholly successful,
on the merits or otherwise, in the defense of such Proceeding. In the event that
Indemnitee is not wholly successful, on the merits or otherwise, in a Proceeding
but is successful, on the merits or otherwise, as to any Claim in such
Proceeding, the Corporation shall indemnify Indemnitee against all reasonable
Expenses incurred by him/her or on his/her behalf relating to each such Claim.
For purposes of this Section 3.1 and without limitation, the termination of a
Claim in a Proceeding by dismissal, with or without prejudice, shall be deemed
to be a successful result as to such Claim.

      Section 3.2 Expenses of a Witness. To the extent that Indemnitee is, by
reason of his/her Corporate Status, a witness or otherwise participates in any
Proceeding at a time when he/she is not named a defendant or respondent in the
Proceeding, he/she shall be indemnified against all Expenses incurred by him/her
or on his/her behalf in connection therewith.

      Section 3.3 Advancement of Expenses. The Corporation shall pay all
reasonable Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding or Claim, whether brought by the Corporation or otherwise, in
advance of any determination respecting entitlement to indemnification pursuant
to Article IV hereof within ten business days after the receipt by the
Corporation of a written request from Indemnitee setting forth a written
affirmation of his/her good faith belief that he/she has met the standard of
conduct necessary for indemnification under applicable law, confirming his/her
obligation under the last sentence of this Section 3.3 and requesting such
payment or payments from time to time, whether prior to or after final
disposition of such Proceeding or Claim. Such statement or statements shall
reasonably evidence the Expenses incurred by Indemnitee. Indemnitee hereby
undertakes and agrees that he/she will repay the Corporation for any Expenses so
advanced to the extent that it shall ultimately be determined by a court in a
final adjudication from which there is no further right of appeal, that
Indemnitee is not entitled to be indemnified against such Expenses.

                                       4


                                   ARTICLE IV
             PROCEDURE FOR DETERMINATION OF RIGHT TO INDEMNIFICATION

      Section 4.1 Request for Indemnification. To obtain indemnification under
this Agreement, Indemnitee shall submit to the Corporation a written request,
including therein or therewith such documentation and information as is
reasonably available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to indemnification for a
Proceeding or Claim. The Secretary or an Assistant Secretary of the Corporation
shall, promptly upon receipt of such a request for indemnification, advise the
Board in writing that Indemnitee has requested indemnification. If, at the time
of the receipt of such request, the Corporation has directors' and officers'
liability insurance in effect under which coverage for such Proceeding or Claim
is potentially available, the Corporation shall give prompt written notice of
such Proceeding or Claim to the applicable insurers in accordance with the
procedures set forth in the applicable policies. The Corporation shall provide
to Indemnitee a copy of such notice delivered to the applicable insurers, and
copies of all subsequent correspondence between the Corporation and such
insurers regarding the Proceeding or Claim, in each case substantially
concurrently with the delivery or receipt thereof by the Corporation. The
failure by Indemnitee to timely notify the Corporation of any Proceeding or
Claim shall not relieve the Corporation from any liability hereunder unless, and
only to the extent that, the Corporation did not otherwise learn of such
Proceeding or Claim and such failure results in forfeiture by the Corporation of
substantial defenses, rights or insurance coverage.

      Section 4.2 Determination of Right to Indemnification.

            (a) To the extent that Indemnitee shall have been wholly successful,
on the merits or otherwise, in defense of any Proceeding or Claim or in defense
of any issue or matter therein, including without limitation dismissal without
prejudice, Indemnitee shall be indemnified against judgments, penalties
(including excise and similar taxes), fines, settlements and reasonable Expenses
actually incurred by him/her or on his/her behalf in connection with any such
Proceeding or Claim or any issue or matter therein in accordance with Article II
and no Standard of Conduct Determination (as defined in Section 4.2(b)) shall be
required.

            (b) Upon written request by Indemnitee for indemnification pursuant
to Section 4.1 hereof, a determination of whether Indemnitee has satisfied any
applicable standard of conduct under Texas law that is a legally required
condition precedent to indemnification of Indemnitee hereunder with respect to
Indemnitee's entitlement thereto (a "STANDARD OF CONDUCT DETERMINATION") shall
be made in the specific case in accordance with Article 2.02-1 of the TBCA (or
any successor provision). Indemnitee will cooperate with the person or persons
making such Standard of Conduct Determination, including providing to such
person or persons, upon reasonable advance request, any documentation or
information that is not privileged or otherwise protected from disclosure and
that is reasonably available to Indemnitee and reasonably necessary to such
determination. The Corporation shall indemnify and hold harmless Indemnitee
against and, if requested by Indemnitee, shall reimburse Indemnitee for, or
advance to Indemnitee, within five business days of such request, any and all
costs and expenses (including attorneys' and experts' fees and expenses)
incurred by Indemnitee in so cooperating with the person or persons making such
Standard of Conduct Determination.

                                       5


            (c) The Corporation shall use its reasonable best efforts to cause
any Standard of Conduct Determination required under Section 4.2(b) to be made
as promptly as practicable. If (i) the person or persons empowered or selected
under this Section 4.2 to make the Standard of Conduct Determination shall not
have made a determination within 30 days after the later of (A) receipt by the
Corporation of written notice from Indemnitee advising the Corporation of the
final disposition of the applicable Proceeding or Claim (the date of such
receipt being the "NOTIFICATION DATE") and (B) the selection of special legal
counsel, if such determination is to be made by special legal counsel, that is
permitted under the provisions of Section 4.2(e) to make such determination, and
(ii) Indemnitee shall have fulfilled his/her obligations set forth in the second
sentence of Section 4.2(b), then Indemnitee shall be deemed to have satisfied
the applicable standard of conduct; provided that such 30-day period may be
extended for a reasonable time, not to exceed an additional 30 days, if the
person or persons making such determination in good faith requires such
additional time for obtaining or evaluating documentation and/or information
relating thereto; and provided, further, that the 30-day limitation set forth in
this Section 4.2(c) shall not apply and such period shall be extended as
necessary if within 30 days after receipt by the Corporation of the request for
indemnification under Section 4.1 the Board has resolved to submit such
determination to the shareholders for their consideration at an annual meeting
thereof to be held within 90 calendar days after such receipt and such
determination is made thereat, or a special meeting of shareholders is called
within 30 calendar days after such receipt for the purpose of making such
determination, such meeting is held for such purpose within 60 calendar days
after having been so called and such determination is made thereat.

            (d) If (i) Indemnitee shall be entitled to indemnification hereunder
pursuant to Section 4.2(a), (ii) no determination of whether Indemnitee has
satisfied any applicable standard of conduct under Texas law is a legally
required condition precedent to indemnification of Indemnitee hereunder, or
(iii) Indemnitee has been determined or deemed pursuant to Section 4.2(b) or (c)
to have satisfied any applicable standard of conduct under Texas law that is a
legally required condition precedent to indemnification of Indemnitee hereunder,
then the Corporation shall pay to Indemnitee, within five business days after
the later of (x) the Notification Date in respect of the applicable Proceeding
or Claim and (y) the earliest date on which the applicable criterion specified
in clause (i), (ii) or (iii) above shall have been satisfied, all reasonable
Expenses incurred by him/her in connection with the applicable Proceeding or
Claim.

            (e) If a Standard of Conduct Determination is to be made by special
legal counsel pursuant to Article 2.02-1 of the TBCA (or any successor
provision), such special legal counsel must be Independent Counsel (as defined
in Article I hereof) and the Corporation shall give written notice to Indemnitee
advising him/her of the identity of the special legal counsel so selected.
Indemnitee may, within five business days after receiving written notice of
selection from the Corporation, deliver to the Corporation a written objection
to such selection; provided, however, that such objection may be asserted only
on the ground that the special legal counsel so selected does not satisfy the
criteria set forth in the definition of "Independent Counsel" in Article 1, and
the objection shall set forth with particularity the factual basis of such
assertion. Absent a proper and timely objection, the person or firm so selected
shall act as special legal counsel. If such written objection is properly and
timely made and substantiated, (i) the special legal counsel so selected may not
serve as special legal counsel unless and until such objection is

                                       6


withdrawn or a court has determined that such objection is without merit, and
(ii) the Corporation may, at its option, select an alternative special legal
counsel and give written notice to Indemnitee advising him/her of the identity
of the alternative special legal counsel so selected, in which case the
provisions of the two immediately preceding sentences and clause (i) of this
sentence shall apply to such subsequent selection and notice. If applicable, the
provisions of clause (ii) of the immediately preceding sentence shall apply to
successive alternative selections. If no special legal counsel that is permitted
under the foregoing provisions of this Section 4.2(e) to make the Standard of
Conduct Determination shall have been selected within 30 days after the
Corporation gives its initial notice pursuant to the first sentence of this
Section 4.2(e), Indemnitee may petition the courts of the State of Texas for
resolution of any objection which shall have been made by Indemnitee to the
Corporation's selection of special legal counsel and/or for the appointment as
special legal counsel of a person or firm selected by the Court or by such other
person as the Court shall designate, and the person or firm with respect to whom
all objections are so resolved or the person or firm so appointed will act as
special legal counsel. In all events, the Corporation shall pay all of the
reasonable fees and expenses of the special legal counsel incurred in connection
with the special legal counsel's determination pursuant to Section 4.2(b).

      Section 4.3 No Other Presumption. The termination of any Proceeding or of
any Claim by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not (except as otherwise expressly provided
in this Agreement) by itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did meet the
requirements for indemnification under Section 2.2. Indemnitee shall be deemed
to have been found liable in respect of any Claim only after he/she shall have
been so adjudged by a court of competent jurisdiction after exhaustion of all
appeals therefrom.

                                   ARTICLE V
                         CERTAIN REMEDIES OF INDEMNITEE

      Section 5.1 Indemnitee Entitled to Adjudication in an Appropriate Court.
In the event (a) a determination is made pursuant to Article IV that Indemnitee
is not entitled to indemnification under this Agreement, or (b) there has been
any failure by the Corporation to make timely payment or advancement of any
amounts due hereunder, Indemnitee shall be entitled to commence an action
seeking an adjudication in an appropriate court of the State of Texas, or in any
other court of competent jurisdiction, of his/her entitlement to such
indemnification or advancement of Expenses. Indemnitee shall commence such
action seeking an adjudication within 180 days following the date on which
Indemnitee first has the right to commence such action pursuant to this Section
5.1, or such right shall expire. The Corporation agrees not to oppose
Indemnitee's right to seek any such adjudication.

      Section 5.2 Adverse Determination Not to Affect any Judicial Proceeding.
In the event that a determination shall have been made pursuant to Article IV
that Indemnitee is not entitled to indemnification, any judicial proceeding
commenced pursuant to this Article V shall be conducted in all respects as a de
novo trial on the merits, and Indemnitee shall not be prejudiced by reason of
such initial adverse determination. In any judicial proceeding commenced
pursuant to this Article V, the Corporation shall have the burden of proving, by
clear

                                       7


and convincing evidence, that Indemnitee is not entitled to indemnification or
advancement of Expenses, as the case may be.

      Section 5.3 Corporation Bound by Determination Favorable to Indemnitee in
any Judicial Proceeding. If a determination shall have been made or deemed to
have been made pursuant to Article IV that Indemnitee is entitled to
indemnification, the Corporation shall be bound by such determination in any
judicial proceeding commenced pursuant to this Article V, absent a knowing
misstatement by Indemnitee of a material fact, or a knowing omission of a
material fact necessary to make a statement by Indemnitee not materially
misleading, in connection with the request for indemnification.

      Section 5.4 Corporation Bound by this Agreement. The Corporation shall be
precluded from asserting in any judicial proceeding commenced pursuant to this
Article V that the procedures and presumptions of this Agreement are not valid,
binding and enforceable and shall stipulate in any such court that the
Corporation is bound by all the provisions of this Agreement.

      Section 5.5 Indemnitee Entitled to Expenses of Judicial Proceeding. In the
event that Indemnitee seeks a judicial adjudication of his/her rights under, or
to recover damages for breach of, this Agreement, Indemnitee shall be entitled
to recover from the Corporation, and shall be indemnified by the Corporation
against, any and all reasonable expenses (of the types described in the
definition of Expenses in Article I) incurred by him/her in such judicial
adjudication but only if he/she prevails therein. If it shall be determined in
said judicial adjudication that Indemnitee is entitled to receive part but not
all of the indemnification or advancement of expenses or other benefit sought,
the expenses incurred by Indemnitee in connection with such judicial
adjudication shall be reasonably prorated in good faith by counsel for
Indemnitee.

      Section 5.6 No Diminishment of Rights. The Corporation shall not adopt any
amendment to the Articles or Bylaws the effect of which would be to deny,
diminish or encumber Indemnitee's rights to indemnity pursuant to the Articles,
Bylaws, the TBCA or any other applicable law as applied to any act or failure to
act occurring in whole or in part prior to the date (the "EFFECTIVE DATE") upon
which the amendment was approved by the Board or the shareholders of the
Corporation, as the case may be. In the event that the Corporation shall adopt
any amendment to the Articles or Bylaws the effect of which is to so deny,
diminish or encumber Indemnitee's rights to indemnity, such amendment shall
apply only to acts or failures to act occurring entirely after the Effective
Date thereof.

                                   ARTICLE VI
                                  MISCELLANEOUS

      Section 6.1 Non-Exclusivity. The rights of Indemnitee to receive
indemnification and advancement of Expenses under this Agreement shall not be
deemed exclusive of any other rights to which Indemnitee may at any time be
entitled under applicable law, the Articles or Bylaws, any other agreement, vote
of shareholders or a resolution of directors of the Corporation, or otherwise.
No amendment or alteration of the Articles or Bylaws or any provision thereof
shall adversely affect Indemnitee's rights hereunder and such rights shall be in

                                       8


addition to any rights Indemnitee may have under the Articles, Bylaws, the TBCA
or otherwise. To the extent that there is a change in the TBCA (whether by
statute or judicial decision) which allows greater indemnification by agreement
than would be afforded currently under the Articles or Bylaws and this
Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by
virtue of this Agreement the greater benefit so afforded by such change.

      Section 6.2 Insurance and Subrogation.

            (a) For the duration of Indemnitee's service as a director and/or
officer of the Corporation, and thereafter for so long as Indemnitee shall be
subject to any pending or possible Proceeding or Claim, the Corporation shall
use commercially reasonable efforts (taking into account the scope and amount of
coverage available relative to the cost thereof) to cause to be maintained in
effect policies of directors' and officers' liability insurance providing
coverage for directors and/or officers of the Corporation. The Corporation shall
provide Indemnitee with a copy of all directors' and officers' liability
insurance applications, binders, policies, declarations, endorsements and other
related materials. Without limiting the generality or effect of the two
immediately preceding sentences, the Corporation shall not discontinue or
significantly reduce the scope or amount of coverage from one policy period to
the next (i) without the prior approval thereof by a majority vote of the
Incumbent Directors, even if less than a quorum, or (ii) if at the time that any
such discontinuation or significant reduction in the scope or amount of coverage
is proposed there are no Incumbent Directors, without the prior written consent
of Indemnitee (which consent shall not be unreasonably withheld or delayed). In
all policies of directors' and officers' liability insurance obtained by the
Corporation, Indemnitee shall be named as an insured in such a manner as to
provide Indemnitee the same rights and benefits, subject to the same
limitations, as are accorded to the Corporation's directors and officers most
favorably insured by such policy. The Corporation may, but shall not be required
to, create a trust fund, grant a security interest or use other means, including
without limitation a letter of credit, to ensure the payment of such amounts as
may be necessary to satisfy its obligations to indemnify and advance Expenses
pursuant to this Agreement.

            (b) In the event of any payment by the Corporation under this
Agreement, the Corporation shall be subrogated to the extent of such payment to
all of the related rights of recovery of Indemnitee against other persons or
entities (other than Indemnitee's successors). Indemnitee shall execute all
papers reasonably required to evidence such rights (all of Indemnitee's
reasonable Expenses related thereto to be reimbursed by or, at the option of
Indemnitee, advanced by the Corporation.

            (c) The Corporation shall not be liable under this Agreement to make
any payment of amounts otherwise indemnifiable hereunder if and to the extent
that Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.

      Section 6.3 Defense of Claims. The Corporation shall be entitled to
participate in the defense of any Proceeding or Claim or to assume the defense
thereof, with counsel reasonably satisfactory to Indemnitee; provided that if
Indemnitee believes, after consultation with counsel selected by Indemnitee,
that (a) the use of counsel chosen by the Corporation to represent Indemnitee
would present such counsel with an actual or potential conflict, (b) the named
parties

                                       9


in any such Proceeding or Claim (including any impleaded parties) include both
the Corporation and Indemnitee and Indemnitee shall conclude, based on the
advice of counsel, that there may be one or more legal defenses available to
him/her that are different from or in addition to those available to the
Corporation, or (c) any such representation by such counsel would be precluded
under the applicable standards of professional conduct then prevailing, then
Indemnitee shall be entitled to retain separate counsel (but not more than one
law firm plus, if applicable, local counsel in respect of any particular
Proceeding or Claim) at the Corporation's expense. The Corporation shall not be
liable to Indemnitee under this Agreement for any amounts paid in settlement of
any Proceeding or Claim effected without the Corporation's prior written
consent. The Corporation shall not, without the prior written consent of
Indemnitee, effect any settlement of any Proceeding or Claim to which Indemnitee
is, or could have been, a party unless such settlement solely involves the
payment of money and includes a complete and unconditional release of Indemnitee
from all liability on any claims that are the subject matter of such Proceeding
or Claim. Neither the Corporation nor Indemnitee shall unreasonably withhold its
consent to any proposed settlement; provided, that Indemnitee may withhold
consent to any settlement that does not provide a complete and unconditional
release of Indemnitee.

      Section 6.4 Exculpation of Directors. If Indemnitee is or was a director
of the Corporation, he/she shall not in that capacity be liable to the
Corporation or its shareholders for monetary damages for an act or omission in
Indemnitee's capacity as a director, except that Indemnitee's liability shall
not be eliminated or limited for: (a) a breach of Indemnitee's duty of loyalty
to the Corporation or its shareholders, (b) an act or omission not in good faith
that constitutes a breach of duty of Indemnitee to the Corporation or an act or
omission that involves intentional misconduct or a knowing violation of the law,
(c) a transaction from which Indemnitee received an improper benefit, whether or
not the benefit resulted from an action taken within the scope of Indemnitee's
office, or (d) an act or omission for which the liability of Indemnitee is
expressly provided for by statute.

      Section 6.5 Duration of Agreement. This Agreement shall continue for so
long as Indemnitee serves as a director or officer of the Corporation or, at the
request of the Corporation, as a director, officer, partner, venturer,
proprietor, trustee, employee, agent or similar functionary of another foreign
or domestic corporation, employee benefit plan, other enterprise or other
entity, and thereafter shall survive until and terminate upon the later to occur
of (a) the final termination of all pending Proceedings in respect of which
Indemnitee is granted rights of indemnification or advancement of Expenses
hereunder and of any proceeding commenced by Indemnitee pursuant to Article V
relating thereto, and (b) the expiration of all statutes of limitation
applicable to possible Claims arising out of Indemnitee's Corporate Status.

      Section 6.6 Successors and Binding Agreement.

            (a) The Corporation shall require any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or otherwise) to
all or substantially all of the business or assets of the Corporation, by
agreement in form and substance reasonably satisfactory to Indemnitee and
his/her counsel, expressly to assume and agree to perform this Agreement in the
same manner and to the same extent the Corporation would be required to perform
if no such succession had taken place. This Agreement shall be binding upon and
inure to the benefit of the Corporation and any successor to the Corporation,
including without

                                       10


limitation any person acquiring directly or indirectly all or substantially all
of the business or assets of the Corporation whether by purchase, merger,
consolidation, reorganization or otherwise (and such successor will thereafter
be deemed the "CORPORATION" for purposes of this Agreement), but shall not
otherwise be assignable or delegatable by the Corporation.

            (b) This Agreement shall inure to the benefit of and be enforceable
by Indemnitee's personal or legal representatives, executors, administrators,
heirs, distributees, legatees and other successors.

            (c) This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign or delegate this
Agreement or any rights or obligations hereunder except as expressly provided in
Sections 6.6(a) and 6.6(b). Without limiting the generality or effect of the
foregoing, Indemnitee's right to receive payments hereunder shall not be
assignable, whether by pledge, creation of a security interest or otherwise,
other than by a transfer by Indemnitee's will or by the laws of descent and
distribution, and, in the event of any attempted assignment or transfer contrary
to this Section 6.6(c), the Corporation shall have no liability to pay any
amount so attempted to be assigned or transferred.

      Section 6.7 Legal Fees and Expenses. It is the intent of the Corporation
that Indemnitee not be required to incur legal fees or other Expenses associated
with the interpretation, enforcement or defense of Indemnitee's rights under
this Agreement by litigation or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be extended to
Indemnitee hereunder. Accordingly, without limiting the generality or effect of
any other provision hereof, if it should appear to Indemnitee that the
Corporation has failed to comply with any of its obligations under this
Agreement or in the event that the Corporation or any other person takes or
threatens to take any action to declare this Agreement void or unenforceable, or
institutes any litigation or other action or proceeding designed to deny, or to
recover from, Indemnitee the benefits provided or intended to be provided to
Indemnitee hereunder, the Corporation irrevocably authorizes Indemnitee from
time to time to retain counsel of Indemnitee's choice, at the expense of the
Corporation as hereafter provided, to advise and represent Indemnitee in
connection with any such interpretation, enforcement or defense, including
without limitation the initiation or defense of any litigation or other legal
action, whether by or against the Corporation or any director, officer,
shareholder or other person affiliated with the Corporation, in any
jurisdiction. Notwithstanding any existing or prior attorney-client relationship
between the Corporation and such counsel, the Corporation irrevocably consents
to Indemnitee's entering into an attorney-client relationship with such counsel,
and in that connection the Corporation and Indemnitee agree that a confidential
relationship shall exist between Indemnitee and such counsel. Without respect to
whether Indemnitee prevails, in whole or in part, in connection with any of the
foregoing, the Corporation will pay and be solely financially responsible for
any and all attorneys' and related fees and expenses incurred by Indemnitee in
connection with any of the foregoing.

      Section 6.8 Notice by Each Party. Indemnitee agrees to promptly notify the
Corporation in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document or communication relating
to any Proceeding or Claim for which Indemnitee may be entitled to
indemnification or advancement of Expenses hereunder. The Corporation agrees to
promptly notify Indemnitee in writing, as to the pendency

                                       11


of any Proceeding or Claim which may involve a claim against Indemnitee for
which Indemnitee may be entitled to indemnification or advancement of Expenses
hereunder.

      Section 6.9 Amendment. This Agreement may not be modified or amended
except by a written instrument executed by or on behalf of each of the parties
hereto.

      Section 6.10 Waivers. The observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term only by a writing
signed by the party against which such waiver is to be asserted. Unless
otherwise expressly provided herein, no delay on the part of any party hereto in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party hereto of any right,
power or privilege hereunder operate as a waiver of any other right, power or
privilege hereunder nor shall any single or partial exercise of any right, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder.

      Section 6.11 Entire Agreement. This Agreement and the documents expressly
referred to herein constitute the entire agreement between the parties hereto
with respect to matters covered hereby, and any other prior or contemporaneous
oral or written understandings or agreements with respect to the matters covered
hereby are expressly superseded by this Agreement.

      Section 6.12 Severability. If any provision of this Agreement or the
application of such provision to any person or circumstance, shall be judicially
declared to be invalid, unenforceable or void, such decision will not have the
effect of invalidating or voiding the remainder of this Agreement or affect the
application of such provision to other persons or circumstances, and the parties
hereto agree that the part or parts of this Agreement so held to be invalid,
unenforceable or void will be deemed to have been stricken herefrom and the
remainder of this Agreement will have the same force and effectiveness as if
such part or parts had never been included herein; provided, however, that the
parties shall negotiate in good faith with respect to an equitable modification
of the provision or application thereof declared to be invalid, unenforceable or
void. Any such finding of invalidity or unenforceability shall not prevent the
enforcement of such provision in any other jurisdiction to the maximum extent
permitted by applicable law.

      Section 6.13 Notices. Unless otherwise expressly provided herein, all
notices, requests, demands, consents, waivers, instructions, approvals and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered to or mailed, certified mail return receipt
requested, first-class postage paid, addressed as follows: (i) if to the
Corporation, AMERISAFE, Inc., 2301 Highway 190 West, DeRidder, Louisiana 70634,
Attn: Secretary, and (ii) if to Indemnitee, at the address specified on the
signature page of this Agreement, or to such other address or to such other
individuals as any party shall have last designated by notice to the other
parties. All notices and other communications given to any party in accordance
with the provisions of this Agreement shall be deemed to have been given when
delivered or sent to the intended recipient thereof in accordance with the
provisions of this Section 6.13.

                                       12


      Section 6.14 Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Texas without regard to
the principles of conflict of laws.

      Section 6.15 Headings. The Article and Section headings in this Agreement
are for convenience of reference only, and shall not be deemed to alter or
affect the meaning or interpretation of any provisions hereof.

      Section 6.16 Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original and both of which
together shall be deemed to be one and the same instrument.

                                       13


      IN WITNESS WHEREOF, this Agreement has been duly executed and delivered to
be effective as of the date first above written.

                                      AMERISAFE, INC.

                                      By: ______________________________________
                                          Name:
                                          Title:

                                      INDEMNITEE

                                      __________________________________________
                                      [Name]

                                      Indemnitee Notice Address:

                                      __________________________________________
                                      __________________________________________
                                      __________________________________________

                                       14

EX-10.12

                                                                   Exhibit 10.12

                          FIRST CASUALTY EXCESS OF LOSS
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 2005

                                    issued to

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group



                                TABLE OF CONTENTS



ARTICLE                                                 PAGE
                                                     
     I      Classes of Business Reinsured                 1
    II      Commencement and Termination                  1
   III      Territory (BRMA 51A)                          3
    IV      Exclusions                                    3
     V      Special Acceptances                           7
    VI      Retention and Limit                           7
   VII      Definitions                                   8
  VIII      Annuities at Company's Option                10
    IX      Claims                                       11
     X      Commutation                                  11
    XI      Special Commutation                          12
   XII      Salvage and Subrogation                      13
  XIII      Reinsurance Premium                          14
   XIV      Late Payments                                14
    XV      Offset (BRMA 36A)                            15
   XVI      Access to Records (BRMA 1D)                  16
  XVII      Liability of the Reinsurer                   16
 XVIII      Net Retained Lines (BRMA 32E)                16
   XIX      Errors and Omissions (BRMA 14F)              16
    XX      Taxes (BRMA 50B)                             16
   XXI      Reserves and Letters of Credit               17
  XXII      Insolvency                                   18
 XXIII      Arbitration (BRMA 6J)                        19
  XXIV      Service of Suit (BRMA 49C)                   20
   XXV      Entire Agreement                             20
  XXVI      Governing Law (BRMA 71B)                     20
 XXVII      Agency Agreement                             21
XXVIII      Intermediary (BRMA 23A)                      21




                          FIRST CASUALTY EXCESS OF LOSS
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 2005

                                    issued to

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group
             (hereinafter referred to collectively as the "Company")

                                       by

                   The Subscribing Reinsurer(s) Executing the
                     Interests and Liabilities Agreement(s)
                                 Attached Hereto
                  (hereinafter referred to as the "Reinsurer")

ARTICLE I - CLASSES OF BUSINESS REINSURED

By this Contract the Reinsurer agrees to reinsure the excess liability which may
accrue to the Company under its policies, contracts and binders of insurance or
reinsurance (hereinafter called "policies") in force at the effective date
hereof or issued or renewed on or after that date, and classified by the Company
as Workers' Compensation, Employers Liability, including coverage provided under
the U.S. Longshore and Harbor Workers' Compensation Act and the Jones Act, and
General Liability business, subject to the terms, conditions and limitations
hereinafter set forth.

ARTICLE II - COMMENCEMENT AND TERMINATION

A.    This Contract shall become effective at 12:01 a.m., Local Standard Time,
      January 1, 2005, with respect to losses arising out of occurrences
      commencing at or after that time and date, and shall continue in force
      thereafter until terminated.

B.    Either party may terminate this Contract on any December 31 by giving the
      other party not less than 90 days prior notice by certified or registered
      mail.

C.    Notwithstanding the provisions of paragraph B above, the Company may
      terminate a Subscribing Reinsurer's percentage share in this Contract in
      the event any of the following

Page 1


      circumstances occur, as clarified by public announcement as respects
      subparagraphs 1 through 7 below or upon discovery as respects subparagraph
      8 below. Within 30 days of such public announcement or discovery, the
      Company shall give the Subscribing Reinsurer notice, via certified mail,
      of its intent to terminate the Subscribing Reinsurer's percentage share
      under the Contract. The effective date of termination shall be applied to
      12:01 a.m., Local Standard Time, on the date specified by the Company,
      subject to one day of prior notice, unless mutually agreed otherwise:

      1.    The Subscribing Reinsurer's policyholders' surplus at the beginning
            of any contract year has been reduced by more than 20.0% of the
            amount of surplus 12 months prior to that date; or

      2.    The Subscribing Reinsurer's policyholders' surplus at any time
            during any contract year has been reduced by more than 20.0% of the
            amount of surplus at the date of the Subscribing Reinsurer's most
            recent financial statement filed with regulatory authorities and
            available to the public as of the beginning of the contract year; or

      3.    The Subscribing Reinsurer's A.M. Best's rating has been assigned or
            downgraded below A- and/or Standard & Poor's rating has been
            assigned or downgraded below BBB+; or

      4.    The Subscribing Reinsurer has become merged with, acquired by or
            controlled by any other company, corporation or individual(s) not
            controlling the Subscribing Reinsurer's operations previously; or

      5.    A State Insurance Department or other legal authority has ordered
            the Subscribing Reinsurer to cease writing business; or

      6.    The Subscribing Reinsurer has become insolvent or has been placed
            into liquidation or receivership (whether voluntary or involuntary)
            or proceedings have been instituted against the Subscribing
            Reinsurer for the appointment of a receiver, liquidator,
            rehabilitator, conservator or trustee in bankruptcy, or other agent
            known by whatever name, to take possession of its assets or control
            of its operations; or

      7.    The Subscribing Reinsurer has reinsured its entire liability under
            the Contract without the Company's prior written consent; or

      8.    The Subscribing Reinsurer has ceased assuming new and renewal treaty
            reinsurance business.

D.    Unless the Company elects that the Reinsurer have no liability for losses
      arising out of occurrences commencing after the effective date of
      termination, and so notifies the Reinsurer prior to or as promptly as
      possible after the effective date of termination, reinsurance hereunder on
      business in force on the effective date of termination shall remain in
      full force and effect until expiration, cancellation or next premium
      anniversary of such business, whichever first occurs, but in no event
      beyond 12 months plus odd time (not exceeding 18 months in all) following
      the effective date of termination.

Page 2


ARTICLE III - TERRITORY (BRMA 51A)

The territorial limits of this Contract shall be identical with those of the
Company's policies.

ARTICLE IV - EXCLUSIONS

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

      1.    Lines of business not identified in Article I.

      2.    All excess of loss reinsurance assumed by the Company.

      3.    Reinsurance assumed by the Company under obligatory reinsurance
            agreements, except:

            a.    Agency reinsurance where the policies involved are to be
                  reunderwritten in accordance with the underwriting standards
                  of the Company and reissued as Company policies at the next
                  anniversary or expiration date; and

            b.    Intercompany reinsurance between any of the reinsured
                  companies under this Contract.

      4.    Business written by the Company on a co-indemnity basis where the
            Company is not the controlling carrier.

      5.    Business written to apply in excess of a deductible of more than
            $25,000, and business issued to apply specifically in excess over
            underlying insurance. However, if the Company is required, by any
            state regulation, to provide a deductible of more than $25,000, this
            exclusion shall not apply.

      6.    Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
            Liability - Reinsurance (U.S.A.)" attached to and forming part of
            this Contract.

      7.    As regards interests which at time of loss or damage are on shore,
            no liability shall attach hereto in respect of any loss or damage
            which is occasioned by war, invasion, hostilities, acts of foreign
            enemies, civil war, rebellion, insurrection, military or usurped
            power, or martial law or confiscation by order of any government or
            public authority. This War Exclusion Clause shall not, however,
            apply to interests which at time of loss or damage are within the
            territorial limits of the United States of America (comprising the
            Fifty States of the Union, the District of Columbia, and including
            bridges between the United States of America and Mexico provided
            they are under United States ownership), Canada, St. Pierre and
            Miquelon, provided such interests are insured under policies
            containing a standard war or hostilities or warlike operations
            exclusion clause.

      8.    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.

      9.    All liability of the Company arising by contract, operation of law,
            or otherwise, from its participation or membership, whether
            voluntary or involuntary, in any insolvency fund.

Page 3


            "Insolvency fund" includes any guaranty fund, insolvency fund, plan,
            pool, association, fund or other arrangement, however denominated,
            established or governed, which provides for any assessment of or
            payment or assumption by the Company of part or 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.

      10.   Workers' Compensation where the principal exposures, as defined by
            the governing class code, include:

            a.    Operation of aircraft but only if the annual estimated policy
                  premium is $250,000 or more;

            b.    Railroad, subway, or street railway operations;

            c.    Operation or navigation of vessels or barges;

            d.    Manufacture, production, or refining of gas, natural or
                  artificial fuel, or other liquefied petroleum fuel, but only
                  if the annual estimated policy premium is $250,000 or more;

            e.    Manufacturing, assembly, packing, or processing of fireworks,
                  fuses, nitroglycerine, magnesium, pyroxylin, ammunition, or
                  explosives. This exclusion does not apply to the assembly,
                  packing, or processing of explosives when the estimated annual
                  premium is under $250,000;

            f.    Wrecking or demolition of structures but only if the annual
                  estimated policy premium is $250,000 or more;

            g.    Underground mining.

      11.   As respects Workers' Compensation and Employers' Liability only,
            unless otherwise excluded as set forth above, the reinsurance
            provided under this Contract shall not apply to any loss, cost or
            expense arising out of or related to, either directly or indirectly,
            any "terrorist activity," as defined herein, but this exclusion
            shall only apply when the activity includes, involves, or is
            associated with the use of any biological, chemical, radioactive, or
            nuclear agent, material, device or weapon, or when the predominant
            business of the policyholder as defined by the governing class code
            is:

            a.    The operation of: airports and aircraft; flight schools;
                  bridges, dams, tunnels, or locks; department stores; shopping
                  malls; chain retail stores; casinos and casino hotels; cruise
                  lines; railroads; ports/public transit authorities; security
                  services; stadiums; convention/exhibition centers; or
                  theme/amusement parks.

            b.    The manufacture and distribution of: automobiles; chemicals,
                  petrochemicals, pharmaceuticals; utilities (electric, gas,
                  water, and sewer); major defense/aerospace products; or
                  high-tech equipment, but only if the policyholder employs more
                  than 20 personnel at the location of a terrorist activity at
                  the time of its occurrence.

Page 4


            c.    The management or operation of the following type of
                  structures, but only if greater than 25 stories in height:
                  apartments/condominiums/co-ops; hotels/motels; or office
                  buildings.

            d.    Businesses primarily engaged in the entertainment, media, or
                  transportation industry limited to the following: major media
                  providers (NBC, FOX, ABC, CBS, etc.); television and motion
                  picture studios; Broadway theaters; major internet companies
                  (AOL, Yahoo, etc.); professional sports teams; major
                  telecommunications companies (AT&T, Worldcom/MCI, etc.);
                  national truck rental companies (Ryder, Penske, UHaul, etc.);
                  or major national motor freight common carriers (J.B. Hunt,
                  Red Arrow, etc.).

            e.    Policyholders primarily located in, or predominantly doing
                  business as: hospitals; universities; nuclear facilities;
                  financial institutions; or governmental buildings and national
                  landmarks.

            "Terrorist activity" shall mean any deliberate, unlawful act that:

            a.    Is declared by any authorized government official to be or to
                  involve terrorism, terrorist activity or acts of terrorism; or

            b.    Includes, involves, or is associated with the use or
                  threatened use of force, violence or harm against any person,
                  tangible or intangible property, the environment, or any
                  natural resources, where the act or threatened act is
                  intended, in whole or in part, to:

                  i.    Promote or further any political, ideological,
                        philosophical, racial, ethnic, social or religious cause
                        or objective of the perpetrator or any organization,
                        association or group affiliated with the perpetrator; or

                  ii.   Influence, disrupt or interfere with any government
                        related operations, activities or policies; or

                  iii.  Intimidate, coerce or frighten the general public or any
                        segment of the general public; or

                  iv.   Disrupt or interfere with a national economy or any
                        segment of a national economy; or

            c.    Includes, involves, or is associated with, in whole or in
                  part, any of the following activities, or the threat thereof:

                  i.    Hijacking or sabotage of any form of transportation or
                        conveyance, including but not limited to spacecraft,
                        satellite, aircraft, train, vessel, or motor vehicle;

                  ii.   Hostage taking or kidnapping;

                  iii.  The use of any bomb, incendiary device, explosive or
                        firearm;

                  iv.   The interference with or disruption of basic public or
                        commercial services and systems, including but not
                        limited to the following services or systems:

Page 5


                        electricity, natural gas, power, postal, communications,
                        telecommunications, information, public transportation,
                        water, fuel, sewer or waste disposal;

                  v.    The injuring or assassination of any elected or
                        appointed government official or any government
                        employee;

                  vi.   The seizure, blockage, interference with, disruption of,
                        or damage to any government buildings, institutions,
                        functions, events, tangible or intangible property or
                        other assets; or

                  vii.  The seizure, blockage, interference with, disruption of,
                        or damage to tunnels, roads, streets, highways, or other
                        places of public transportation or conveyance.

            d.    Any of the activities listed in subparagraph c, above, shall
                  be considered terrorist activity except where the Company can
                  demonstrate to the Reinsurer that the foregoing activities or
                  threats thereof were motivated solely by personal objectives
                  of the perpetrator that are unrelated, in whole or in part, to
                  any intention to:

                  i.    Promote or further any political, ideological,
                        philosophical, racial, ethnic, social or religious cause
                        or objective of the perpetrator or any organization,
                        association or group affiliated with the perpetrator;

                  ii.   Influence, disrupt or interfere with any
                        government-related operations, activities or policies;

                  iii.  Intimidate, coerce or frighten the general public or any
                        segment of the general public; or

                  iv.   Disrupt or interfere with a national economy or any
                        segment of a national economy.

      12.   As respects General Liability policies, exposures, other than those
            identified below, as included in the General Liability section of
            the Company's Commercial Lines Manual:

            a.    Class 97111 - Logging;

            b.    Class 58873 - Sawmill;

            c.    Class 59984 - Woodyard and Drivers;

            d.    Class 95410 - Grading of Land;

            e.    Class 45819 - Lumber Yard;

            f.    Class 10073 - Repair Shops and Drivers;

            g.    Class 43822 - Timber Cruiser;

            h.    Class 99793 - Truckman Not Otherwise Classified;

Page 6


            i.    Class 91591 - Contractors - Subcontracted Work Other Than
                  Construction;

            j.    Class 49452 - Vacant Land.

B.    Any exclusion set forth in subparagraphs 10 and/or 12 of paragraph A shall
      be waived automatically when, in the opinion of the Company, the exposure
      excluded therein is incidental to the principal exposure on the risk in
      question.

C.    If the Company is bound, without the knowledge and contrary to the
      instructions of the Company's supervisory underwriting personnel, on any
      business falling within the scope of one or more of the exclusions set
      forth in subparagraphs 10 and/or 12 of paragraph A, the exclusion shall be
      suspended with respect to such business until the Company has the first
      opportunity to cancel the policy in compliance with governmental
      requirements.

D.    If the Company is required to accept an assigned risk which conflicts with
      one or more of the exclusions set forth in subparagraph 10 of paragraph A,
      reinsurance shall apply, but only for the difference between the Company's
      retention and the minimum limit required by the applicable state statute,
      and in no event shall the Reinsurer's liability exceed the limit set forth
      in Article VI.

ARTICLE V - SPECIAL ACCEPTANCES

From time to time the Company may request a special acceptance of reinsurance
falling outside the scope of the provisions set forth in this Contract. If each
Subscribing Reinsurer whose share in the interests and liabilities of the
Reinsurer is 25.0% or greater agrees to a special acceptance, such special
acceptance shall be binding on all Subscribing Reinsurers with respect to their
respective shares. If such agreement is not achieved, such special acceptance
shall be made to this Contract only with respect to the interests and
liabilities of each Subscribing Reinsurer who agrees to the special acceptance.
In the event a reinsurer becomes a party to this Contract subsequent to one or
more special acceptances hereunder, the new reinsurer shall automatically accept
such special acceptance(s) as being covered hereunder.

ARTICLE VI - RETENTION AND LIMIT

A.    The Company shall retain and be liable for the first $1,000,000 of
      ultimate net loss arising out of each occurrence. The Reinsurer shall then
      be liable (subject to the provisions of paragraph B below) for the amount
      by which such ultimate net loss exceeds the Company's retention, but the
      liability of the Reinsurer shall not exceed $4,000,000 as respects any one
      occurrence.

B.    Notwithstanding the provisions of paragraph A above, no claim shall be
      made under this Contract during any contract year unless and until
      cumulative subject excess losses paid from losses arising out of
      occurrences commencing during the contract year (being losses which would
      be recoverable from the Reinsurer under paragraph A above were it not for
      the provisions of this paragraph) exceed an annual aggregate retention of
      2.250% of net earned premium. The Company shall retain and be liable for
      such annual aggregate retention in addition to its initial loss retention
      stipulated in paragraph A above.

Page 7


C.    As respects any loss or losses arising out of terrorist activity, the
      liability of the Reinsurer shall not exceed $4,000,000 each contract year.
      Terrorism losses shall have priority when calculating the annual aggregate
      retention.

D.    The Company shall be permitted to carry quota share and excess
      reinsurance, recoveries under which shall inure solely to the benefit of
      the Company and be entirely disregarded in applying all of the provisions
      of this Contract.

E.    The Company shall be permitted to carry excess of loss reinsurance
      applying to Workers' Compensation risks in the State of Minnesota,
      recoveries under which shall inure to the benefit of this Contract.

      Such coverage shall be provided through the Minnesota Workers'
      Compensation Reinsurance Association. It is understood that the liability
      of the Reinsurer for Minnesota Workers' Compensation risks is not
      released.

      In the event the Company accrues liability that is not provided by any
      inuring reinsurance, for whatever reason, the Reinsurer agrees to reinsure
      such excess liability.

ARTICLE VII - DEFINITIONS

A.    "Ultimate net loss" as used herein is defined as the sum or sums
      (including loss in excess of policy limits, extra contractual obligations
      and any loss adjustment expense, as hereinafter defined) paid or payable
      by the Company in settlement of claims and in satisfaction of judgments
      rendered on account of such claims, after deduction of all salvage, all
      recoveries and all claims on inuring insurance or reinsurance, whether
      collectible or not. Nothing herein shall be construed to mean that losses
      under this Contract are not recoverable until the Company's ultimate net
      loss has been ascertained.

B.    "Loss in excess of policy limits" and "extra contractual obligations" as
      used herein shall be defined as follows:

      1.    "Loss in excess of policy limits" shall mean 90.0% of any amount
            paid or payable by the Company in excess of its policy limits, but
            otherwise within the terms of its policy, such loss in excess of the
            Company's policy limits having been incurred because of, but not
            limited to, failure by the Company to settle within the policy
            limits or by reason of the Company's alleged or actual negligence,
            fraud or bad faith in rejecting an offer of settlement or in the
            preparation of the defense or in the trial of an action against its
            insured or reinsured or in the preparation or prosecution of an
            appeal consequent upon such an action.

      2.    "Extra contractual obligations" shall mean 90.0% of any punitive,
            exemplary, compensatory or consequential damages paid or payable by
            the Company, not covered by any other provision of this Contract and
            which arise from the handling of any claim on business subject to
            this Contract, such liabilities arising because of, but not limited
            to, failure by the Company to settle within the policy limits or by
            reason of the Company's alleged or actual negligence, fraud or bad
            faith in rejecting an offer of settlement or in the preparation of
            the defense or in the trial of any action against its insured or
            reinsured or in the preparation or prosecution of an appeal
            consequent upon such an action. An extra contractual obligation
            shall be deemed, in all

Page 8


            circumstances, to have occurred on the same date as the loss covered
            or alleged to be covered under the policy.

      If any provision of this Article shall be rendered illegal or
      unenforceable by the laws, regulations or public policy of any state, such
      provision shall be considered void in such state, but this shall not
      affect the validity or enforceability of any other provision of this
      Contract or the enforceability of such provision in any other
      jurisdiction.

      Notwithstanding anything stated herein, this Contract shall not apply to
      any loss in excess of policy limits or any extra contractual obligation
      incurred by the Company as a result of any fraudulent and/or criminal act
      by any officer or director of the Company acting individually or
      collectively or in collusion with any individual or corporation or any
      other organization or party involved in the presentation, defense or
      settlement of any claim covered hereunder.

C.    "Occurrence" as used herein is defined as an accident or occurrence or a
      series of accidents or occurrences arising out of or caused by one event,
      except that:

      1.    As respects General Liability policies where the Company's limit of
            liability for Products and Completed Operations coverages is
            determined on the basis of the insured's aggregate losses during a
            policy period, all such losses proceeding from or traceable to the
            same causative agency shall, at the Company's option, be deemed to
            have been caused by one occurrence commencing at the beginning of
            the policy period, it being understood and agreed that each renewal
            or annual anniversary date of the policy involved shall be deemed
            the beginning of a new policy period;

      2.    Each occupational disease case or cumulative trauma case contracted
            by an employee of an insured shall be deemed to have been caused by
            a separate occurrence, commencing on:

            a.    The date of disability for which compensation is payable if
                  the case is compensable under the Workers' Compensation Law;

            b.    The date disability due to the disease actually began if the
                  case is not compensable under the Workers' Compensation Law;

            c.    The date of cessation of employment if claim is made after
                  employment has ceased.

      3.    Notwithstanding the provisions of subparagraph 2 above, as respects
            losses resulting from occupational disease or cumulative trauma
            suffered by employees of an insured for which the employer is
            liable, as a result of a sudden and accidental event not exceeding
            72 hours in duration, all such losses shall be considered one
            occurrence and may be combined with losses classified as other than
            occupational disease or cumulative trauma which arise out of the
            same event and the combination of such losses shall be considered as
            one occurrence within the meaning hereof.

D.    "Occupational or industrial disease" is any abnormal condition that
      fulfills all of the following conditions:

Page 9


      1.    It is not traceable to a definite compensable accident occurring
            during the employee's past or present employment.

      2.    It has been caused by exposure to a disease producing agent or
            agents present in the workers' occupational environment.

      3.    It has resulted in disability or death.

E.    "Cumulative trauma" is an injury that fulfills all of the following
      conditions:

      1.    It is not traceable to a definite compensable accident occurring
            during the employee's past or present employment.

      2.    It has occurred from and has been aggravated by a repetitive
            employment related activity.

      3.    It has resulted in disability or death.

F.    "Loss adjustment expense" as used herein shall mean expenses allocable to
      the investigation, defense and/or settlement of specific claims, including
      litigation expenses, interest on judgments, declaratory judgment expenses
      or other legal expenses and costs incurred in connection with coverage
      questions and legal actions connected thereto, and salaries and expenses
      of salaried adjusters associated with claims covered under policies of the
      Company reinsured hereunder but not including office expenses or salaries
      of the Company's regular employees.

G.    "Contract year" as used in this Contract shall mean the period from
      January 1, 2005 to December 31, 2005, both days inclusive, and each
      respective 12-month period thereafter that this Contract continues in
      force. However, if this Contract is terminated, the final contract year
      shall be from the beginning of the then current contract year through the
      date of termination if this Contract is terminated on a "cutoff" basis, or
      the end of the runoff period if this Contract is terminated on a "runoff"
      basis.

ARTICLE VIII - ANNUITIES AT COMPANY'S OPTION

A.    Whenever the Company is required, or elects, to purchase an annuity or to
      negotiate a structured settlement, either in satisfaction of a judgment or
      in an out-of-court settlement or otherwise, the cost of the annuity or the
      structured settlement, as the case may be, shall be deemed part of the
      Company's ultimate net loss.

B.    The terms "annuity" or "structured settlement" shall be understood to mean
      any insurance policy, lump sum payment, agreement or device of whatever
      nature resulting in the payment of a lump sum by the Company in settlement
      of any or all future liabilities which may attach to it as a result of an
      occurrence.

C.    In the event the Company purchases an annuity which inures in whole or in
      part to the benefit of the Reinsurer, it is understood that the liability
      of the Reinsurer is not released thereby. In the event the Company is
      required to provide benefits not provided by the annuity for whatever
      reason, the Reinsurer shall pay its proportional share of any loss.

Page 10


ARTICLE IX - CLAIMS

A.    Whenever a claim is reserved by the Company for an amount greater than
      50.0% of its retention hereunder and/or whenever a claim appears likely to
      result in a claim under this Contract, the Company shall notify the
      Reinsurer. Further, the Company shall notify the Reinsurer whenever a
      claim involves a fatality, major limb amputation, spinal cord damage,
      brain damage, blindness or extensive burns, regardless of liability, if
      the policy limits or statutory benefits applicable to the claim are
      greater than the Company's retention hereunder. The Reinsurer shall have
      the right to participate, at its own expense, in the defense of any claim
      or suit or proceeding involving this reinsurance.

B.    All claim settlements made by the Company, provided they are within the
      terms of this Contract (including but not limited to ex-gratia payments),
      shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all
      amounts for which it may be liable upon receipt of satisfactory evidence
      of the amount paid by the Company.

ARTICLE X - COMMUTATION

A.    The Company and the Reinsurer may mutually agree to commute any contract
      year.

B.    Unless otherwise mutually agreed, the calculation for the commutation
      shall be calculated in accordance with the following formula:

      1.    The Reinsurer's net premium earned (i.e., the gross earned
            reinsurance premium less the ceding commission paid) for the
            contract year; less

      2.    The Reinsurer's paid losses and loss adjustment expense on losses
            arising out of occurrences commencing during the contract year; less

      3.    The Reinsurer's margin at 25.0% of the net earned premium (i.e., the
            gross earned reinsurance premium less the ceding commission paid)
            for the contract year; equals

      4.    The Company's net profit.

C.    Payment to the Company of the calculation will result in a full and final
      commutation of all known and unknown losses and shall constitute a
      complete and final release of the Reinsurer and the Company in respect of
      any and all liabilities on business covered under this Contract during the
      contract year commuted.

D.    Should the calculation be zero or negative, no payment shall be made and
      the Company shall have the option to provide a full and final commutation
      of all known and unknown losses, which shall constitute a complete and
      final release of the Reinsurer and the Company with respect to any and all
      liabilities on business covered under this Contract during the contract
      year commuted.

Page 11


ARTICLE XI - SPECIAL COMMUTATION

A.    In the event a Subscribing Reinsurer meets the following conditions, the
      Company may require a commutation of that portion of any excess loss
      hereunder represented by any outstanding claim or claims, including any
      related loss adjustment expense.

      1.    The Subscribing Reinsurer's A.M. Best's rating has been assigned or
            downgraded below A- (inclusive of "Not Rated" ratings) and/or
            Standard & Poor's rating has been assigned or downgraded below BBB+
            (inclusive of "Not Rated" ratings); or

      2.    The Subscribing Reinsurer has ceased assuming new and renewal
            property and casualty treaty reinsurance business.

      "Outstanding claim or claims" shall be defined as known or unknown claims,
      including any billed yet unpaid claims. However, unless otherwise mutually
      agreed, this paragraph shall not apply unless the outstanding claim or
      claims is for an amount not less than $5,000.

      Such commutation shall be in accordance with Article II. Unless mutually
      agreed or subject to Article II, the commutation will take place for a
      subject period being the inception of the contract year through the date
      of termination. The Subscribing Reinsurer shall have no liability for
      losses arising out of occurrences after the date of termination.

B.    If the Company elects to require commutation as provided in paragraph A
      above, the Company shall submit a Statement of Valuation of the
      outstanding claim or claims as of the last day of the month immediately
      preceding the month in which the Company elects to require commutation, as
      determined by the Company. Such Statement of Valuation shall include the
      elements considered reasonable to establish the excess loss and shall set
      forth or attach the information relied upon by the Company and the
      methodology employed to calculate the excess loss. The Subscribing
      Reinsurer shall then pay the amount requested within 30 calendar days of
      receipt of such Statement of Valuation, unless the Subscribing Reinsurer
      needs additional information from the Company to assess the Company's
      Statement of Valuation or contests such amount.

C.    If the Subscribing Reinsurer needs additional information from the Company
      to assess the Company's Statement of Valuation or contests the amount
      requested, the Subscribing Reinsurer shall so notify the Company within 15
      calendar days of receipt of the Company's Statement of Valuation. The
      Company shall supply any reasonably requested information to the
      Subscribing Reinsurer within 15 calendar days of receipt of the
      notification. Within 30 calendar days of the date of the notification or
      of the receipt of the information, whichever is later, the Subscribing
      Reinsurer shall provide the Company with its Statement of Valuation of the
      outstanding claim or claims as of the last day of the month immediately
      preceding the month in which the Company elects to require commutation, as
      determined by the Subscribing Reinsurer. Such Statement of Valuation shall
      include the elements considered reasonable to establish the excess loss
      and shall set forth or attach the information relied upon by the
      Subscribing Reinsurer and the methodology employed to calculate the excess
      loss.

D.    In the event the Subscribing Reinsurer's Statement of Valuation of the
      outstanding claim or claims is viewed as unacceptable to the Company, the
      Company may either abandon the commutation effort, or may seek to settle
      any difference by using an independent actuary agreed to by the parties.

Page 12


E.    If the parties cannot agree on an acceptable independent actuary within 15
      calendar days of the date of the Subscribing Reinsurer's Statement of
      Valuation, then each party shall appoint an actuary as party arbitrators
      for the limited and sole purpose of selecting an independent actuary. If
      the actuaries cannot agree on an acceptable independent actuary within 15
      calendar days of the date of the Subscribing Reinsurer's Statement of
      Valuation, the Company shall supply the Subscribing Reinsurer with a list
      of at least three proposed independent actuaries, and the Subscribing
      Reinsurer shall select the independent actuary from that list.

F.    Upon selection of the independent actuary, both parties shall present
      their respective written submissions to the independent actuary. The
      independent actuary may, at his or her discretion, request additional
      information. The independent actuary shall issue his or her decision
      within 45 calendar days after the written submissions have been filed and
      any additional information has been provided.

G.    The decision of the independent actuary shall be final and binding. The
      expense of the independent actuary shall be equally divided between the
      two parties. For the purposes of this Article, unless mutually agreed
      otherwise, an "independent actuary" shall be an actuary who satisfies each
      of the following criteria:

      1.    Is regularly engaged in the valuation of claims resulting from lines
            of business subject to this Contract; and

      2.    Is either a Fellow of the Casualty Actuarial Society or of the
            American Academy of Actuaries; and

      3.    Is disinterested and impartial regarding this commutation.

H.    Notwithstanding paragraph A, B and C above, in the event that the
      Subscribing Reinsurer no longer meets the conditions set forth in
      subparagraph 1 or 2 in paragraph A above, this commutation may continue on
      a mutually agreed basis.

I.    Payment by the Subscribing Reinsurer of the amount requested in accordance
      with paragraph B, C or F above, shall release the Subscribing Reinsurer
      from all further liability for outstanding claim or claims, known or
      unknown, under this Contract, which shall release the Company from all
      further liability for payments of salvage or subrogation amounts, known or
      unknown, to the Subscribing Reinsurer under this Contract.

J.    In the event of any conflict between this Article and any other Article of
      this Contract, the terms of this Article shall control.

K.    This Article shall survive the termination of this Contract.

ARTICLE XII - SALVAGE AND SUBROGATION

The Reinsurer shall be credited with salvage (i.e., reimbursement obtained or
recovery made by the Company, less the actual cost, excluding salaries of
officials and employees of the Company and sums paid to attorneys as retainer,
of obtaining such reimbursement or making such recovery) or subrogation on
account of claims and settlements involving reinsurance hereunder. Salvage or
subrogation thereon shall always be used to reimburse the excess carriers in the
reverse order of their priority according to their participation before being
used in

Page 13


any way to reimburse the Company for its primary loss. The Company hereby agrees
to enforce its rights to salvage or subrogation where it is economically
reasonable in the judgment of the Company, relating to any loss, a part of which
loss was sustained by the Reinsurer, and to prosecute all claims arising out of
such rights.

ARTICLE XIII - REINSURANCE PREMIUM

A.    As premium for the reinsurance provided hereunder during each contract
      year, the Company shall pay the Reinsurer 5.900% of its net earned
      premium.

B.    Within 30 days after the end of each month, the Company shall report its
      net earned premium for the month. The premium due the Reinsurer, at the
      rate shown in paragraph A, shall be paid by the Company with its report.
      In the event this Contract is terminated in accordance with paragraph C of
      Article II, no payments shall be due as respects each Subscribing
      Reinsurer after the effective date of termination.

C.    Within 60 days after the end of each contract year (or within 60 days
      after the effective date of termination if this Contract is terminated on
      a "runoff" basis), the Company shall provide a report to the Reinsurer
      setting forth the premium due hereunder for the contract year, computed in
      accordance with paragraph A, and any additional premium due the Reinsurer
      shall be remitted promptly.

D.    "Net earned premium" as used herein is defined as the Company's gross
      earned premium collected on the classes of business subject to this
      Contract, less only the earned portion of premiums, if any, ceded by the
      Company for reinsurance which inures to the benefit of this Contract and
      less dividends incurred.

ARTICLE XIV - LATE PAYMENTS

A.    The provisions of this Article shall not be implemented unless
      specifically invoked, in writing, by one of the parties to this Contract.

B.    In the event any premium, loss or other payment due either party is not
      received by the intermediary named in Article XXVIII (hereinafter referred
      to as the "Intermediary") by the payment due date, the party to whom
      payment is due, may, by notifying the Intermediary in writing, require the
      debtor party to pay, and the debtor party agrees to pay, an interest
      penalty on the amount past due calculated for each such payment on the
      last business day of each month as follows:

      1.    The number of full days which have expired since the due date or the
            last monthly calculation, whichever the lesser; times

      2.    1/365ths of the sum of 400 basis points plus the six-month United
            States Treasury Bill rate as quoted in The Wall Street Journal on
            the first business day of the month for which the calculation is
            made; times

      3.    The amount past due, including accrued interest.

      It is agreed that interest shall accumulate until payment of the original
      amount due plus interest penalties have been received by the Intermediary.

Page 14


C.    The establishment of the due date shall, for purposes of this Article, be
      determined as follows:

      1.    As respects the payment of routine deposits and premiums due the
            Reinsurer, the due date shall be as provided for in the applicable
            section of this Contract. In the event a due date is not
            specifically stated for a given payment, it shall be deemed due 30
            days after the date of transmittal by the Intermediary of the
            initial billing for each such payment.

      2.    Any claim or loss payment due the Company hereunder shall be deemed
            due 45 business days after the proof of loss or demand for payment
            is transmitted to the Reinsurer. If such loss or claim payment is
            not received within the 45 days, interest will accrue on the payment
            or amount overdue in accordance with paragraph B above, from the
            date the proof of loss or demand for payment was transmitted to the
            Reinsurer.

      3.    As respects any payment, adjustment or return due either party not
            otherwise provided for in subparagraphs 1 and 2 of paragraph C
            above, the due date shall be as provided for in the applicable
            section of this Contract. In the event a due date is not
            specifically stated for a given payment, it shall be deemed due 10
            business days following transmittal of written notification that the
            provisions of this Article have been invoked.

      For purposes of interest calculations only, amounts due hereunder shall be
      deemed paid upon receipt by the Intermediary.

D.    Nothing herein shall be construed as limiting or prohibiting a Subscribing
      Reinsurer from contesting the validity of any claim, or from participating
      in the defense of any claim or suit, or prohibiting either party from
      contesting the validity of any payment or from initiating any arbitration
      or other proceeding in accordance with the provisions of this Contract. If
      the debtor party prevails in an arbitration or other proceeding, then any
      interest penalties due hereunder on the amount in dispute shall be null
      and void. If the debtor party loses in such proceeding, then the interest
      penalty on the amount determined to be due hereunder shall be calculated
      in accordance with the provisions set forth above unless otherwise
      determined by such proceedings. If a debtor party advances payment of any
      amount it is contesting, and proves to be correct in its contestation,
      either in whole or in part, the other party shall reimburse the debtor
      party for any such excess payment made plus interest on the excess amount
      calculated in accordance with this Article.

E.    Interest penalties arising out of the application of this Article that are
      $100 or less from any party shall be waived unless there is a pattern of
      late payments consisting of three or more items over the course of any
      12-month period.

ARTICLE XV - OFFSET (BRMA 36A)

The Company and the Reinsurer may offset any balance or amount due from one
party to the other under this Contract or any other contract heretofore or
hereafter entered into between the Company and the Reinsurer, whether acting as
assuming reinsurer or ceding company. This provision shall not be affected by
the insolvency of either party to this Contract.

Page 15


ARTICLE XVI - ACCESS TO RECORDS (BRMA 1D)

The Reinsurer or its designated representatives shall have access at any
reasonable time to all records of the Company which pertain in any way to this
reinsurance.

ARTICLE XVII - LIABILITY OF THE REINSURER

A.    The liability of the Reinsurer shall follow that of the Company in every
      case and be subject in all respects to all the general and specific
      stipulations, clauses, waivers and modifications of the Company's policies
      and any endorsements thereon.

B.    Nothing herein shall in any manner create any obligations or establish any
      rights against the Reinsurer in favor of any third party or any persons
      not parties to this Contract.

ARTICLE XVIII - NET RETAINED LINES (BRMA 32E)

A.    This Contract applies only to that portion of any policy which the Company
      retains net for its own account (prior to deduction of any underlying
      reinsurance specifically permitted in this Contract), and in calculating
      the amount of any loss hereunder and also in computing the amount or
      amounts in excess of which this Contract attaches, only loss or losses in
      respect of that portion of any policy which the Company retains net for
      its own account shall be included.

B.    The amount of the Reinsurer's liability hereunder in respect of any loss
      or losses shall not be increased by reason of the inability of the Company
      to collect from any other reinsurer(s), whether specific or general, any
      amounts which may have become due from such reinsurer(s), whether such
      inability arises from the insolvency of such other reinsurer(s) or
      otherwise.

ARTICLE XIX - ERRORS AND OMISSIONS (BRMA 14F)

Inadvertent delays, errors or omissions made in connection with this Contract or
any transaction hereunder shall not relieve either party from any liability
which would have attached had such delay, error or omission not occurred,
provided always that such error or omission is rectified as soon as possible
after discovery.

ARTICLE XX - TAXES (BRMA 50B)

In consideration of the terms under which this Contract is issued, the Company
will not claim a deduction in respect of the premium hereon when making tax
returns, other than income or profits tax returns, to any state or territory of
the United States of America or the District of Columbia.

Page 16


ARTICLE XXI - RESERVES AND LETTERS OF CREDIT

(Applies only to a reinsurer which does not qualify for full credit with any
insurance regulatory authority having jurisdiction over the Company's reserves,
which is or becomes rated "B++" or lower by A.M. Best (inclusive of "Not Rated"
ratings) and/or Standard & Poor's rating is or becomes "BBB+" or lower
(inclusive of "Not Rated" ratings).)

A.    As regards policies or bonds issued by the Company coming within the scope
      of this Contract, the Company agrees that when it shall file with the
      insurance regulatory authority or set up on its books reserves for losses
      covered hereunder which it shall be required by law to set up, it will
      forward to the Reinsurer a statement showing the proportion of such
      reserves which is applicable to the Reinsurer. The Reinsurer hereby agrees
      to fund such reserves in respect of known outstanding losses that have
      been reported to the Reinsurer and allocated loss adjustment expense
      relating thereto, losses and allocated loss adjustment expense paid by the
      Company but not recovered from the Reinsurer, plus reserves for losses
      incurred but not reported, as shown in the statement prepared by the
      Company (hereinafter referred to as "Reinsurer's Obligations") by funds
      withheld, cash advances or a Letter of Credit. The Reinsurer shall have
      the option of determining the method of funding provided it is acceptable
      to the insurance regulatory authorities having jurisdiction over the
      Company's reserves with regards to unauthorized reinsurers; or, should the
      Reinsurer be downgraded, the method of funding shall be mutually agreed.

B.    When funding by a Letter of Credit, the Reinsurer agrees to apply for and
      secure timely delivery to the Company of a clean, irrevocable and
      unconditional Letter of Credit issued by a bank meeting the NAIC
      Securities Valuation Office credit standards for issuers of Letters of
      Credit and containing provisions acceptable to the insurance regulatory
      authorities having jurisdiction over the Company's reserves in an amount
      equal to the Reinsurer's proportion of said reserves. Such Letter of
      Credit shall be issued for a period of not less than one year, and shall
      contain an "evergreen" clause, which automatically extends the term for
      one year from its date of expiration or any future expiration date unless
      thirty (30) days (sixty (60) days where required by insurance regulatory
      authorities) prior to any expiration date the issuing bank shall notify
      the Company by certified or registered mail that the issuing bank elects
      not to consider the Letter of Credit extended for any additional period.

C.    The Reinsurer and Company agree that the Letters of Credit provided by the
      Reinsurer pursuant to the provisions of this Contract may be drawn upon at
      any time, notwithstanding any other provision of this Contract, and be
      utilized by the Company or any successor, by operation of law, of the
      Company including, without limitation, any liquidator, rehabilitator,
      receiver or conservator of the Company for the following purposes, unless
      otherwise provided for in a separate Trust Agreement:

      1.    To reimburse the Company for the Reinsurer's Obligations, the
            payment of which is due under the terms of this Contract and which
            has not been otherwise paid;

      2.    To make refund of any sum which is in excess of the actual amount
            required to pay the Reinsurer's Obligations under this Contract, if
            so requested by the Reinsurer;

      3.    To fund an account with the Company for the Reinsurer's Obligations.
            Such cash deposit shall be held in an interest bearing account
            separate from the Company's

Page 17


            other assets, and interest thereon not in excess of the prime rate
            shall accrue to the benefit of the Reinsurer;

       4.   To pay the Reinsurer's share of any other amounts the Company claims
            are due under this Contract.

D.    In the event the amount drawn by the Company on any Letter of Credit is in
      excess of the actual amount required for subparagraphs 1 or 3, or in the
      case of subparagraph 4, the actual amount determined to be due, the
      Company shall promptly return to the Reinsurer the excess amount so drawn.
      All of the foregoing shall be applied without diminution because of
      insolvency on the part of the Company or the Reinsurer.

E.    The issuing bank shall have no responsibility whatsoever in connection
      with the propriety of withdrawals made by the Company or the disposition
      of funds withdrawn, except to ensure that withdrawals are made only upon
      the order of properly authorized representatives of the Company.

F.    At annual intervals, or more frequently as agreed but never more
      frequently than quarterly, the Company shall prepare a specific statement
      of the Reinsurer's Obligations, for the sole purpose of amending the
      Letter of Credit, in the following manner:

      1.    If the statement shows that the Reinsurer's Obligations exceed the
            balance of credit as of the statement date, the Reinsurer shall,
            within thirty (30) days after receipt of notice of such excess,
            secure delivery to the Company of an amendment to the Letter of
            Credit increasing the amount of credit by the amount of such
            difference.

      2.    If, however, the statement shows that the Reinsurer's Obligations
            are less than the balance of credit as of the statement date, the
            Company shall, within thirty (30) days after receipt of written
            request from the Reinsurer, release such excess credit by agreeing
            to secure an amendment to the Letter of Credit reducing the amount
            of credit available by the amount of such excess credit.

G.    This Article shall not apply to a reinsurer which satisfies both of the
      following:

      1.    Qualifies for full credit with any insurance regulatory authority
            having jurisdiction over the Company's reserves; and

      2.    Is rated "A+" or better by A.M. Best at the beginning of any
            contract year.

ARTICLE XXII - INSOLVENCY

A.    In the event of the insolvency of one or more of the reinsured companies,
      this reinsurance shall be payable directly to the company or to its
      liquidator, receiver, conservator or statutory successor on the basis of
      the liability of the company without diminution because of the insolvency
      of the company or because the liquidator, receiver, conservator or
      statutory successor of the company has failed to pay all or a portion of
      any claim. It is agreed, however, that the liquidator, receiver,
      conservator or statutory successor of the company shall give written
      notice to the Reinsurer of the pendency of a claim against the company
      indicating the policy or bond reinsured which claim would involve a
      possible liability on the part of the Reinsurer within a reasonable time
      after such claim is filed in the

Page 18


      conservation or liquidation proceeding or in the receivership, and that
      during the pendency of such claim, the Reinsurer may investigate such
      claim and interpose, at its own expense, in the proceeding where such
      claim is to be adjudicated, any defense or defenses that it may deem
      available to the company or its liquidator, receiver, conservator or
      statutory successor. The expense thus incurred by the Reinsurer shall be
      chargeable, subject to the approval of the Court, against the company as
      part of the expense of conservation or liquidation to the extent of a pro
      rata share of the benefit which may accrue to the company solely as a
      result of the defense undertaken by the Reinsurer.

B.    Where two or more reinsurers are involved in the same claim and a majority
      in interest elect to interpose defense to such claim, the expense shall be
      apportioned in accordance with the terms of this Contract as though such
      expense had been incurred by the company.

C.    It is further understood and agreed that, in the event of the insolvency
      of one or more of the reinsured companies, the reinsurance under this
      Contract shall be payable directly by the Reinsurer to the company or to
      its liquidator, receiver or statutory successor, except as provided by
      Section 4118(a) of the New York Insurance Law or except (1) where this
      Contract specifically provides another payee of such reinsurance in the
      event of the insolvency of the company or (2) where the Reinsurer with the
      consent of the direct insured or insureds has assumed such policy
      obligations of the company as direct obligations of the Reinsurer to the
      payees under such policies and in substitution for the obligations of the
      company to such payees.

ARTICLE XXIII - ARBITRATION (BRMA 6J)

A.    As a condition precedent to any right of action hereunder, in the event of
      any dispute or difference of opinion hereafter arising with respect to
      this Contract, it is hereby mutually agreed that such dispute or
      difference of opinion shall be submitted to arbitration. One Arbiter shall
      be chosen by the Company, the other by the Reinsurer, and an Umpire shall
      be chosen by the two Arbiters before they enter upon arbitration, all of
      whom shall be active or retired disinterested executive officers of
      insurance or reinsurance companies or Lloyd's London Underwriters. In the
      event that either party should fail to choose an Arbiter within 30 days
      following a written request by the other party to do so, the requesting
      party may choose two Arbiters who shall in turn choose an Umpire before
      entering upon arbitration. If the two Arbiters fail to agree upon the
      selection of an Umpire within 30 days following their appointment, each
      Arbiter shall nominate three candidates within 10 days thereafter, two of
      whom the other shall decline, and the decision shall be made by drawing
      lots.

B.    Each party shall present its case to the Arbiters within 30 days following
      the date of appointment of the Umpire. The Arbiters shall consider this
      Contract as an honorable engagement rather than merely as a legal
      obligation and they are relieved of all judicial formalities and may
      abstain from following the strict rules of law. The decision of the
      Arbiters shall be final and binding on both parties; but failing to agree,
      they shall call in the Umpire and the decision of the majority shall be
      final and binding upon both parties. Judgment upon the final decision of
      the Arbiters may be entered in any court of competent jurisdiction.

C.    If more than one reinsurer is involved in the same dispute, all such
      reinsurers shall constitute and act as one party for purposes of this
      Article and communications shall be made by the Company to each of the
      reinsurers constituting one party, provided, however,

Page 19


      that nothing herein shall impair the rights of such reinsurers to assert
      several, rather than joint, defenses or claims, nor be construed as
      changing the liability of the reinsurers participating under the terms of
      this Contract from several to joint.

D.    Each party shall bear the expense of its own Arbiter, and shall jointly
      and equally bear with the other the expense of the Umpire and of the
      arbitration. In the event that the two Arbiters are chosen by one party,
      as above provided, the expense of the Arbiters, the Umpire and the
      arbitration shall be equally divided between the two parties.

E.    Any arbitration proceedings shall take place at a location mutually agreed
      upon by the parties to this Contract, but notwithstanding the location of
      the arbitration, all proceedings pursuant hereto shall be governed by the
      law of the state in which the Company has its principal office.

ARTICLE XXIV - SERVICE OF SUIT (BRMA 49C)

(Applicable if the Reinsurer is not domiciled in the United States of America,
and/or is not authorized in any State, Territory or District of the United
States where authorization is required by insurance regulatory authorities)

A.    It is agreed that in the event the Reinsurer fails to pay any amount
      claimed to be due hereunder, the Reinsurer, at the request of the Company,
      will submit to the jurisdiction of a court of competent jurisdiction
      within the United States. Nothing in this Article constitutes or should be
      understood to constitute a waiver of the Reinsurer's rights to commence an
      action in any court of competent jurisdiction in the United States, to
      remove an action to a United States District Court, or to seek a transfer
      of a case to another court as permitted by the laws of the United States
      or of any state in the United States.

B.    Further, pursuant to any statute of any state, territory or district of
      the United States which makes provision therefor, the Reinsurer hereby
      designates the party named in its Interests and Liabilities Agreement, or
      if no party is named therein, the Superintendent, Commissioner or Director
      of Insurance or other officer specified for that purpose in the statute,
      or his successor or successors in office, as its true and lawful attorney
      upon whom may be served any lawful process in any action, suit or
      proceeding instituted by or on behalf of the Company or any beneficiary
      hereunder arising out of this Contract.

ARTICLE XXV - ENTIRE AGREEMENT

This written Contract constitutes the entire agreement between the parties
hereto with respect to the business being reinsured hereunder, and there are no
understandings between the parties hereto other than as expressed in this
Contract. Any change or modification to this Contract will be made by amendment
to this Contract and signed by the parties.

ARTICLE XXVI - GOVERNING LAW (BRMA 71B)

This Contract shall be governed by and construed in accordance with the laws of
the State of Louisiana.

Page 20


ARTICLE XXVII - AGENCY AGREEMENT

If more than one reinsured company is named as a party to this Contract, the
first named company shall be deemed the agent of the other reinsured companies
for purposes of sending or receiving notices required by the terms and
conditions of this Contract, and for purposes of remitting or receiving any
monies due any party.

ARTICLE XXVIII - INTERMEDIARY (BRMA 23A)

Benfield Inc. is hereby recognized as the Intermediary negotiating this Contract
for all business hereunder. All communications (including but not limited to
notices, statements, premium, return premium, commissions, taxes, losses, loss
adjustment expense, salvages and loss settlements) relating thereto shall be
transmitted to the Company or the Reinsurer through Benfield Inc. Payments by
the Company to the Intermediary shall be deemed to constitute payment to the
Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed to
constitute payment to the Company only to the extent that such payments are
actually received by the Company.

IN WITNESS WHEREOF, the Company by its duly authorized representative has
executed this Contract as of the date undermentioned at:

DeRidder, LA this 20th day of April in the year 2005.

                             /s/ Allan E. Farr
                             -----------------------------------------------
                             American Interstate Insurance Company
                             American Interstate Insurance Company of Texas
                             Silver Oak Casualty, Inc.

Page 21


      NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE (U.S.A.)
       (Approved by Lloyd's Underwriters' Fire and Non-Marine Association)

(1)   This reinsurance does not cover any loss or liability accruing to the
      Reassured as a member of, or subscriber to, any association of insurers or
      reinsurers formed for the purpose of covering nuclear energy risks or as a
      direct or indirect reinsurer of any such member, subscriber or
      association.

(2)   Without in any way restricting the operation of paragraph (1) of this
      Clause it is understood and agreed that for all purposes of this
      reinsurance all the original policies of the Reassured (new, renewal and
      replacement) of the classes specified in Clause II of this paragraph (2)
      from the time specified in Clause III in this paragraph (2) shall be
      deemed to include the following provision (specified as the Limited
      Exclusion Provision):

      LIMITED EXCLUSION PROVISION.*

      I.    It is agreed that the policy does not apply under any liability
            coverage, to

            (injury, sickness, disease, death or destruction
            (bodily injury or property damage

            with respect to which an insured under the policy is also an insured
            under a nuclear energy liability policy issued by Nuclear Energy
            Liability Insurance Association, Mutual Atomic Energy Liability
            Underwriters or Nuclear Insurance Association of Canada, or would be
            an insured under any such policy but for its termination upon
            exhaustion of its limit of liability.

      II.   Family Automobile Policies (liability only), Special Automobile
            Policies (private passenger automobiles, liability only), Farmers
            Comprehensive Personal Liability Policies (liability only),
            Comprehensive Personal Liability Policies (liability only) or
            policies of a similar nature; and the liability portion of
            combination forms related to the four classes of policies stated
            above, such as the Comprehensive Dwelling Policy and the applicable
            types of Homeowners Policies.

      III.  The inception dates and thereafter of all original policies as
            described in II above, whether new, renewal or replacement, being
            policies which either

            (a)   become effective on or after 1st May, 1960, or

            (b)   become effective before that date and contain the
            Limited Exclusion Provision set out above; provided this paragraph
            (2) shall not be applicable to Family Automobile Policies, Special
            Automobile Policies, or policies or combination policies of a
            similar nature, issued by the Reassured on New York risks, until 90
            days following approval of the Limited Exclusion Provision by the
            Governmental Authority having jurisdiction thereof.

(3)   Except for those classes of policies specified in Clause II of paragraph
      (2) and without in any way restricting the operation of paragraph (1) of
      this Clause, it is understood and agreed that for all purposes of this
      reinsurance the original liability policies of the Reassured (new, renewal
      and replacement) affording the following coverages:

            Owners, Landlords and Tenants Liability, Contractual Liability,
            Elevator Liability, Owners or Contractors (including railroad)
            Protective Liability, Manufacturers and Contractors Liability,
            Product Liability, Professional and Malpractice Liability,
            Storekeepers Liability, Garage Liability, Automobile Liability
            (including Massachusetts Motor Vehicle or Garage Liability)

      shall be deemed to include, with respect to such coverages, from the time
      specified in Clause V of this paragraph (3), the following provision
      (specified as the Broad Exclusion Provision):

      BROAD EXCLUSION PROVISION.*

      It is agreed that the policy does not apply:

            I. Under any Liability Coverage to

                  (injury, sickness, disease, death or destruction
                  (bodily injury or property damage

           (a)   with respect to which an insured under the policy is also an
                 insured under a nuclear energy liability policy issued by
                 Nuclear Energy Liability Insurance Association, Mutual Atomic
                 Energy Liability Underwriters or Nuclear Insurance Association
                 of Canada, or would be an insured under any such policy but
                 for its termination upon exhaustion of its limit of liability;
                 or

           (b)   resulting from the hazardous properties of nuclear material
                 and with respect to which (1) any person or organization is
                 required to maintain financial protection pursuant to the
                 Atomic Energy Act of 1954, or any law amendatory thereof, or
                 (2) the insured is, or had this policy not been issued would
                 be, entitled to indemnity from the United States of America,
                 or any agency thereof, under any agreement entered into by the
                 United States of America, or any agency thereof, with any
                 person or organization.

Page 1 Of 2


         II. Under any Medical Payments Coverage, or under any Supplementary
             Payments Provision relating to

               (immediate medical or surgical relief
               (first aid,

            to expenses incurred with respect to

               (bodily injury, sickness, disease or death
               (bodily injury

            resulting from the hazardous properties of nuclear material and
            arising out of the operation of a nuclear facility by any person or
            organization.

         III. Under any Liability Coverage to

               (injury, sickness, disease, death or destruction
               (bodily injury or property damage

            resulting from the hazardous properties of nuclear material, if

            (a) the nuclear material (1) is at any nuclear facility owned by, or
                operated by or on behalf of, an insured or (2) has been
                discharged or dispersed therefrom;

            (b) the nuclear material is contained in spent fuel or waste at any
                time possessed, handled, used, processed, stored, transported or
                disposed of by or on behalf of an insured; or

            (c) the
                   (injury, sickness, disease, death or destruction
                   (bodily injury or property damage

                  arises out of the furnishing by an insured of services,
                  materials, parts or equipment in connection with the planning,
                  construction, maintenance, operation or use of any nuclear
                  facility, but if such facility is located within the United
                  States of America, its territories, or possessions or Canada,
                  this exclusion (c) applies only to

                  (injury to or destruction of property at such nuclear facility

                  (property damage to such nuclear facility and any property
                  thereat.

         IV. As used in this endorsement:
            "hazardous properties" include radioactive, toxic or explosive
            properties; "nuclear material" means source material, special
            nuclear material or byproduct material; "source material", "special
            nuclear material", and "byproduct material" have the meanings given
            them in the Atomic Energy Act of 1954 or in any law amendatory
            thereof; "spent fuel" means any fuel element or fuel component,
            solid or liquid, which has been used or exposed to radiation in a
            nuclear reactor; "waste" means any waste material (1) containing
            byproduct material and (2) resulting from the operation by any
            person or organization of any nuclear facility included within the
            definition of nuclear facility under paragraph (a) or (b) thereof;
            "nuclear facility" means

            (a)   any nuclear reactor,

            (b)   any equipment or device designed or used for (1) separating
                  the isotopes of uranium or plutonium, (2) processing or
                  utilizing spent fuel, or (3) handling processing or packaging
                  waste,

            (c)   any equipment or device used for the processing, fabricating
                  or alloying of special nuclear material if at any time the
                  total amount of such material in the custody of the insured at
                  the premises where such equipment or device is located
                  consists of or contains more than 25 grams of plutonium or
                  uranium 233 or any combination thereof, or more than 250 grams
                  of uranium 235,

            (d)   any structure, basin, excavation, premises or place prepared
                  or used for the storage or disposal of waste, and includes the
                  site on which any of the foregoing is located, all operations
                  conducted on such site and all premises used for such
                  operations; "nuclear reactor" means any apparatus designed or
                  used to sustain nuclear fission in a self-supporting chain
                  reaction or to contain a critical mass of fissionable
                  material;

                  (With respect to injury to or destruction of property, the
                  word "injury" or "destruction,"

                  ("property damage" includes all forms of radioactive
                  contamination of property,

                  (includes all forms of radioactive contamination of property.

         V. The inception dates and thereafter of all original policies
            affording coverages specified in this paragraph (3), whether new,
            renewal or replacement, being policies which become effective on or
            after 1st May, 1960, provided this paragraph (3) shall not be
            applicable to

                  (i)   Garage and Automobile Policies issued by the Reassured
                        on New York risks, or

                  (ii)  statutory liability insurance required under Chapter 90,
                        General Laws of Massachusetts, until 90 days following
                        approval of the Broad Exclusion Provision by the
                        Governmental Authority having jurisdiction thereof.

(4)   Without in any way restricting the operation of paragraph (1) of this
      Clause, it is understood and agreed that paragraphs (2) and (3) above are
      not applicable to original liability policies of the Reassured in Canada
      and that with respect to such policies this Clause shall be deemed to
      include the Nuclear Energy Liability Exclusion Provisions adopted by the
      Canadian Underwriters' Association or the Independent Insurance Conference
      of Canada.

- ----------------
*NOTE. The words printed in italics in the Limited Exclusion Provision and in
      the Broad Exclusion Provision shall apply only in relation to original
      liability policies which include a Limited Exclusion Provision or a Broad
      Exclusion Provision containing those words.

21/9/67
N.M.A. 1590

Page 2 of 2


                          FIRST CASUALTY EXCESS OF LOSS
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 2005

                                    issued to

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group



REINSURERS                                      PARTICIPATIONS
                                             
Partner Reinsurance Company                     25.0%

THROUGH BENFIELD LIMITED
Lloyd's Underwriters and Companies
  Per Signing Schedule(s)                       35.0

TOTAL                                           60.0% part of
                                                100% share in the interests and
                                                liabilities of the "Reinsurer"




                       INTERESTS AND LIABILITIES AGREEMENT

                           entered into by and between

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana

                                       and

                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group

                                       and

                     Partner Reinsurance Company of the U.S.
                               New York, New York
            (hereinafter referred to as the "Subscribing Reinsurer")

IT IS HEREBY AGREED that the Subscribing Reinsurer shall have a 25.0% share in
the interests and liabilities of the "Reinsurer" as set forth in the attached
Contract entitled:

                          FIRST CASUALTY EXCESS OF LOSS
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 2005

IT IS FURTHER AGREED that this Agreement shall become effective at 12:01 a.m.,
Local Standard Time, January 1, 2005, and shall continue in force until
terminated in accordance with the provisions of the attached Contract.

IT IS ALSO AGREED, effective at 12:01 a.m., Local Standard Time, January 1,
2005, that the following shall apply to the Subscribing Reinsurer's share in the
attached Contract, in lieu of the provisions of paragraph C of Article II -
Commencement and Termination - of the Contract:

"C.   Notwithstanding the provisions of paragraph B above, the Company may
      terminate a Subscribing Reinsurer's percentage share in this Contract in
      the event any of the following circumstances occur, as clarified by public
      announcement as respects subparagraphs 1 through 7 below or upon discovery
      as respects subparagraph 8 below. Within 30 days of such public
      announcement or discovery, the Company shall give the Subscribing
      Reinsurer notice, via certified mail, of its intent to terminate the
      Subscribing Reinsurer's percentage share under the Contract. The effective
      date of special termination shall not be sooner than one day after the
      Company provides the Subscribing Reinsurer notice of its election to
      specially terminate, unless mutually agreed otherwise:"

Page 1 of 2



IT IS ALSO AGREED that the Subscribing Reinsurer's share in the attached
Contract shall be separate and apart from the shares of the other reinsurers,
and shall not be joint with the shares of the other reinsurers, it being
understood that the Subscribing Reinsurer shall in no event participate in the
interests and liabilities of the other reinsurers.

IN WITNESS WHEREOF, the parties hereto by their respective duly authorized
representatives have executed this Agreement as of the dates undermentioned at:

DeRidder, LA, this 28th day of June in the year 2005.

                             /s/ Allan E. Farr
                             ---------------------------------------------------
                             American Interstate Insurance Company
                             American Interstate Insurance Company of Texas
                             Silver Oak Casualty, Inc.

Greenwich, Connecticut, this 21st day of March in the year 2005.

                             /s/ Giuseppe Ruggieri
                             ---------------------------------------------------
                             Partner Reinsurance Company of the U.S.

Page 2 of 2


                       INTERESTS AND LIABILITIES AGREEMENT

                                       of

                     Certain Underwriting Members of Lloyd's
                  shown in the Signing Schedule attached hereto
            (hereinafter referred to as the "Subscribing Reinsurer")

                               with respect to the

                          FIRST CASUALTY EXCESS OF LOSS
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 2005

                         issued to and duly executed by

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group

The Subscribing Reinsurer hereby accepts a 5.0% share in the interests and
liabilities of the "Reinsurer" as set forth in the attached Contract captioned
above.

This Agreement shall become effective at 12:01 a.m., Local Standard Time,
January 1, 2005, and shall continue in force until terminated in accordance with
the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and liabilities of the
other reinsurers.

In any action, suit or proceeding to enforce the Subscribing Reinsurer's
obligations under the attached Contract, service of process may be made upon
Mendes & Mount, 750 Seventh Avenue, New York, New York 10019.

Signed for and on behalf of the Subscribing Reinsurer in the Signing Schedule
attached hereto.



                       INTERESTS AND LIABILITIES AGREEMENT

                                       of

                           Certain Insurance Companies
                shown in the Signing Schedule(s) attached hereto
            (hereinafter referred to as the "Subscribing Reinsurer")

                               with respect to the

                          FIRST CASUALTY EXCESS OF LOSS
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 2005

                         issued to and duly executed by

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group

The Subscribing Reinsurer hereby accepts a 30.0% share in the interests and
liabilities of the "Reinsurer" as set forth in the attached Contract captioned
above.

This Agreement shall become effective at 12:01 a.m., Local Standard Time,
January 1, 2005, and shall continue in force until terminated in accordance with
the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and liabilities of the
other reinsurers.

In any action, suit or proceeding to enforce the Subscribing Reinsurer's
obligations under the attached Contract, service of process may be made upon
Mendes & Mount, 750 Seventh Avenue, New York, New York 10019.

Signed for and on behalf of the Subscribing Reinsurer in the Signing Schedule(s)
attached hereto.


                          FIRST CASUALTY EXCESS OF LOSS
                              REINSURANCE CONTRACT
                          (AS RESPECTS HANNOVER TERMS)
                           EFFECTIVE: JANUARY 1, 2005

                                    issued to

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group



                               TABLE OF CONTENTS



ARTICLE                                                                  PAGE
                                                                   
    I     Classes of Business Reinsured                                    1
   II     Commencement and Termination                                     1
  III     Territory (BRMA 51A)                                             3
   IV     Exclusions                                                       3
    V     Special Acceptances                                              7
   VI     Retention and Limit                                              7
  VII     Definitions                                                      8
 VIII     Annuities at Company's Option                                   10
   IX     Claims                                                          11
    X     Commutation                                                     11
   XI     Special Commutation                                             12
  XII     Salvage and Subrogation                                         13
 XIII     Reinsurance Premium                                             14
  XIV     Late Payments                                                   14
   XV     Offset (BRMA 36A)                                               16
  XVI     Access to Records (BRMA 1D)                                     16
 XVII     Liability of the Reinsurer                                      16
XVIII     Net Retained Lines (BRMA 32E)                                   16
  XIX     Errors and Omissions (BRMA 14F)                                 16
   XX     Taxes (BRMA 50B)                                                17
  XXI     Reserves and Letters of Credit                                  17
 XXII     Insolvency                                                      18
XXIII     Arbitration (BRMA 6J)                                           19
 XXIV     Service of Suit (BRMA 49C)                                      20
  XXV     Entire Agreement                                                20
 XXVI     Agency Agreement                                                20
XXVII     Intermediary (BRMA 23A)                                         21



                          FIRST CASUALTY EXCESS OF LOSS
                              REINSURANCE CONTRACT
                          (AS RESPECTS HANNOVER TERMS)
                           EFFECTIVE: JANUARY 1, 2005

                                    issued to

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group
             (hereinafter referred to collectively as the "Company")

                                       by

                   The Subscribing Reinsurer(s) Executing the
                     Interests and Liabilities Agreement(s)
                                 Attached Hereto
                  (hereinafter referred to as the "Reinsurer")

ARTICLE I - CLASSES OF BUSINESS REINSURED

By this Contract the Reinsurer agrees to reinsure the excess liability which may
accrue to the Company under its policies, contracts and binders of insurance or
reinsurance (hereinafter called "policies") in force at the effective date
hereof or issued or renewed on or after that date, and classified by the Company
as Workers' Compensation, Employers Liability, including coverage provided under
the U.S. Longshore and Harbor Workers' Compensation Act and the Jones Act, and
General Liability business, subject to the terms, conditions and limitations
hereinafter set forth.

ARTICLE II - COMMENCEMENT AND TERMINATION

A.    This Contract shall become effective at 12:01 a.m., Local Standard Time,
      January 1, 2005, with respect to losses arising out of occurrences
      commencing at or after that time and date, and shall continue in force
      thereafter until terminated.

B.    Either party may terminate this Contract on any December 31 by giving the
      other party not less than 90 days prior notice by certified or registered
      mail.

Page 1



C.    Notwithstanding the provisions of paragraph B above, the Company may
      terminate a Subscribing Reinsurer's percentage share in this Contract in
      the event any of the following circumstances occur, as clarified by public
      announcement as respects subparagraphs 1 through 7 below or upon discovery
      as respects subparagraph 8 below. Within 30 days of such public
      announcement or discovery, the Company shall give the Subscribing
      Reinsurer notice, via certified mail, of its intent to terminate the
      Subscribing Reinsurer's percentage share under the Contract. The effective
      date of termination shall be retroactively applied to 12:01 a.m., Local
      Standard Time, on the first day of the month preceding the month of the
      date of the applicable public announcement or discovery, unless mutually
      agreed otherwise:

      1.    The Subscribing Reinsurer's policyholders' surplus at the beginning
            of any contract year has been reduced by more than 20.0% of the
            amount of surplus 12 months prior to that date; or

      2.    The Subscribing Reinsurer's policyholders' surplus at any time
            during any contract year has been reduced by more than 20.0% of the
            amount of surplus at the date of the Subscribing Reinsurer's most
            recent financial statement filed with regulatory authorities and
            available to the public as of the beginning of the contract year; or

      3.    The Subscribing Reinsurer's A.M. Best's rating has been assigned or
            downgraded below A- and/or Standard & Poor's rating has been
            assigned or downgraded below BBB+; or

      4.    The Subscribing Reinsurer has become merged with, acquired by or
            controlled by any other company, corporation or individual(s) not
            controlling the Subscribing Reinsurer's operations previously; or

      5.    A State Insurance Department or other legal authority has ordered
            the Subscribing Reinsurer to cease writing business; or

      6.    The Subscribing Reinsurer has become insolvent or has been placed
            into liquidation or receivership (whether voluntary or involuntary)
            or proceedings have been instituted against the Subscribing
            Reinsurer for the appointment of a receiver, liquidator,
            rehabilitator, conservator or trustee in bankruptcy, or other agent
            known by whatever name, to take possession of its assets or control
            of its operations; or

      7.    The Subscribing Reinsurer has reinsured its entire liability under
            the Contract without the Company's prior written consent; or

      8.    The Subscribing Reinsurer has ceased assuming new and renewal treaty
            reinsurance business.

D.    Unless the Company elects that the Reinsurer have no liability for losses
      arising out of occurrences commencing after the effective date of
      termination, and so notifies the Reinsurer prior to or as promptly as
      possible after the effective date of termination, reinsurance hereunder on
      business in force on the effective date of termination shall remain in
      full force and effect until expiration, cancellation or next premium
      anniversary of such business, whichever first occurs, but in no event
      beyond 12 months plus odd time (not exceeding 18 months in all) following
      the effective date of termination.

Page 2



ARTICLE III - TERRITORY (BRMA 51A)

The territorial limits of this Contract shall be identical with those of the
Company's policies.

ARTICLE IV - EXCLUSIONS

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

      1.    Lines of business not identified in Article I.

      2.    All excess of loss reinsurance assumed by the Company.

      3.    Reinsurance assumed by the Company under obligatory reinsurance
            agreements, except:

            a.    Agency reinsurance where the policies involved are to be
                  reunderwritten in accordance with the underwriting standards
                  of the Company and reissued as Company policies at the next
                  anniversary or expiration date; and

            b.    Intercompany reinsurance between any of the reinsured
                  companies under this Contract.

      4.    Business written by the Company on a co-indemnity basis where the
            Company is not the controlling carrier.

      5.    Business written to apply in excess of a deductible of more than
            $25,000, and business issued to apply specifically in excess over
            underlying insurance. However, if the Company is required, by any
            state regulation, to provide a deductible of more than $25,000, this
            exclusion shall not apply.

      6.    Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
            Liability - Reinsurance (U.S.A.)" attached to and forming part of
            this Contract.

      7.    As regards interests which at time of loss or damage are on shore,
            no liability shall attach hereto in respect of any loss or damage
            which is occasioned by war, invasion, hostilities, acts of foreign
            enemies, civil war, rebellion, insurrection, military or usurped
            power, or martial law or confiscation by order of any government or
            public authority. This War Exclusion Clause shall not, however,
            apply to interests which at time of loss or damage are within the
            territorial limits of the United States of America (comprising the
            Fifty States of the Union, the District of Columbia, and including
            bridges between the United States of America and Mexico provided
            they are under United States ownership), Canada, St. Pierre and
            Miquelon, provided such interests are insured under policies
            containing a standard war or hostilities or warlike operations
            exclusion clause.

      8.    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.

Page 3



      9.    All liability of the Company arising by contract, operation of 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, however denominated,
            established or governed, which provides for any assessment of or
            payment or assumption by the Company of part or 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.

      10.   Workers' Compensation where the principal exposures, as defined by
            the governing class code, include:

            a.    Operation of aircraft but only if the annual estimated policy
                  premium is $250,000 or more;

            b.    Railroad, subway, or street railway operations;

            c.    Operation or navigation of vessels or barges;

            d.    Manufacture, production, or refining of gas, natural or
                  artificial fuel, or other liquefied petroleum fuel, but only
                  if the annual estimated policy premium is $250,000 or more;

            e.    Manufacturing, assembly, packing, or processing of fireworks,
                  fuses, nitroglycerine, magnesium, pyroxylin, ammunition, or
                  explosives. This exclusion does not apply to the assembly,
                  packing, or processing of explosives when the estimated annual
                  premium is under $250,000;

            f.    Wrecking or demolition of structures but only if the annual
                  estimated policy premium is $250,000 or more;

            g.    Underground mining.

      11.   As respects Workers' Compensation and Employers' Liability only,
            unless otherwise excluded as set forth above, the reinsurance
            provided under this Contract shall not apply to any loss, cost or
            expense arising out of or related to, either directly or indirectly,
            any "terrorist activity," as defined herein, but this exclusion
            shall only apply when the activity includes, involves, or is
            associated with the use of any biological, chemical, radioactive, or
            nuclear agent, material, device or weapon, or when the predominant
            business of the policyholder as defined by the governing class code
            is:

            a.    The operation of: airports and aircraft; flight schools;
                  bridges, dams, tunnels, or locks; department stores; shopping
                  malls; chain retail stores; casinos and casino hotels; cruise
                  lines; railroads; ports/public transit authorities; security
                  services; stadiums; convention/exhibition centers; or
                  theme/amusement parks.

            b.    The manufacture and distribution of: automobiles; chemicals,
                  petrochemicals, pharmaceuticals; utilities (electric, gas,
                  water, and sewer); major defense/aerospace products; or
                  high-tech equipment, but only if the policyholder

Page 4



                  employs more than 20 personnel at the location of a terrorist
                  activity at the time of its occurrence.

            c.    The management or operation of the following type of
                  structures, but only if greater than 25 stories in height:
                  apartments/condominiums/co-ops; hotels/motels; or office
                  buildings.

            d.    Businesses primarily engaged in the entertainment, media, or
                  transportation industry limited to the following: major media
                  providers (NBC, FOX, ABC, CBS, etc.); television and motion
                  picture studios; Broadway theaters; major internet companies
                  (AOL, Yahoo, etc.); professional sports teams; major
                  telecommunications companies (AT&T, Worldcom/MCI, etc.);
                  national truck rental companies (Ryder, Penske, UHaul, etc.);
                  or major national motor freight common carriers (J.B. Hunt,
                  Red Arrow, etc.).

            e.    Policyholders primarily located in, or predominantly doing
                  business as: hospitals; universities; nuclear facilities;
                  financial institutions; or governmental buildings and national
                  landmarks.

            "Terrorist activity" shall mean any deliberate, unlawful act that:

            a.    Is declared by any authorized government official to be or to
                  involve terrorism, terrorist activity or acts of terrorism; or

            b.    Includes, involves, or is associated with the use or
                  threatened use of force, violence or harm against any person,
                  tangible or intangible property, the environment, or any
                  natural resources, where the act or threatened act is
                  intended, in whole or in part, to:

                  i.    Promote or further any political, ideological,
                        philosophical, racial, ethnic, social or religious cause
                        or objective of the perpetrator or any organization,
                        association or group affiliated with the perpetrator; or

                  ii.   Influence, disrupt or interfere with any government
                        related operations, activities or policies; or

                  iii.  Intimidate, coerce or frighten the general public or any
                        segment of the general public; or

                  iv.   Disrupt or interfere with a national economy or any
                        segment of a national economy; or

            c.    Includes, involves, or is associated with, in whole or in
                  part, any of the following activities, or the threat thereof:

                  i.    Hijacking or sabotage of any form of transportation or
                        conveyance, including but not limited to spacecraft,
                        satellite, aircraft, train, vessel, or motor vehicle;

                  ii.   Hostage taking or kidnapping;

                  iii.  The use of any bomb, incendiary device, explosive or
                        firearm;

Page 5



                  iv.   The interference with or disruption of basic public or
                        commercial services and systems, including but not
                        limited to the following services or systems:
                        electricity, natural gas, power, postal, communications,
                        telecommunications, information, public transportation,
                        water, fuel, sewer or waste disposal;

                  v.    The injuring or assassination of any elected or
                        appointed government official or any government
                        employee;

                  vi.   The seizure, blockage, interference with, disruption of,
                        or damage to any government buildings, institutions,
                        functions, events, tangible or intangible property or
                        other assets; or

                  vii.  The seizure, blockage, interference with, disruption of,
                        or damage to tunnels, roads, streets, highways, or other
                        places of public transportation or conveyance.

            d.    Any of the activities listed in subparagraph c, above, shall
                  be considered terrorist activity except where the Company can
                  demonstrate to the Reinsurer that the foregoing activities or
                  threats thereof were motivated solely by personal objectives
                  of the perpetrator that are unrelated, in whole or in part, to
                  any intention to:

                  i.    Promote or further any political, ideological,
                        philosophical, racial, ethnic, social or religious cause
                        or objective of the perpetrator or any organization,
                        association or group affiliated with the perpetrator;

                  ii.   Influence, disrupt or interfere with any
                        government-related operations, activities or policies;

                  iii.  Intimidate, coerce or frighten the general public or any
                        segment of the general public; or

                  iv.   Disrupt or interfere with a national economy or any
                        segment of a national economy.

      12.   As respects General Liability policies, exposures, other than those
            identified below, as included in the General Liability section of
            the Company's Commercial Lines Manual:

            a.    Class 97111 - Logging;

            b.    Class 58873 - Sawmill;

            c.    Class 59984 - Woodyard and Drivers;

            d.    Class 95410 - Grading of Land;

            e.    Class 45819 - Lumber Yard;

            f.    Class 10073 - Repair Shops and Drivers;

Page 6



            g.    Class 43822 - Timber Cruiser;

            h.    Class 99793 - Truckman Not Otherwise Classified;

            i.    Class 91591 - Contractors - Subcontracted Work Other Than
                  Construction;

            j.    Class 49452 - Vacant Land.

B.    Any exclusion set forth in subparagraphs 10 and/or 12 of paragraph A shall
      be waived automatically when, in the opinion of the Company, the exposure
      excluded therein is incidental to the principal exposure on the risk in
      question.

C.    If the Company is bound, without the knowledge and contrary to the
      instructions of the Company's supervisory underwriting personnel, on any
      business falling within the scope of one or more of the exclusions set
      forth in subparagraphs 10 and/or 12 of paragraph A, the exclusion shall be
      suspended with respect to such business until the Company has the first
      opportunity to cancel the policy in compliance with governmental
      requirements.

D.    If the Company is required to accept an assigned risk which conflicts with
      one or more of the exclusions set forth in subparagraph 10 of paragraph A,
      reinsurance shall apply, but only for the difference between the Company's
      retention and the minimum limit required by the applicable state statute,
      and in no event shall the Reinsurer's liability exceed the limit set forth
      in Article VI.

ARTICLE V - SPECIAL ACCEPTANCES

From time to time the Company may request a special acceptance of reinsurance
falling outside the scope of the provisions set forth in this Contract. If each
Subscribing Reinsurer whose share in the interests and liabilities of the
Reinsurer is 25.0% or greater agrees to a special acceptance, such special
acceptance shall be binding on all Subscribing Reinsurers with respect to their
respective shares. If such agreement is not achieved, such special acceptance
shall be made to this Contract only with respect to the interests and
liabilities of each Subscribing Reinsurer who agrees to the special acceptance.
In the event a reinsurer becomes a party to this Contract subsequent to one or
more special acceptances hereunder, the new reinsurer shall automatically accept
such special acceptance(s) as being covered hereunder.

ARTICLE VI - RETENTION AND LIMIT

A.    The Company shall retain and be liable for the first $1,000,000 of
      ultimate net loss arising out of each occurrence. The Reinsurer shall then
      be liable (subject to the provisions of paragraph B below) for the amount
      by which such ultimate net loss exceeds the Company's retention, but the
      liability of the Reinsurer shall not exceed $4,000,000 as respects any one
      occurrence.

B.    Notwithstanding the provisions of paragraph A above, no claim shall be
      made under this Contract during any contract year unless and until
      cumulative subject excess losses paid from losses arising out of
      occurrences commencing during the contract year (being losses which would
      be recoverable from the Reinsurer under paragraph A above were it not for
      the provisions of this paragraph) exceed an annual aggregate retention of
      2.250% of net

Page 7



      earned premium. The Company shall retain and be liable for such annual
      aggregate retention in addition to its initial loss retention stipulated
      in paragraph A above.

C.    As respects any loss or losses arising out of terrorist activity, the
      liability of the Reinsurer shall not exceed $4,000,000 each contract year.
      Terrorism losses shall have priority when calculating the annual aggregate
      retention.

D.    The Company shall be permitted to carry quota share and excess
      reinsurance, recoveries under which shall inure solely to the benefit of
      the Company and be entirely disregarded in applying all of the provisions
      of this Contract.

E.    The Company shall purchase or be deemed to have purchased inuring excess
      facultative reinsurance to limit its ultimate net loss under any one
      coverage, any one policy (exclusive of loss in excess of policy limits or
      extra contractual obligations) to $2,000,000 each occurrence as respects
      General Liability and Employers Liability business subject hereto.

F.    The Company shall be permitted to carry excess of loss reinsurance
      applying to Workers' Compensation risks in the State of Minnesota,
      recoveries under which shall inure to the benefit of this Contract.

      Such coverage shall be provided through the Minnesota Workers'
      Compensation Reinsurance Association. It is understood that the liability
      of the Reinsurer for Minnesota Workers' Compensation risks is not
      released.

      In the event the Company accrues liability that is not provided by any
      inuring reinsurance, for whatever reason, the Reinsurer agrees to reinsure
      such excess liability.

ARTICLE VII - DEFINITIONS

A.    "Ultimate net loss" as used herein is defined as the sum or sums
      (including loss in excess of policy limits, extra contractual obligations
      and any loss adjustment expense, as hereinafter defined) paid or payable
      by the Company in settlement of claims and in satisfaction of judgments
      rendered on account of such claims, after deduction of all salvage, all
      recoveries and all claims on inuring insurance or reinsurance, whether
      collectible or not. Nothing herein shall be construed to mean that losses
      under this Contract are not recoverable until the Company's ultimate net
      loss has been ascertained.

B.    "Loss in excess of policy limits" and "extra contractual obligations" as
      used herein shall be defined as follows:

      1.    "Loss in excess of policy limits" shall mean 90.0% of any amount
            paid or payable by the Company in excess of its policy limits, but
            otherwise within the terms of its policy, such loss in excess of the
            Company's policy limits having been incurred because of, but not
            limited to, failure by the Company to settle within the policy
            limits or by reason of the Company's alleged or actual negligence,
            fraud or bad faith in rejecting an offer of settlement or in the
            preparation of the defense or in the trial of an action against its
            insured or reinsured or in the preparation or prosecution of an
            appeal consequent upon such an action.

Page 8



      2.    "Extra contractual obligations" shall mean 90.0% of any punitive,
            exemplary, compensatory or consequential damages paid or payable by
            the Company, not covered by any other provision of this Contract and
            which arise from the handling of any claim on business subject to
            this Contract, such liabilities arising because of, but not limited
            to, failure by the Company to settle within the policy limits or by
            reason of the Company's alleged or actual negligence, fraud or bad
            faith in rejecting an offer of settlement or in the preparation of
            the defense or in the trial of any action against its insured or
            reinsured or in the preparation or prosecution of an appeal
            consequent upon such an action. An extra contractual obligation
            shall be deemed, in all circumstances, to have occurred on the same
            date as the loss covered or alleged to be covered under the policy.

      If any provision of this Article shall be rendered illegal or
      unenforceable by the laws, regulations or public policy of any state, such
      provision shall be considered void in such state, but this shall not
      affect the validity or enforceability of any other provision of this
      Contract or the enforceability of such provision in any other
      jurisdiction.

      Notwithstanding anything stated herein, this Contract shall not apply to
      any loss in excess of policy limits or any extra contractual obligation
      incurred by the Company as a result of any fraudulent and/or criminal act
      by any officer or director of the Company acting individually or
      collectively or in collusion with any individual or corporation or any
      other organization or party involved in the presentation, defense or
      settlement of any claim covered hereunder.

C.    "Occurrence" as used herein is defined as an accident or occurrence or a
      series of accidents or occurrences arising out of or caused by one event,
      except that:

      1.    As respects General Liability policies where the Company's limit of
            liability for Products and Completed Operations coverages is
            determined on the basis of the insured's aggregate losses during a
            policy period, all such losses proceeding from or traceable to the
            same causative agency shall, at the Company's option, be deemed to
            have been caused by one occurrence commencing at the beginning of
            the policy period, it being understood and agreed that each renewal
            or annual anniversary date of the policy involved shall be deemed
            the beginning of a new policy period;

      2.    Each occupational disease case or cumulative trauma case contracted
            by an employee of an insured shall be deemed to have been caused by
            a separate occurrence, commencing on:

            a.    The date of disability for which compensation is payable if
                  the case is compensable under the Workers' Compensation Law;

            b.    The date disability due to the disease actually began if the
                  case is not compensable under the Workers' Compensation Law;

            c.    The date of cessation of employment if claim is made after
                  employment has ceased.

      3.    Notwithstanding the provisions of subparagraph 2 above, as respects
            losses resulting from occupational disease or cumulative trauma
            suffered by employees of an insured for which the employer is
            liable, as a result of a sudden and accidental event not

Page 9



            exceeding 72 hours in duration, all such losses shall be considered
            one occurrence and may be combined with losses classified as other
            than occupational disease or cumulative trauma which arise out of
            the same event and the combination of such losses shall be
            considered as one occurrence within the meaning hereof.

D.    "Occupational or industrial disease" is any abnormal condition that
      fulfills all of the following conditions:

      1.    It is not traceable to a definite compensable accident occurring
            during the employee's past or present employment.

      2.    It has been caused by exposure to a disease producing agent or
            agents present in the workers' occupational environment.

      3.    It has resulted in disability or death.

E.    "Cumulative trauma" is an injury that fulfills all of the following
      conditions:

      1.    It is not traceable to a definite compensable accident occurring
            during the employee's past or present employment.

      2.    It has occurred from and has been aggravated by a repetitive
            employment related activity.

      3.    It has resulted in disability or death.

F.    "Loss adjustment expense" as used herein shall mean expenses allocable to
      the investigation, defense and/or settlement of specific claims, including
      litigation expenses, interest on judgments, declaratory judgment expenses
      or other legal expenses and costs incurred in connection with coverage
      questions and legal actions connected thereto, and salaries and expenses
      of salaried adjusters associated with claims covered under policies of the
      Company reinsured hereunder but not including office expenses or salaries
      of the Company's regular employees.

G.    "Contract year" as used in this Contract shall mean the period from
      January 1, 2005 to December 31, 2005, both days inclusive, and each
      respective 12-month period thereafter that this Contract continues in
      force. However, if this Contract is terminated, the final contract year
      shall be from the beginning of the then current contract year through the
      date of termination if this Contract is terminated on a "cutoff" basis, or
      the end of the runoff period if this Contract is terminated on a "runoff"
      basis.

ARTICLE VIII - ANNUITIES AT COMPANY'S OPTION

A.    Whenever the Company is required, or elects, to purchase an annuity or to
      negotiate a structured settlement, either in satisfaction of a judgment or
      in an out-of-court settlement or otherwise, the cost of the annuity or the
      structured settlement, as the case may be, shall be deemed part of the
      Company's ultimate net loss.

B.    The terms "annuity" or "structured settlement" shall be understood to mean
      any insurance policy, lump sum payment, agreement or device of whatever
      nature resulting in the

Page 10



      payment of a lump sum by the Company in settlement of any or all future
      liabilities which may attach to it as a result of an occurrence.

C.    In the event the Company purchases an annuity which inures in whole or in
      part to the benefit of the Reinsurer, it is understood that the liability
      of the Reinsurer is not released thereby. In the event the Company is
      required to provide benefits not provided by the annuity for whatever
      reason, the Reinsurer shall pay its proportional share of any loss.

ARTICLE IX - CLAIMS

A.    Whenever a claim is reserved by the Company for an amount greater than
      50.0% of its retention hereunder and/or whenever a claim appears likely to
      result in a claim under this Contract, the Company shall notify the
      Reinsurer. Further, the Company shall notify the Reinsurer whenever a
      claim involves a fatality, major limb amputation, spinal cord damage,
      brain damage, blindness or extensive burns, regardless of liability, if
      the policy limits or statutory benefits applicable to the claim are
      greater than the Company's retention hereunder. The Reinsurer shall have
      the right to participate, at its own expense, in the defense of any claim
      or suit or proceeding involving this reinsurance.

B.    All claim settlements made by the Company, provided they are within the
      terms of this Contract (including but not limited to ex-gratia payments),
      shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all
      amounts for which it may be liable upon receipt of satisfactory evidence
      of the amount paid by the Company.

ARTICLE X - COMMUTATION

A.    As mutually agreed, the Company may commute the contract year.

B.    Unless otherwise mutually agreed, the calculation for the commutation
      shall be calculated in accordance with the following formula:

      1.    The Reinsurer's net premium earned (i.e., the gross earned
            reinsurance premium less the ceding commission paid) for the
            contract year; less

      2.    The Reinsurer's paid losses and loss adjustment expense on losses
            arising out of occurrences commencing during the contract year; less

      3.    The Reinsurer's margin at 25.0% of the net earned premium (i.e., the
            gross earned reinsurance premium less the ceding commission paid)
            for the contract year; equals

      4.    The Company's net profit.

C.    Payment to the Company of the calculation will result in a full and final
      commutation of all known and unknown losses and shall constitute a
      complete and final release of the Reinsurer and the Company in respect of
      any and all liabilities on business covered under this Contract during the
      contract year commuted.

D.    Should the calculation be zero or negative, no payment shall be made and
      the Company shall have the option to provide a full and final commutation
      of all known and unknown

Page 11



      losses, which shall constitute a complete and final release of the
      Reinsurer and the Company with respect to any and all liabilities on
      business covered under this Contract during the contract year commuted.

ARTICLE XI - SPECIAL COMMUTATION

A.    In the event a Subscribing Reinsurer meets the following conditions, the
      Company may require a commutation of that portion of any excess loss
      hereunder represented by any outstanding claim or claims, including any
      related loss adjustment expense.

      1.    The Subscribing Reinsurer's A.M. Best's rating has been assigned or
            downgraded below A- (inclusive of "Not Rated" ratings) and/or
            Standard & Poor's rating has been assigned or downgraded below BBB+
            (inclusive of "Not Rated" ratings); or

      2.    The Subscribing Reinsurer has ceased assuming new and renewal
            property and casualty treaty reinsurance business.

      "Outstanding claim or claims" shall be defined as known or unknown claims,
      including any billed yet unpaid claims. However, unless otherwise mutually
      agreed, this paragraph shall not apply unless the outstanding claim or
      claims is for an amount not less than $5,000.

B.    If the Company elects to require commutation as provided in paragraph A
      above, the Company shall submit a Statement of Valuation of the
      outstanding claim or claims as of the last day of the month immediately
      preceding the month in which the Company elects to require commutation, as
      determined by the Company. Such Statement of Valuation shall include the
      elements considered reasonable to establish the excess loss and shall set
      forth or attach the information relied upon by the Company and the
      methodology employed to calculate the excess loss. The Subscribing
      Reinsurer shall then pay the amount requested within 30 calendar days of
      receipt of such Statement of Valuation, unless the Subscribing Reinsurer
      needs additional information from the Company to assess the Company's
      Statement of Valuation or contests such amount.

C.    If the Subscribing Reinsurer needs additional information from the Company
      to assess the Company's Statement of Valuation or contests the amount
      requested, the Subscribing Reinsurer shall so notify the Company within 15
      calendar days of receipt of the Company's Statement of Valuation. The
      Company shall supply any reasonably requested information to the
      Subscribing Reinsurer within 15 calendar days of receipt of the
      notification. Within 30 calendar days of the date of the notification or
      of the receipt of the information, whichever is later, the Subscribing
      Reinsurer shall provide the Company with its Statement of Valuation of the
      outstanding claim or claims as of the last day of the month immediately
      preceding the month in which the Company elects to require commutation, as
      determined by the Subscribing Reinsurer. Such Statement of Valuation shall
      include the elements considered reasonable to establish the excess loss
      and shall set forth or attach the information relied upon by the
      Subscribing Reinsurer and the methodology employed to calculate the excess
      loss.

D.    In the event the Subscribing Reinsurer's Statement of Valuation of the
      outstanding claim or claims is viewed as unacceptable to the Company, the
      Company may either abandon the commutation effort, or may seek to settle
      any difference by using an independent actuary agreed to by the parties.

Page 12



E.    If the parties cannot agree on an acceptable independent actuary within 15
      calendar days of the date of the Subscribing Reinsurer's Statement of
      Valuation, then each party shall appoint an actuary as party arbitrators
      for the limited and sole purpose of selecting an independent actuary. If
      the actuaries cannot agree on an acceptable independent actuary within 15
      calendar days of the date of the Subscribing Reinsurer's Statement of
      Valuation, the Company shall supply the Subscribing Reinsurer with a list
      of at least three proposed independent actuaries, and the Subscribing
      Reinsurer shall select the independent actuary from that list.

F.    Upon selection of the independent actuary, both parties shall present
      their respective written submissions to the independent actuary. The
      independent actuary may, at his or her discretion, request additional
      information. The independent actuary shall issue his or her decision
      within 45 calendar days after the written submissions have been filed and
      any additional information has been provided.

G.    The decision of the independent actuary shall be final and binding. The
      expense of the independent actuary shall be equally divided between the
      two parties. For the purposes of this Article, unless mutually agreed
      otherwise, an "independent actuary" shall be an actuary who satisfies each
      of the following criteria:

      1.    Is regularly engaged in the valuation of claims resulting from lines
            of business subject to this Contract; and

      2.    Is either a Fellow of the Casualty Actuarial Society or of the
            American Academy of Actuaries; and

      3.    Is disinterested and impartial regarding this commutation.

H.    Notwithstanding paragraph A, B and C above, in the event that the
      Subscribing Reinsurer no longer meets the conditions set forth in
      subparagraph 1 or 2 in paragraph A above, this commutation may continue on
      a mutually agreed basis.

I.    Payment by the Subscribing Reinsurer of the amount requested in accordance
      with paragraph B, C or F above, shall release the Subscribing Reinsurer
      from all further liability for outstanding claim or claims, known or
      unknown, under this Contract, which shall release the Company from all
      further liability for payments of salvage or subrogation amounts, known or
      unknown, to the Subscribing Reinsurer under this Contract.

J.    In the event of any conflict between this Article and any other Article of
      this Contract, the terms of this Article shall control.

K.    This Article shall survive the termination of this Contract.

ARTICLE XII - SALVAGE AND SUBROGATION

The Reinsurer shall be credited with salvage (i.e., reimbursement obtained or
recovery made by the Company, less the actual cost, excluding salaries of
officials and employees of the Company and sums paid to attorneys as retainer,
of obtaining such reimbursement or making such recovery) or subrogation on
account of claims and settlements involving reinsurance

Page 13



hereunder. Salvage or subrogation thereon shall always be used to reimburse the
excess carriers in the reverse order of their priority according to their
participation before being used in any way to reimburse the Company for its
primary loss. The Company hereby agrees to enforce its rights to salvage or
subrogation where it is economically reasonable in the judgment of the Company,
relating to any loss, a part of which loss was sustained by the Reinsurer, and
to prosecute all claims arising out of such rights.

ARTICLE XIII - REINSURANCE PREMIUM

A.    As premium for the reinsurance provided hereunder during each contract
      year, the Company shall pay the Reinsurer 8.429% (5.900% net) of its net
      earned premium.

      The Reinsurer shall allow the Company a 30.0% commission on all premiums
      ceded to the Reinsurer hereunder. The Company shall allow the Reinsurer
      return commission on return premiums at the same rate.

B.    Within 30 days after the end of each month, the Company shall report its
      net earned premium for the month. The premium due the Reinsurer, at the
      rate shown in paragraph A, shall be paid by the Company with its report.
      In the event this Contract is terminated in accordance with paragraph C of
      Article II, no payments shall be due as respects each Subscribing
      Reinsurer after the effective date of termination.

C.    Within 60 days after the end of each contract year (or within 60 days
      after the effective date of termination if this Contract is terminated on
      a "runoff" basis), the Company shall provide a report to the Reinsurer
      setting forth the premium due hereunder for the contract year, computed in
      accordance with paragraph A, and any additional premium due the Reinsurer
      shall be remitted promptly.

D.    "Net earned premium" as used herein is defined as the Company's gross
      earned premium collected on the classes of business subject to this
      Contract, less only the earned portion of premiums, if any, ceded by the
      Company for reinsurance which inures to the benefit of this Contract and
      less dividends incurred.

ARTICLE XIV - LATE PAYMENTS

A.    The provisions of this Article shall not be implemented unless
      specifically invoked, in writing, by one of the parties to this Contract.

B.    In the event any premium, loss or other payment due either party is not
      received by the intermediary named in Article XXVII (hereinafter referred
      to as the "Intermediary") by the payment due date, the party to whom
      payment is due, may, by notifying the Intermediary in writing, require the
      debtor party to pay, and the debtor party agrees to pay, an interest
      penalty on the amount past due calculated for each such payment on the
      last business day of each month as follows:

      1.    The number of full days which have expired since the due date or the
            last monthly calculation, whichever the lesser; times

Page 14



      2.    1/365ths of the sum of 400 basis points plus the six-month United
            States Treasury Bill rate as quoted in The Wall Street Journal on
            the first business day of the month for which the calculation is
            made; times

      3.    The amount past due, including accrued interest.

      It is agreed that interest shall accumulate until payment of the original
      amount due plus interest penalties have been received by the Intermediary.

C.    The establishment of the due date shall, for purposes of this Article, be
      determined as follows:

      1.    As respects the payment of routine deposits and premiums due the
            Reinsurer, the due date shall be as provided for in the applicable
            section of this Contract. In the event a due date is not
            specifically stated for a given payment, it shall be deemed due 30
            days after the date of transmittal by the Intermediary of the
            initial billing for each such payment.

      2.    Any claim or loss payment due the Company hereunder shall be deemed
            due 45 business days after the proof of loss or demand for payment
            is transmitted to the Reinsurer. If such loss or claim payment is
            not received within the 45 days, interest will accrue on the payment
            or amount overdue in accordance with paragraph B above, from the
            date the proof of loss or demand for payment was transmitted to the
            Reinsurer.

      3.    As respects any payment, adjustment or return due either party not
            otherwise provided for in subparagraphs 1 and 2 of paragraph C
            above, the due date shall be as provided for in the applicable
            section of this Contract. In the event a due date is not
            specifically stated for a given payment, it shall be deemed due 10
            business days following transmittal of written notification that the
            provisions of this Article have been invoked.

      For purposes of interest calculations only, amounts due hereunder shall be
      deemed paid upon receipt by the Intermediary.

D.    Nothing herein shall be construed as limiting or prohibiting a Subscribing
      Reinsurer from contesting the validity of any claim, or from participating
      in the defense of any claim or suit, or prohibiting either party from
      contesting the validity of any payment or from initiating any arbitration
      or other proceeding in accordance with the provisions of this Contract. If
      the debtor party prevails in an arbitration or other proceeding, then any
      interest penalties due hereunder on the amount in dispute shall be null
      and void. If the debtor party loses in such proceeding, then the interest
      penalty on the amount determined to be due hereunder shall be calculated
      in accordance with the provisions set forth above unless otherwise
      determined by such proceedings. If a debtor party advances payment of any
      amount it is contesting, and proves to be correct in its contestation,
      either in whole or in part, the other party shall reimburse the debtor
      party for any such excess payment made plus interest on the excess amount
      calculated in accordance with this Article.

E.    Interest penalties arising out of the application of this Article that are
      $100 or less from any party shall be waived unless there is a pattern of
      late payments consisting of three or more items over the course of any
      12-month period.

Page 15



ARTICLE XV - OFFSET (BRMA 36A)

The Company and the Reinsurer may offset any balance or amount due from one
party to the other under this Contract or any other contract heretofore or
hereafter entered into between the Company and the Reinsurer, whether acting as
assuming reinsurer or ceding company. This provision shall not be affected by
the insolvency of either party to this Contract.

ARTICLE XVI - ACCESS TO RECORDS (BRMA 1D)

The Reinsurer or its designated representatives shall have access at any
reasonable time to all records of the Company which pertain in any way to this
reinsurance.

ARTICLE XVII - LIABILITY OF THE REINSURER

A.    The liability of the Reinsurer shall follow that of the Company in every
      case and be subject in all respects to all the general and specific
      stipulations, clauses, waivers and modifications of the Company's policies
      and any endorsements thereon.

B.    Nothing herein shall in any manner create any obligations or establish any
      rights against the Reinsurer in favor of any third party or any persons
      not parties to this Contract.

ARTICLE XVIII - NET RETAINED LINES (BRMA 32E)

A.    This Contract applies only to that portion of any policy which the Company
      retains net for its own account (prior to deduction of any underlying
      reinsurance specifically permitted in this Contract), and in calculating
      the amount of any loss hereunder and also in computing the amount or
      amounts in excess of which this Contract attaches, only loss or losses in
      respect of that portion of any policy which the Company retains net for
      its own account shall be included.

B.    The amount of the Reinsurer's liability hereunder in respect of any loss
      or losses shall not be increased by reason of the inability of the Company
      to collect from any other reinsurer(s), whether specific or general, any
      amounts which may have become due from such reinsurer(s), whether such
      inability arises from the insolvency of such other reinsurer(s) or
      otherwise.

ARTICLE XIX - ERRORS AND OMISSIONS (BRMA 14F)

Inadvertent delays, errors or omissions made in connection with this Contract or
any transaction hereunder shall not relieve either party from any liability
which would have attached had such delay, error or omission not occurred,
provided always that such error or omission is rectified as soon as possible
after discovery.

Page 16



ARTICLE XX - TAXES (BRMA 50B)

In consideration of the terms under which this Contract is issued, the Company
will not claim a deduction in respect of the premium hereon when making tax
returns, other than income or profits tax returns, to any state or territory of
the United States of America or the District of Columbia.

ARTICLE XXI - RESERVES AND LETTERS OF CREDIT

(Applies only to a reinsurer which does not qualify for full credit with any
insurance regulatory authority having jurisdiction over the Company's reserves,
which is or becomes rated "B++" or lower by A.M. Best (inclusive of "Not Rated"
ratings) and/or Standard & Poor's rating is or becomes "BBB+" or lower
(inclusive of "Not Rated" ratings).)

A.    As regards policies or bonds issued by the Company coming within the scope
      of this Contract, the Company agrees that when it shall file with the
      insurance regulatory authority or set up on its books reserves for losses
      covered hereunder which it shall be required by law to set up, it will
      forward to the Reinsurer a statement showing the proportion of such
      reserves which is applicable to the Reinsurer. The Reinsurer hereby agrees
      to fund such reserves in respect of known outstanding losses that have
      been reported to the Reinsurer and allocated loss adjustment expense
      relating thereto, losses and allocated loss adjustment expense paid by the
      Company but not recovered from the Reinsurer, plus reserves for losses
      incurred but not reported, as shown in the statement prepared by the
      Company (hereinafter referred to as "Reinsurer's Obligations") by funds
      withheld, cash advances or a Letter of Credit. The Reinsurer shall have
      the option of determining the method of funding provided it is acceptable
      to the insurance regulatory authorities having jurisdiction over the
      Company's reserves with regards to unauthorized reinsurers; or, should the
      Reinsurer be downgraded, the method of funding shall be mutually agreed.

B.    When funding by a Letter of Credit, the Reinsurer agrees to apply for and
      secure timely delivery to the Company of a clean, irrevocable and
      unconditional Letter of Credit issued by a bank meeting the NAIC
      Securities Valuation Office credit standards for issuers of Letters of
      Credit and containing provisions acceptable to the insurance regulatory
      authorities having jurisdiction over the Company's reserves in an amount
      equal to the Reinsurer's proportion of said reserves. Such Letter of
      Credit shall be issued for a period of not less than one year, and shall
      contain an "evergreen" clause, which automatically extends the term for
      one year from its date of expiration or any future expiration date unless
      thirty (30) days (sixty (60) days where required by insurance regulatory
      authorities) prior to any expiration date the issuing bank shall notify
      the Company by certified or registered mail that the issuing bank elects
      not to consider the Letter of Credit extended for any additional period.

C.    The Reinsurer and Company agree that the Letters of Credit provided by the
      Reinsurer pursuant to the provisions of this Contract may be drawn upon at
      any time, notwithstanding any other provision of this Contract, and be
      utilized by the Company or any successor, by operation of law, of the
      Company including, without limitation, any liquidator, rehabilitator,
      receiver or conservator of the Company for the following purposes, unless
      otherwise provided for in a separate Trust Agreement:

Page 17



      1.    To reimburse the Company for the Reinsurer's Obligations, the
            payment of which is due under the terms of this Contract and which
            has not been otherwise paid;

      2.    To make refund of any sum which is in excess of the actual amount
            required to pay the Reinsurer's Obligations under this Contract, if
            so requested by the Reinsurer;

      3.    To fund an account with the Company for the Reinsurer's Obligations.
            Such cash deposit shall be held in an interest bearing account
            separate from the Company's other assets, and interest thereon not
            in excess of the prime rate shall accrue to the benefit of the
            Reinsurer;

      4.    To pay the Reinsurer's share of any other amounts the Company claims
            are due under this Contract.

D.    In the event the amount drawn by the Company on any Letter of Credit is in
      excess of the actual amount required for subparagraphs 1 or 3, or in the
      case of subparagraph 4, the actual amount determined to be due, the
      Company shall promptly return to the Reinsurer the excess amount so drawn.
      All of the foregoing shall be applied without diminution because of
      insolvency on the part of the Company or the Reinsurer.

E.    The issuing bank shall have no responsibility whatsoever in connection
      with the propriety of withdrawals made by the Company or the disposition
      of funds withdrawn, except to ensure that withdrawals are made only upon
      the order of properly authorized representatives of the Company.

F.    At annual intervals, or more frequently as agreed but never more
      frequently than quarterly, the Company shall prepare a specific statement
      of the Reinsurer's Obligations, for the sole purpose of amending the
      Letter of Credit, in the following manner:

      1.    If the statement shows that the Reinsurer's Obligations exceed the
            balance of credit as of the statement date, the Reinsurer shall,
            within thirty (30) days after receipt of notice of such excess,
            secure delivery to the Company of an amendment to the Letter of
            Credit increasing the amount of credit by the amount of such
            difference.

      2.    If, however, the statement shows that the Reinsurer's Obligations
            are less than the balance of credit as of the statement date, the
            Company shall, within thirty (30) days after receipt of written
            request from the Reinsurer, release such excess credit by agreeing
            to secure an amendment to the Letter of Credit reducing the amount
            of credit available by the amount of such excess credit.

ARTICLE XXII - INSOLVENCY

A.    In the event of the insolvency of one or more of the reinsured companies,
      this reinsurance shall be payable directly to the company or to its
      liquidator, receiver, conservator or statutory successor on the basis of
      the liability of the company without diminution because of the insolvency
      of the company or because the liquidator, receiver, conservator or
      statutory successor of the company has failed to pay all or a portion of
      any claim. It is agreed, however, that the liquidator, receiver,
      conservator or statutory successor of the company shall give written
      notice to the Reinsurer of the pendency of a claim against the company
      indicating the policy or bond reinsured which claim would involve a
      possible

Page 18



      liability on the part of the Reinsurer within a reasonable time after such
      claim is filed in the conservation or liquidation proceeding or in the
      receivership, and that during the pendency of such claim, the Reinsurer
      may investigate such claim and interpose, at its own expense, in the
      proceeding where such claim is to be adjudicated, any defense or defenses
      that it may deem available to the company or its liquidator, receiver,
      conservator or statutory successor. The expense thus incurred by the
      Reinsurer shall be chargeable, subject to the approval of the Court,
      against the company as part of the expense of conservation or liquidation
      to the extent of a pro rata share of the benefit which may accrue to the
      company solely as a result of the defense undertaken by the Reinsurer.

B.    Where two or more reinsurers are involved in the same claim and a majority
      in interest elect to interpose defense to such claim, the expense shall be
      apportioned in accordance with the terms of this Contract as though such
      expense had been incurred by the company.

C.    It is further understood and agreed that, in the event of the insolvency
      of one or more of the reinsured companies, the reinsurance under this
      Contract shall be payable directly by the Reinsurer to the company or to
      its liquidator, receiver or statutory successor, except as provided by
      Section 4118(a) of the New York Insurance Law or except (1) where this
      Contract specifically provides another payee of such reinsurance in the
      event of the insolvency of the company or (2) where the Reinsurer with the
      consent of the direct insured or insureds has assumed such policy
      obligations of the company as direct obligations of the Reinsurer to the
      payees under such policies and in substitution for the obligations of the
      company to such payees.

ARTICLE XXIII - ARBITRATION (BRMA 6J)

A.    As a condition precedent to any right of action hereunder, in the event of
      any dispute or difference of opinion hereafter arising with respect to
      this Contract, it is hereby mutually agreed that such dispute or
      difference of opinion shall be submitted to arbitration. One Arbiter shall
      be chosen by the Company, the other by the Reinsurer, and an Umpire shall
      be chosen by the two Arbiters before they enter upon arbitration, all of
      whom shall be active or retired disinterested executive officers of
      insurance or reinsurance companies or Lloyd's London Underwriters. In the
      event that either party should fail to choose an Arbiter within 30 days
      following a written request by the other party to do so, the requesting
      party may choose two Arbiters who shall in turn choose an Umpire before
      entering upon arbitration. If the two Arbiters fail to agree upon the
      selection of an Umpire within 30 days following their appointment, each
      Arbiter shall nominate three candidates within 10 days thereafter, two of
      whom the other shall decline, and the decision shall be made by drawing
      lots.

B.    Each party shall present its case to the Arbiters within 30 days following
      the date of appointment of the Umpire. The Arbiters shall consider this
      Contract as an honorable engagement rather than merely as a legal
      obligation and they are relieved of all judicial formalities and may
      abstain from following the strict rules of law. The decision of the
      Arbiters shall be final and binding on both parties; but failing to agree,
      they shall call in the Umpire and the decision of the majority shall be
      final and binding upon both parties. Judgment upon the final decision of
      the Arbiters may be entered in any court of competent jurisdiction.

C.    If more than one reinsurer is involved in the same dispute, all such
      reinsurers shall constitute and act as one party for purposes of this
      Article and communications shall be

Page 19



      made by the Company to each of the reinsurers constituting one party,
      provided, however, that nothing herein shall impair the rights of such
      reinsurers to assert several, rather than joint, defenses or claims, nor
      be construed as changing the liability of the reinsurers participating
      under the terms of this Contract from several to joint.

D.    Each party shall bear the expense of its own Arbiter, and shall jointly
      and equally bear with the other the expense of the Umpire and of the
      arbitration. In the event that the two Arbiters are chosen by one party,
      as above provided, the expense of the Arbiters, the Umpire and the
      arbitration shall be equally divided between the two parties.

E.    Any arbitration proceedings shall take place at a location mutually agreed
      upon by the parties to this Contract, but notwithstanding the location of
      the arbitration, all proceedings pursuant hereto shall be governed by the
      law of the state in which the Company has its principal office.

ARTICLE XXIV - SERVICE OF SUIT (BRMA 49C)

(Applicable if the Reinsurer is not domiciled in the United States of America,
and/or is not authorized in any State, Territory or District of the United
States where authorization is required by insurance regulatory authorities)

A.    It is agreed that in the event the Reinsurer fails to pay any amount
      claimed to be due hereunder, the Reinsurer, at the request of the Company,
      will submit to the jurisdiction of a court of competent jurisdiction
      within the United States. Nothing in this Article constitutes or should be
      understood to constitute a waiver of the Reinsurer's rights to commence an
      action in any court of competent jurisdiction in the United States, to
      remove an action to a United States District Court, or to seek a transfer
      of a case to another court as permitted by the laws of the United States
      or of any state in the United States.

B.    Further, pursuant to any statute of any state, territory or district of
      the United States which makes provision therefor, the Reinsurer hereby
      designates the party named in its Interests and Liabilities Agreement, or
      if no party is named therein, the Superintendent, Commissioner or Director
      of Insurance or other officer specified for that purpose in the statute,
      or his successor or successors in office, as its true and lawful attorney
      upon whom may be served any lawful process in any action, suit or
      proceeding instituted by or on behalf of the Company or any beneficiary
      hereunder arising out of this Contract.

ARTICLE XXV - ENTIRE AGREEMENT

This written Contract constitutes the entire agreement between the parties
hereto with respect to the business being reinsured hereunder, and there are no
understandings between the parties hereto other than as expressed in this
Contract. Any change or modification to this Contract will be made by amendment
to this Contract and signed by the parties.

ARTICLE XXVI - AGENCY AGREEMENT

If more than one reinsured company is named as a party to this Contract, the
first named company shall be deemed the agent of the other reinsured companies
for purposes of sending

Page 20



or receiving notices required by the terms and conditions of this Contract, and
for purposes of remitting or receiving any monies due any party.

ARTICLE XXVII - INTERMEDIARY (BRMA 23A)

Benfield Inc. is hereby recognized as the Intermediary negotiating this Contract
for all business hereunder. All communications (including but not limited to
notices, statements, premium, return premium, commissions, taxes, losses, loss
adjustment expense, salvages and loss settlements) relating thereto shall be
transmitted to the Company or the Reinsurer through Benfield Inc. Payments by
the Company to the Intermediary shall be deemed to constitute payment to the
Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed to
constitute payment to the Company only to the extent that such payments are
actually received by the Company.

IN WITNESS WHEREOF, the Company by its duly authorized representative has
executed this Contract as of the date undermentioned at:

DeRidder, LA, this 20th day of April in the year 2005.

                                  /s/ Allan E. Farr
                                  ----------------------------------------------
                                  American Interstate Insurance Company
                                  American Interstate Insurance Company of Texas
                                  Silver Oak Casualty, Inc.

Page 21



      NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE (U.S.A.)
       (Approved by Lloyd's Underwriters' Fire and Non-Marine Association)

(1)   This reinsurance does not cover any loss or liability accruing to the
      Reassured as a member of, or subscriber to, any association of insurers or
      reinsurers formed for the purpose of covering nuclear energy risks or as a
      direct or indirect reinsurer of any such member, subscriber or
      association.

(2)   Without in any way restricting the operation of paragraph (1) of this
      Clause it is understood and agreed that for all purposes of this
      reinsurance all the original policies of the Reassured (new, renewal and
      replacement) of the classes specified in Clause II of this paragraph (2)
      from the time specified in Clause III in this paragraph (2) shall be
      deemed to include the following provision (specified as the Limited
      Exclusion Provision):

      LIMITED EXCLUSION PROVISION.*

      I.    It is agreed that the policy does not apply under any liability
            coverage, to
                  (injury, sickness, disease, death or destruction
                  (bodily injury or property damage

            with respect to which an insured under the policy is also an insured
            under a nuclear energy liability policy issued by Nuclear Energy
            Liability Insurance Association, Mutual Atomic Energy Liability
            Underwriters or Nuclear Insurance Association of Canada, or would be
            an insured under any such policy but for its termination upon
            exhaustion of its limit of liability.

      II.   Family Automobile Policies (liability only), Special Automobile
            Policies (private passenger automobiles, liability only), Farmers
            Comprehensive Personal Liability Policies (liability only),
            Comprehensive Personal Liability Policies (liability only) or
            policies of a similar nature; and the liability portion of
            combination forms related to the four classes of policies stated
            above, such as the Comprehensive Dwelling Policy and the applicable
            types of Homeowners Policies.

      III.  The inception dates and thereafter of all original policies as
            described in II above, whether new, renewal or replacement, being
            policies which either

            (a)   become effective on or after 1st May, 1960, or

            (b)   become effective before that date and contain the Limited
                  Exclusion Provision set out above;

            provided this paragraph (2) shall not be applicable to Family
            Automobile Policies, Special Automobile Policies, or policies or
            combination policies of a similar nature, issued by the Reassured on
            New York risks, until 90 days following approval of the Limited
            Exclusion Provision by the Governmental Authority having
            jurisdiction thereof.

(3)   Except for those classes of policies specified in Clause II of paragraph
      (2) and without in any way restricting the operation of paragraph (1) of
      this Clause, it is understood and agreed that for all purposes of this
      reinsurance the original liability policies of the Reassured (new, renewal
      and replacement) affording the following coverages:

            Owners, Landlords and Tenants Liability, Contractual Liability,
            Elevator Liability, Owners or Contractors (including railroad)
            Protective Liability, Manufacturers and Contractors Liability,
            Product Liability, Professional and Malpractice Liability,
            Storekeepers Liability, Garage Liability, Automobile Liability
            (including Massachusetts Motor Vehicle or Garage Liability)

      shall be deemed to include, with respect to such coverages, from the time
      specified in Clause V of this paragraph (3), the following provision
      (specified as the Broad Exclusion Provision):

      BROAD EXCLUSION PROVISION.*

      It is agreed that the policy does not apply:

      I.    Under any Liability Coverage to

                  (injury, sickness, disease, death or destruction
                  (bodily injury or property damage

            (a)   with respect to which an insured under the policy is also an
                  insured under a nuclear energy liability policy issued by
                  Nuclear Energy Liability Insurance Association, Mutual Atomic
                  Energy Liability Underwriters or Nuclear Insurance Association
                  of Canada, or would be an insured under any such policy but
                  for its termination upon exhaustion of its limit of liability;
                  or

            (b)   resulting from the hazardous properties of nuclear material
                  and with respect to which (1) any person or organization is
                  required to maintain financial protection pursuant to the
                  Atomic Energy Act of 1954, or any law amendatory thereof, or
                  (2) the insured is, or had this policy not been issued would
                  be, entitled to indemnity from the United States of America,
                  or any agency thereof, under any agreement entered into by the
                  United States of America, or any agency thereof, with any
                  person or organization.

Page 1 of 2



      II.   Under any Medical Payments Coverage, or under any Supplementary
            Payments Provision relating to

                  (immediate medical or surgical relief
                  (first aid,

            to expenses incurred with respect to

                  (bodily injury, sickness, disease or death
                  (bodily injury

            resulting from the hazardous properties of nuclear material and
            arising out of the operation of a nuclear facility by any person or
            organization.

      III.  Under any Liability Coverage to

                  (injury, sickness, disease, death or destruction
                  (bodily injury or property damage

            resulting from the hazardous properties of nuclear material, if

            (a)   the nuclear material (1) is at any nuclear facility owned by,
                  or operated by or on behalf of, an insured or (2) has been
                  discharged or dispersed therefrom;

            (b)   the nuclear material is contained in spent fuel or waste at
                  any time possessed, handled, used, processed, stored,
                  transported or disposed of by or on behalf of an insured; or

            (c)   the

                        (injury, sickness, disease, death or destruction
                        (bodily injury or property damage

                  arises out of the furnishing by an insured of services,
                  materials, parts or equipment in connection with the planning,
                  construction, maintenance, operation or use of any nuclear
                  facility, but if such facility is located within the United
                  States of America, its territories, or possessions or Canada,
                  this exclusion (c) applies only to

                        (injury to or destruction of property at such nuclear
                        facility
                        (property damage to such nuclear facility and any
                        property thereat.

      IV.   As used in this endorsement:

            "hazardous properties" include radioactive, toxic or explosive
            properties; "nuclear material" means source material, special
            nuclear material or byproduct material; "source material", "special
            nuclear material", and "byproduct material" have the meanings given
            them in the Atomic Energy Act of 1954 or in any law amendatory
            thereof; "spent fuel" means any fuel element or fuel component,
            solid or liquid, which has been used or exposed to radiation in a
            nuclear reactor; "waste" means any waste material (1) containing
            byproduct material and (2) resulting from the operation by any
            person or organization of any nuclear facility included within the
            definition of nuclear facility under paragraph (a) or (b) thereof;
            "nuclear facility" means

            (a)   any nuclear reactor,

            (b)   any equipment or device designed or used for (1) separating
                  the isotopes of uranium or plutonium, (2) processing or
                  utilizing spent fuel, or (3) handling processing or packaging
                  waste,

            (c)   any equipment or device used for the processing, fabricating
                  or alloying of special nuclear material if at any time the
                  total amount of such material in the custody of the insured at
                  the premises where such equipment or device is located
                  consists of or contains more than 25 grams of plutonium or
                  uranium 233 or any combination thereof, or more than 250 grams
                  of uranium 235,

            (d)   any structure, basin, excavation, premises or place prepared
                  or used for the storage or disposal of waste, and includes the
                  site on which any of the foregoing is located, all operations
                  conducted on such site and all premises used for such
                  operations; "nuclear reactor" means any apparatus designed or
                  used to sustain nuclear fission in a self-supporting chain
                  reaction or to contain a critical mass of fissionable
                  material;

                  (With respect to injury to or destruction of property, the
                  word "injury" or "destruction,"
                  ("property damage" includes all forms of radioactive
                  contamination of property,
                  (includes all forms of radioactive contamination of property.

V.    The inception dates and thereafter of all original policies affording
      coverages specified in this paragraph (3), whether new, renewal or
      replacement, being policies which become effective on or after 1st May,
      1960, provided this paragraph (3) shall not be applicable to

                        (i)   Garage and Automobile Policies issued by the
                              Reassured on New York risks, or

                        (ii)  statutory liability insurance required under
                              Chapter 90, General Laws of Massachusetts, until
                              90 days following approval of the Broad Exclusion
                              Provision by the Governmental Authority having
                              jurisdiction thereof.

(4)   Without in any way restricting the operation of paragraph (1) of this
      Clause, it is understood and agreed that paragraphs (2) and (3) above are
      not applicable to original liability policies of the Reassured in Canada
      and that with respect to such policies this Clause shall be deemed to
      include the Nuclear Energy Liability Exclusion Provisions adopted by the
      Canadian Underwriters' Association or the Independent Insurance Conference
      of Canada.


- ------------------
*NOTE. The words printed in italics in the Limited Exclusion Provision and in
       the Broad Exclusion Provision shall apply only in relation to original
       liability policies which include a Limited Exclusion Provision or a Broad
       Exclusion Provision containing those words.

Page 2 of 2

                       INTERESTS AND LIABILITIES AGREEMENT

                                       of

                  Hannover Ruckversicherungs-Aktiengesellschaft
                                Hannover, Germany
            (hereinafter referred to as the "Subscribing Reinsurer")

                               with respect to the

                          FIRST CASUALTY EXCESS OF LOSS
                              REINSURANCE CONTRACT
                          (AS RESPECTS HANNOVER TERMS)
                           EFFECTIVE: JANUARY 1, 2005

                         issued to and duly executed by

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group



The Subscribing Reinsurer hereby accepts a 30.0% share in the interests and
liabilities of the "Reinsurer" as set forth in the attached Contract captioned
above.

This Agreement shall become effective at 12:01 a.m., Local Standard Time,
January 1, 2005, and shall continue in force until terminated in accordance with
the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and liabilities of the
other reinsurers.

In any action, suit or proceeding to enforce the Subscribing Reinsurer's
obligations under the attached Contract, service of process may be made upon
Mendes & Mount, 750 Seventh Avenue, New York, New York 10019.

IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date undermentioned at:

Hannover, Germany, this 22nd day of March in the year 2005.

                              /s/ M. Dill           /s/ S. Eberhardt
                             ------------------------------------------------
                             Hannover Ruckversicherungs-Aktiengesellschaft





                          FIRST CASUALTY EXCESS OF LOSS
                              REINSURANCE CONTRACT
                          (AS RESPECTS HANNOVER TERMS)
                           EFFECTIVE: JANUARY 1, 2005

                                    issued to

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group


          REINSURERS                               PARTICIPATIONS

Hannover Ruckversicherungs-Aktiengesellschaft          30.0%

TOTAL                                                  30.0% part of
                                                       100% share in
                                                       the interests and
                                                       liabilities of the
                                                       "Reinsurer"

EX-10.13

                                                                   Exhibit 10.13

                         SECOND CASUALTY EXCESS OF LOSS
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 2005

                                    issued to

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group



                                TABLE OF CONTENTS



ARTICLE                                                                        PAGE
                                                                         
     I   Classes of Business Reinsured                                           1
    II   Commencement and Termination                                            1
   III   Territory (BRMA 51A)                                                    3
    IV   Exclusions                                                              3
     V   Special Acceptances                                                     7
    VI   Retention and Limit                                                     7
   VII   Reinstatement                                                           8
  VIII   Definitions                                                             9
    IX   Annuities at Company's Option                                          11
     X   Claims                                                                 11
    XI   Sunset                                                                 12
   XII   Special Commutation                                                    12
  XIII   Salvage and Subrogation                                                14
   XIV   Federal Terrorism Coverage                                             14
    XV   Reinsurance Premium                                                    14
   XVI   Late Payments                                                          15
  XVII   Offset (BRMA 36A)                                                      16
 XVIII   Access to Records (BRMA 1D)                                            17
   XIX   Liability of the Reinsurer                                             17
    XX   Net Retained Lines (BRMA 32E)                                          17
   XXI   Errors and Omissions                                                   17
  XXII   Taxes (BRMA 50B)                                                       17
 XXIII   Reserves and Letters of Credit                                         18
  XXIV   Insolvency                                                             19
   XXV   Arbitration (BRMA 6J)                                                  20
  XXVI   Service of Suit (BRMA 49C)                                             21
 XXVII   Entire Agreement                                                       21
XXVIII   Governing Law (BRMA 71B)                                               21
  XXIX   Agency Agreement                                                       22
   XXX   Intermediary (BRMA 23A)                                                22




                         SECOND CASUALTY EXCESS OF LOSS
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 2005

                                    issued to

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group
             (hereinafter referred to collectively as the "Company")

                                       by

                   The Subscribing Reinsurer(s) Executing the
                     Interests and Liabilities Agreement(s)
                                 Attached Hereto
                  (hereinafter referred to as the "Reinsurer")

ARTICLE I - CLASSES OF BUSINESS REINSURED

By this Contract the Reinsurer agrees to reinsure the excess liability which may
accrue to the Company under its policies, contracts and binders of insurance or
reinsurance (hereinafter called "policies") in force at the effective date
hereof or issued or renewed on or after that date, and classified by the Company
as Workers' Compensation, Employers Liability, including coverage provided under
the U.S. Longshore and Harbor Workers' Compensation Act and the Jones Act, and
General Liability business, subject to the terms, conditions and limitations
hereinafter set forth.

ARTICLE II - COMMENCEMENT AND TERMINATION

A.    This Contract shall become effective at 12:01 a.m., Local Standard Time,
      January 1, 2005, with respect to losses arising out of occurrences
      commencing at or after that time and date, and shall continue in force
      thereafter until terminated.

B.    Either party may terminate this Contract on any December 31 by giving the
      other party not less than 90 days prior notice by certified or registered
      mail.

Page 1



C.    Notwithstanding the provisions of paragraph B above, the Company may
      terminate a Subscribing Reinsurer's percentage share in this Contract by
      giving 90 days prior written notice to the Subscribing Reinsurer in the
      event any of the following circumstances occur, or as clarified by public
      announcement as respects subparagraphs 1 through 7 below or upon discovery
      as respects subparagraph 8 below, effective retroactively to the start of
      the calendar quarter preceding such circumstances:

      1.    The Subscribing Reinsurer's policyholders' surplus at the beginning
            of any contract year has been reduced by more than 20.0% of the
            amount of surplus 12 months prior to that date; or

      2.    The Subscribing Reinsurer's policyholders' surplus at any time
            during any contract year has been reduced by more than 20.0% of the
            amount of surplus at the date of the Subscribing Reinsurer's most
            recent financial statement filed with regulatory authorities and
            available to the public as of the beginning of the contract year; or

      3.    The Subscribing Reinsurer's A.M. Best's rating has been assigned or
            downgraded below A- (inclusive of "Not Rated" ratings) and/or
            Standard & Poor's rating has been assigned or downgraded below BBB+
            (inclusive of "Not Rated" ratings); or

      4.    The Subscribing Reinsurer has become merged with, acquired by or
            controlled by any other company, corporation or individual(s) not
            controlling the Subscribing Reinsurer's operations previously; or

      5.    A State Insurance Department or other legal authority has ordered
            the Subscribing Reinsurer to cease writing business; or

      6.    The Subscribing Reinsurer has become insolvent or has been placed
            into liquidation or receivership (whether voluntary or involuntary)
            or proceedings have been instituted against the Subscribing
            Reinsurer for the appointment of a receiver, liquidator,
            rehabilitator, conservator or trustee in bankruptcy, or other agent
            known by whatever name, to take possession of its assets or control
            of its operations; or

      7.    The Subscribing Reinsurer has reinsured its entire liability under
            this Contract without the Company's prior written consent; or

      8.    The Subscribing Reinsurer has ceased assuming new and renewal treaty
            reinsurance business.

D.    Unless the Company elects that the Reinsurer have no liability for losses
      arising out of occurrences commencing after the effective date of
      termination, and so notifies the Reinsurer prior to or as promptly as
      possible after the effective date of termination, reinsurance hereunder on
      business in force on the effective date of termination shall remain in
      full force and effect until expiration, cancellation or next premium
      anniversary of such business, whichever first occurs, but in no event
      beyond 12 months plus odd time (not exceeding 18 months in all) following
      the effective date of termination.

Page 2



ARTICLE III - TERRITORY (BRMA 51A)

The territorial limits of this Contract shall be identical with those of the
Company's policies.

ARTICLE IV - EXCLUSIONS

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

      1.    Lines of business not identified in Article I.

      2.    All excess of loss reinsurance assumed by the Company.

      3.    Reinsurance assumed by the Company under obligatory reinsurance
            agreements, except:

            a.    Agency reinsurance where the policies involved are to be
                  reunderwritten in accordance with the underwriting standards
                  of the Company and reissued as Company policies at the next
                  anniversary or expiration date; and

            b.    Intercompany reinsurance between any of the reinsured
                  companies under this Contract.

      4.    Business written by the Company on a co-indemnity basis where the
            Company is not the controlling carrier.

      5.    Business written to apply in excess of a deductible of more than
            $25,000, and business issued to apply specifically in excess over
            underlying insurance. However, if the Company is required, by any
            state regulation, to provide a deductible of more than $25,000, this
            exclusion shall not apply.

      6.    Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
            Liability - Reinsurance (U.S.A.)" attached to and forming part of
            this Contract.

      7.    As regards interests which at time of loss or damage are on shore,
            no liability shall attach hereto in respect of any loss or damage
            which is occasioned by war, invasion, hostilities, acts of foreign
            enemies, civil war, rebellion, insurrection, military or usurped
            power, or martial law or confiscation by order of any government or
            public authority. This War Exclusion Clause shall not, however,
            apply to interests which at time of loss or damage are within the
            territorial limits of the United States of America (comprising the
            Fifty States of the Union, the District of Columbia, and including
            bridges between the United States of America and Mexico provided
            they are under United States ownership), Canada, St. Pierre and
            Miquelon, provided such interests are insured under policies
            containing a standard war or hostilities or warlike operations
            exclusion clause.

      8.    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.

Page 3



      9.    All liability of the Company arising by contract, operation of 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, however denominated,
            established or governed, which provides for any assessment of or
            payment or assumption by the Company of part or 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.

      10.   Workers' Compensation where the principal exposures, as defined by
            the governing class code, include:

            a.    Operation of aircraft but only if the annual estimated policy
                  premium is $250,000 or more;

            b.    Railroad, subway, or street railway operations;

            c.    Operation or navigation of vessels or barges;

            d.    Manufacture, production, or refining of gas, natural or
                  artificial fuel, or other liquefied petroleum fuel, but only
                  if the annual estimated policy premium is $250,000 or more;

            e.    Manufacturing, assembly, packing, or processing of fireworks,
                  fuses, nitroglycerine, magnesium, pyroxylin, ammunition, or
                  explosives. This exclusion does not apply to the assembly,
                  packing, or processing of explosives when the estimated annual
                  premium is under $250,000;

            f.    Wrecking or demolition of structures but only if the annual
                  estimated policy premium is $250,000 or more;

            g.    Underground mining.

      11.   As respects Workers' Compensation and Employers' Liability only,
            unless otherwise excluded as set forth above, the reinsurance
            provided under this Contract shall not apply to any loss, cost or
            expense arising out of or related to, either directly or indirectly,
            any "terrorist activity," as defined herein, but this exclusion
            shall only apply when the activity includes, involves, or is
            associated with the use of any biological, chemical, radioactive, or
            nuclear agent, material, device or weapon, or when the predominant
            business of the policyholder as defined by the governing class code
            is:

            a.    The operation of: airports and aircraft; flight schools;
                  bridges, dams, tunnels, or locks; department stores; shopping
                  malls; chain retail stores; casinos and casino hotels; cruise
                  lines; railroads; ports/public transit authorities; security
                  services; stadiums; convention/exhibition centers; or
                  theme/amusement parks.

            b.    The manufacture and distribution of: automobiles; chemicals,
                  petrochemicals, pharmaceuticals; utilities (electric, gas,
                  water, and sewer); major defense/aerospace products; or
                  high-tech equipment, but only if the policyholder

Page 4



                  employs more than 20 personnel at the location of a terrorist
                  activity at the time of its occurrence.

            c.    The management or operation of the following type of
                  structures, but only if greater than 25 stories in height:
                  apartments/condominiums/co-ops; hotels/motels; or office
                  buildings.

            d.    Businesses primarily engaged in the entertainment, media, or
                  transportation industry limited to the following: major media
                  providers (NBC, FOX, ABC, CBS, etc.); television and motion
                  picture studios; Broadway theaters; major internet companies
                  (AOL, Yahoo, etc.); professional sports teams; major
                  telecommunications companies (AT&T, Worldcom/MCI, etc.);
                  national truck rental companies (Ryder, Penske, UHaul, etc.);
                  or major national motor freight common carriers (J.B. Hunt,
                  Red Arrow, etc.).

            e.    Policyholders primarily located in, or predominantly doing
                  business as: hospitals; universities; nuclear facilities;
                  financial institutions; or governmental buildings and national
                  landmarks.

            "Terrorist activity" shall mean any deliberate, unlawful act that:

            a.    Is declared by any authorized government official to be or to
                  involve terrorism, terrorist activity or acts of terrorism; or

            b.    Includes, involves, or is associated with the use or
                  threatened use of force, violence or harm against any person,
                  tangible or intangible property, the environment, or any
                  natural resources, where the act or threatened act is
                  intended, in whole or in part, to:

                  i.    Promote or further any political, ideological,
                        philosophical, racial, ethnic, social or religious cause
                        or objective of the perpetrator or any organization,
                        association or group affiliated with the perpetrator; or

                  ii.   Influence, disrupt or interfere with any government
                        related operations, activities or policies; or

                  iii.  Intimidate, coerce or frighten the general public or any
                        segment of the general public; or

                  iv.   Disrupt or interfere with a national economy or any
                        segment of a national economy; or

            c.    Includes, involves, or is associated with, in whole or in
                  part, any of the following activities, or the threat thereof:

                  i.    Hijacking or sabotage of any form of transportation or
                        conveyance, including but not limited to spacecraft,
                        satellite, aircraft, train, vessel, or motor vehicle;

                  ii.   Hostage taking or kidnapping;

Page 5



                  iii.  The use of any bomb, incendiary device, explosive or
                        firearm;

                  iv.   The interference with or disruption of basic public or
                        commercial services and systems, including but not
                        limited to the following services or systems:
                        electricity, natural gas, power, postal, communications,
                        telecommunications, information, public transportation,
                        water, fuel, sewer or waste disposal;

                  v.    The injuring or assassination of any elected or
                        appointed government official or any government
                        employee;

                  vi.   The seizure, blockage, interference with, disruption of,
                        or damage to any government buildings, institutions,
                        functions, events, tangible or intangible property or
                        other assets; or

                  vii.  The seizure, blockage, interference with, disruption of,
                        or damage to tunnels, roads, streets, highways, or other
                        places of public transportation or conveyance.

            d.    Any of the activities listed in subparagraph c, above, shall
                  be considered terrorist activity except where the Company can
                  demonstrate to the Reinsurer that the foregoing activities or
                  threats thereof were motivated solely by personal objectives
                  of the perpetrator that are unrelated, in whole or in part, to
                  any intention to:

                  i.    Promote or further any political, ideological,
                        philosophical, racial, ethnic, social or religious cause
                        or objective of the perpetrator or any organization,
                        association or group affiliated with the perpetrator;

                  ii.   Influence, disrupt or interfere with any
                        government-related operations, activities or policies;

                  iii.  Intimidate, coerce or frighten the general public or any
                        segment of the general public; or

                  iv.   Disrupt or interfere with a national economy or any
                        segment of a national economy.

      12.   As respects General Liability policies, exposures, other than those
            identified below, as included in the General Liability section of
            the Company's Commercial Lines Manual:

            a.    Class 97111 - Logging;

            b.    Class 58873 - Sawmill;

            c.    Class 59984 - Woodyard and Drivers;

            d.    Class 95410 - Grading of Land;

            e.    Class 45819 - Lumber Yard;

Page 6



            f.    Class 10073 - Repair Shops and Drivers;

            g.    Class 43822 - Timber Cruiser;

            h.    Class 99793 - Truckman Not Otherwise Classified;

            i.    Class 91591 - Contractors - Subcontracted Work Other Than
                  Construction;

            j.    Class 49452 - Vacant Land.

B.    Any exclusion set forth in subparagraphs 10 and/or 12 of paragraph A shall
      be waived automatically when, in the opinion of the Company, the exposure
      excluded therein is incidental to the principal exposure on the risk in
      question.

C.    If the Company is bound, without the knowledge and contrary to the
      instructions of the Company's supervisory underwriting personnel, on any
      business falling within the scope of one or more of the exclusions set
      forth in subparagraphs 10 and/or 12 of paragraph A, the exclusion shall be
      suspended with respect to such business until the Company has the first
      opportunity to cancel the policy in compliance with governmental
      requirements.

D.    If the Company is required to accept an assigned risk which conflicts with
      one or more of the exclusions set forth in subparagraph 10 of paragraph A,
      reinsurance shall apply, but only for the difference between the Company's
      retention and the minimum limit required by the applicable state statute,
      and in no event shall the Reinsurer's liability exceed the limit set forth
      in Article VI.

ARTICLE V - SPECIAL ACCEPTANCES

From time to time the Company may request a special acceptance of reinsurance
falling outside the scope of the provisions set forth herein. As respects each
layer of this Contract separately, if each Subscribing Reinsurer whose share in
the interests and liabilities of the Reinsurer is 25.0% or greater agrees to a
special acceptance, such special acceptance shall be binding on all Subscribing
Reinsurers with respect to their respective shares of each such layer. In the
event agreement is not achieved, such special acceptance shall be made to a
layer or layers of this Contract only with respect to the interests and
liabilities of each Subscribing Reinsurer on such layer or layers who agrees to
such special acceptance. In the event a reinsurer becomes a party to this
Contract subsequent to one or more special acceptances hereunder, the new
reinsurer shall automatically accept such special acceptance(s) as being covered
hereunder.

ARTICLE VI - RETENTION AND LIMIT

A.    The Company shall retain and be liable for the first $5,000,000 of
      ultimate net loss, arising out of each occurrence. The Reinsurer shall
      then be liable for the amount by which such ultimate net loss exceeds the
      Company's retention, but the liability of the Reinsurer shall not exceed
      $5,000,000, as respects any one occurrence.

Page 7



B.    The Company shall be permitted to carry excess of loss and quota share
      reinsurance, recoveries under which shall inure solely to the benefit of
      the Company and be entirely disregarded in applying all of the provisions
      of this Contract.

C.    The Company shall be permitted to carry excess of loss reinsurance
      applying to Workers' Compensation risks in the State of Minnesota,
      recoveries under which shall inure to the benefit of this Contract.

      Such coverage shall be provided through the Minnesota Workers'
      Compensation Reinsurance Association. It is understood that the liability
      of the Reinsurer for Minnesota Workers' Compensation risks is not
      released.

      In the event the Company accrues liability that is not provided by any
      inuring reinsurance, for whatever reason, the Reinsurer agrees to reinsure
      such excess liability.

D.    In the event this Contract is terminated on a "runoff" basis, additional
      reinstatement coverage shall be negotiated on or prior to the effective
      date of termination.

ARTICLE VII - REINSTATEMENT

A.    In the event all or any portion of the reinsurance hereunder is exhausted
      by loss, the amount so exhausted shall be reinstated immediately from the
      time the occurrence commences hereon. For each amount so reinstated the
      Company agrees to pay additional premium equal to the product of the
      following:

      1.    The percentage of the occurrence limit reinstated (based on the loss
            paid by the Reinsurer); times

      2.    The earned reinsurance premium for the contract year (exclusive of
            reinstatement premium).

B.    Whenever the Company requests payment by the Reinsurer of any loss
      hereunder, the Company shall submit a statement to the Reinsurer of
      reinstatement premium due the Reinsurer. If the earned reinsurance premium
      for the contract year has not been finally determined as of the date of
      any such statement, the calculation of reinstatement premium due shall be
      based on the annual deposit premium and shall be readjusted when the
      earned reinsurance premium for the contract year has been finally
      determined. Any reinstatement premium shown to be due the Reinsurer as
      reflected by any such statement (less prior payments, if any) shall be
      payable by the Company concurrently with payment by the Reinsurer of the
      requested loss. Any return reinstatement premium shown to be due the
      Company shall be remitted by the Reinsurer as promptly as possible after
      receipt and verification of the Company's statement.

C.    Notwithstanding anything stated herein, the liability of the Reinsurer
      hereunder shall not exceed $5,000,000 as respects loss or losses arising
      out of any one occurrence, nor shall it exceed $10,000,000 in all during
      the contract year.

Page 8



ARTICLE VIII - DEFINITIONS

A.    "Ultimate net loss" as used herein is defined as the sum or sums
      (including loss in excess of policy limits, extra contractual obligations
      and any loss adjustment expense, as hereinafter defined) paid or payable
      by the Company in settlement of claims and in satisfaction of judgments
      rendered on account of such claims, after deduction of all salvage, all
      recoveries and all claims on inuring insurance or reinsurance, whether
      collectible or not. Nothing herein shall be construed to mean that losses
      under this Contract are not recoverable until the Company's ultimate net
      loss has been ascertained.

B.    "Loss in excess of policy limits" and "extra contractual obligations" as
      used herein shall be defined as follows:

      1.    "Loss in excess of policy limits" shall mean 90.0% of any amount
            paid or payable by the Company in excess of its policy limits, but
            otherwise within the terms of its policy, such loss in excess of the
            Company's policy limits having been incurred because of, but not
            limited to, failure by the Company to settle within the policy
            limits or by reason of the Company's alleged or actual negligence,
            fraud or bad faith in rejecting an offer of settlement or in the
            preparation of the defense or in the trial of an action against its
            insured or reinsured or in the preparation or prosecution of an
            appeal consequent upon such an action.

      2.    "Extra contractual obligations" shall mean 90.0% of any punitive,
            exemplary, compensatory or consequential damages paid or payable by
            the Company, not covered by any other provision of this Contract and
            which arise from the handling of any claim on business subject to
            this Contract, such liabilities arising because of, but not limited
            to, failure by the Company to settle within the policy limits or by
            reason of the Company's alleged or actual negligence, fraud or bad
            faith in rejecting an offer of settlement or in the preparation of
            the defense or in the trial of any action against its insured or
            reinsured or in the preparation or prosecution of an appeal
            consequent upon such an action. An extra contractual obligation
            shall be deemed, in all circumstances, to have occurred on the same
            date as the loss covered or alleged to be covered under the policy.

      If any provision of this Article shall be rendered illegal or
      unenforceable by the laws, regulations or public policy of any state, such
      provision shall be considered void in such state, but this shall not
      affect the validity or enforceability of any other provision of this
      Contract or the enforceability of such provision in any other
      jurisdiction.

      Notwithstanding anything stated herein, this Contract shall not apply to
      any loss in excess of policy limits or any extra contractual obligation
      incurred by the Company as a result of any fraudulent and/or criminal act
      by any officer or director of the Company acting individually or
      collectively or in collusion with any individual or corporation or any
      other organization or party involved in the presentation, defense or
      settlement of any claim covered hereunder.

C.    "Occurrence" as used herein is defined as an accident or occurrence or a
      series of accidents or occurrences arising out of or caused by one event,
      except that:

Page 9



      1.    As respects General Liability policies where the Company's limit of
            liability for Products and Completed Operations coverages is
            determined on the basis of the insured's aggregate losses during a
            policy period, all such losses proceeding from or traceable to the
            same causative agency shall, at the Company's option, be deemed to
            have been caused by one occurrence commencing at the beginning of
            the policy period, it being understood and agreed that each renewal
            or annual anniversary date of the policy involved shall be deemed
            the beginning of a new policy period;

      2.    Each occupational disease case or cumulative trauma case contracted
            by an employee of an insured shall be deemed to have been caused by
            a separate occurrence commencing on:

            a.    The date of disability for which compensation is payable if
                  the case is compensable under the Workers' Compensation Law;

            b.    The date disability due to the disease actually began if the
                  case is not compensable under the Workers' Compensation Law;

            c.    The date of cessation of employment if claim is made after
                  employment has ceased.

      3.    Notwithstanding the provisions of subparagraph 2 above, as respects
            losses resulting from occupational disease or cumulative trauma
            suffered by employees of an insured for which the employer is
            liable, as a result of a sudden and accidental event not exceeding
            72 hours in duration, all such losses shall be considered one
            occurrence and may be combined with losses classified as other than
            occupational disease or cumulative trauma which arise out of the
            same event and the combination of such losses shall be considered as
            one occurrence within the meaning hereof.

D.    "Occupational disease" or industrial disease is any abnormal condition
      that fulfills all of the following conditions:

      1.    It is not traceable to a definite compensable accident occurring
            during the employee's past or present employment.

      2.    It has been caused by exposure to a disease producing agent or
            agents present in the workers' occupational environment.

      3.    It has resulted in disability or death.

E.    "Cumulative trauma" is an injury that fulfills all of the following
      conditions:

      1.    It is not traceable to a definite compensable accident occurring
            during the employee's past or present employment.

      2.    It has occurred from and has been aggravated by a repetitive
            employment related activity.

      3.    It has resulted in disability or death.

Page 10



F.    "Loss adjustment expense" as used herein shall mean expenses allocable to
      the investigation, defense and/or settlement of specific claims, including
      litigation expenses, interest on judgments, declaratory judgment expenses
      or other legal expenses and costs incurred in connection with coverage
      questions and legal actions connected thereto, and salaries and expenses
      of salaried adjusters associated with claims covered under policies of the
      Company reinsured hereunder but not including office expenses or salaries
      of the Company's regular employees.

G.    "Contract year" as used in this Contract shall mean the period from
      January 1, 2005 to December 31, 2005, both days inclusive, and each
      respective 12-month period thereafter that this Contract continues in
      force. However, if this Contract is terminated on a "cutoff" basis, the
      final contract year shall be from the beginning of the then current
      contract year through the effective date of termination. If this Contract
      is terminated on a "runoff" basis, the period from the effective date of
      termination through the end of the "runoff" period shall be a separate
      contract year and referred to as the "runoff contract year."

ARTICLE IX - ANNUITIES AT COMPANY'S OPTION

A.    Whenever the Company is required, or elects, to purchase an annuity or to
      negotiate a structured settlement, either in satisfaction of a judgment or
      in an out-of-court settlement or otherwise, the cost of the annuity or the
      structured settlement, as the case may be, shall be deemed part of the
      Company's ultimate net loss.

B.    The terms "annuity" or "structured settlement" shall be understood to mean
      any insurance policy, lump sum payment, agreement or device of whatever
      nature resulting in the payment of a lump sum by the Company in settlement
      of any or all future liabilities which may attach to it as a result of an
      occurrence.

C.    In the event the Company purchases an annuity which inures in whole or in
      part to the benefit of the Reinsurer, it is understood that the liability
      of the Reinsurer is not released thereby. In the event the Company is
      required to provide benefits not provided by the annuity for whatever
      reason, the Reinsurer shall pay its proportional share of any loss.

ARTICLE X - CLAIMS

A.    Whenever a claim is reserved by the Company for an amount greater than
      50.0% of its retention hereunder and/or whenever a claim appears likely to
      result in a claim under this Contract, the Company shall notify the
      Reinsurer. Further, the Company shall notify the Reinsurer whenever a
      claim involves a fatality, major limb amputation, spinal cord damage,
      brain damage, blindness or extensive burns, regardless of liability, if
      the policy limits or statutory benefits applicable to the claim are
      greater than the Company's retention hereunder. The Reinsurer shall have
      the right to participate, at its own expense, in the defense of any claim
      or suit or proceeding involving this reinsurance.

B.    All claim settlements made by the Company, provided they are within the
      terms of this Contract (including but not limited to ex-gratia payments),
      shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all
      amounts for which it may be liable upon receipt of satisfactory evidence
      of the amount paid by the Company.

Page 11



ARTICLE XI - SUNSET

Ten years after the effective date of termination of this Contract (or after the
end of the runoff period, if applicable), the Company shall advise the Reinsurer
of any outstanding claims and/or occurrences (each hereinafter referred to as a
"claim") arising during any contract year, which have not been finally settled
and which may cause a recovery under this Contract. Unless mutually agreed, no
liability shall attach hereunder for any claim not reported to the Reinsurer
within 90 days following the 10-year period.

ARTICLE XII - SPECIAL COMMUTATION

A.    In the event a Subscribing Reinsurer meets the following conditions, the
      Company may require a commutation of that portion of any excess loss
      hereunder represented by any outstanding claim or claims, including any
      related loss adjustment expense.

      1.    The Subscribing Reinsurer's A.M. Best's rating has been assigned or
            downgraded below A- (inclusive of "Not Rated" ratings) and/or
            Standard & Poor's rating has been assigned or downgraded below BBB+
            (inclusive of "Not Rated" ratings); or

      2.    The Subscribing Reinsurer has ceased assuming new and renewal
            property and casualty treaty reinsurance business.

      "Outstanding claim or claims" shall be defined as known or unknown claims,
      including any billed yet unpaid claims. However, unless otherwise mutually
      agreed, this paragraph shall not apply unless the outstanding claim or
      claims is for an amount not less than $5,000.

B.    If the Company elects to require commutation as provided in paragraph A
      above, the Company shall submit a Statement of Valuation of the
      outstanding claim or claims as of the last day of the month immediately
      preceding the month in which the Company elects to require commutation, as
      determined by the Company. Such Statement of Valuation shall include the
      elements considered reasonable to establish the excess loss and shall set
      forth or attach the information relied upon by the Company and the
      methodology employed to calculate the excess loss. The Subscribing
      Reinsurer shall then pay the amount requested within 30 calendar days of
      receipt of such Statement of Valuation, unless the Subscribing Reinsurer
      needs additional information from the Company to assess the Company's
      Statement of Valuation or contests such amount.

C.    If the Subscribing Reinsurer needs additional information from the Company
      to assess the Company's Statement of Valuation or contests the amount
      requested, the Subscribing Reinsurer shall so notify the Company within 15
      calendar days of receipt of the Company's Statement of Valuation. The
      Company shall supply any reasonably requested information to the
      Subscribing Reinsurer within 15 calendar days of receipt of the
      notification. Within 30 calendar days of the date of the notification or
      of the receipt of the information, whichever is later, the Subscribing
      Reinsurer shall provide the Company with its Statement of Valuation of the
      outstanding claim or claims as of the last day of the month immediately
      preceding the month in which the Company elects to require commutation, as
      determined by the Subscribing Reinsurer. Such Statement of Valuation shall
      include the elements

Page 12



      considered reasonable to establish the excess loss and shall set forth or
      attach the information relied upon by the Subscribing Reinsurer and the
      methodology employed to calculate the excess loss.

D.    In the event the Subscribing Reinsurer's Statement of Valuation of the
      outstanding claim or claims is viewed as unacceptable to the Company, the
      Company may either abandon the commutation effort, or may seek to settle
      any difference by using an independent actuary agreed to by the parties.

E.    If the parties cannot agree on an acceptable independent actuary within 15
      calendar days of the date of the Subscribing Reinsurer's Statement of
      Valuation, then each party shall appoint an actuary as party arbitrators
      for the limited and sole purpose of selecting an independent actuary. If
      the actuaries cannot agree on an acceptable independent actuary within 15
      calendar days of the date of the Subscribing Reinsurer's Statement of
      Valuation, the Company shall supply the Subscribing Reinsurer with a list
      of at least three proposed independent actuaries, and the Subscribing
      Reinsurer shall select the independent actuary from that list.

F.    Upon selection of the independent actuary, both parties shall present
      their respective written submissions to the independent actuary. The
      independent actuary may, at his or her discretion, request additional
      information. The independent actuary shall issue his or her decision
      within 45 calendar days after the written submissions have been filed and
      any additional information has been provided.

G.    The decision of the independent actuary shall be final and binding. The
      expense of the independent actuary shall be equally divided between the
      two parties. For the purposes of this Article, unless mutually agreed
      otherwise, an "independent actuary" shall be an actuary who satisfies each
      of the following criteria:

      1.    Is regularly engaged in the valuation of claims resulting from lines
            of business subject to this Contract; and

      2.    Is either a Fellow of the Casualty Actuarial Society or of the
            American Academy of Actuaries; and

      3.    Is disinterested and impartial regarding this commutation.

H.    Notwithstanding paragraph A, B and C above, in the event that the
      Subscribing Reinsurer no longer meets the conditions set forth in
      subparagraph 1 or 2 in paragraph A above, this commutation may continue on
      a mutually agreed basis.

I.    Payment by the Subscribing Reinsurer of the amount requested in accordance
      with paragraph B, C or F above, shall release the Subscribing Reinsurer
      from all further liability for outstanding claim or claims, known or
      unknown, under this Contract, which shall release the Company from all
      further liability for payments of salvage or subrogation amounts, known or
      unknown, to the Subscribing Reinsurer under this Contract.

J.    In the event of any conflict between this Article and any other Article of
      this Contract, the terms of this Article shall control.

Page 13



K.    This Article shall survive the termination of this Contract.

ARTICLE XIII - SALVAGE AND SUBROGATION

The Reinsurer shall be credited with salvage (i.e., reimbursement obtained or
recovery made by the Company, less the actual cost, excluding salaries of
officials and employees of the Company and sums paid to attorneys as retainer,
of obtaining such reimbursement or making such recovery) or subrogation on
account of claims and settlements involving reinsurance hereunder. Salvage or
subrogation thereon shall always be used to reimburse the excess carriers in the
reverse order of their priority according to their participation before being
used in any way to reimburse the Company for its primary loss. The Company
hereby agrees to enforce its rights to salvage or subrogation where it is
economically reasonable in the judgment of the Company, relating to any loss, a
part of which loss was sustained by the Reinsurer, and to prosecute all claims
arising out of such rights.

ARTICLE XIV - FEDERAL TERRORISM COVERAGE

A.    Except as provided in paragraphs B and C below, any loss reimbursement the
      Company receives from the United States Government under the Terrorism
      Risk Insurance Act of 2002 (the "Terrorism Act") as a result of loss
      occurrences commencing during the term of this Contract shall inure solely
      to the benefit of the Company and shall be entirely disregarded in
      applying all of the provisions of this Contract.

B.    If one or more loss occurrences commencing during the term of this
      Contract result(s) in recoveries made by the Company for insured losses
      (as defined in the Terrorism Act) under this Contract and under the
      Terrorism Act, and such recoveries, together with any other reinsurance
      recoveries made by the Company for insured losses applicable to said loss
      occurrence(s), exceed the total amount of insured losses, a percentage of
      any amount in excess thereof shall reduce the ultimate net loss subject to
      this Contract for the loss occurrence(s) to which the recoveries apply.
      The Company shall determine how such percentage is calculated.

C.    For purposes hereof, if a loss reimbursement received by the Company under
      the Terrorism Act is based on the Company's insured losses in more than
      one loss occurrence and the United States Government does not designate
      the amount allocable to each loss occurrence, the reimbursement shall be
      determined by the Company and in accordance with paragraph B above.

ARTICLE XV - REINSURANCE PREMIUM

A.    As premium for the reinsurance provided hereunder during each contract
      year (except the runoff contract year, if any), the Company shall pay the
      Reinsurer 0.648% of its net earned premium for the contract year, subject
      to an annual minimum premium of $1,400,000 (or a pro rata portion thereof
      if this Contract is terminated in accordance with paragraph C of Article
      II).

Page 14



B.    The Company shall pay the Reinsurer an annual deposit premium of
      $1,750,000 in four equal installments of $437,500 on January 1, April 1,
      July 1 and October 1 of each contract year (except the runoff contract
      year, if any). However, in the event this Contract is terminated in
      accordance with paragraph C of Article II, no deposit premium shall be due
      after the effective date of termination.

C.    Within 60 days after the end of each contract year (or within 60 days
      after the effective date of termination if this Contract is terminated on
      a "runoff" basis), the Company shall provide a report to the Reinsurer
      setting forth the premium due hereunder for the contract year, computed in
      accordance with paragraph A, and any additional premium due the Reinsurer
      or return premium due the Company shall be remitted promptly.

D.    In the event this Contract is terminated on a "runoff" basis, the deposit
      premium shall be calculated by multiplying the unearned portion of premium
      in force at the effective date of termination by 0.648%, and paid
      semi-annually.

E.    "Net earned premium" as used herein is defined as the Company's gross
      earned premium collected on the classes of business subject to this
      Contract, less only the earned portion of premiums, if any, ceded by the
      Company for reinsurance which inures to the benefit of this Contract and
      less dividends incurred.

ARTICLE XVI - LATE PAYMENTS

A.    The provisions of this Article shall not be implemented unless
      specifically invoked, in writing, by one of the parties to this Contract.

B.    In the event any premium, loss or other payment due either party is not
      received by the intermediary named in Article XXX (hereinafter referred to
      as the "Intermediary") by the payment due date, the party to whom payment
      is due, may, by notifying the Intermediary in writing, require the debtor
      party to pay, and the debtor party agrees to pay, an interest penalty on
      the amount past due calculated for each such payment on the last business
      day of each month as follows:

      1.    The number of full days which have expired since the due date or the
            last monthly calculation, whichever the lesser; times

      2.    1/365ths of the sum of 400 basis points plus the six-month United
            States Treasury Bill rate as quoted in The Wall Street Journal on
            the first business day of the month for which the calculation is
            made; times

      3.    The amount past due, including accrued interest.

      It is agreed that interest shall accumulate until payment of the original
      amount due plus interest penalties have been received by the Intermediary.

C.    The establishment of the due date shall, for purposes of this Article, be
      determined as follows:

Page 15



      1.    As respects the payment of routine deposits and premiums due the
            Reinsurer, the due date shall be as provided for in the applicable
            section of this Contract. In the event a due date is not
            specifically stated for a given payment, it shall be deemed due 30
            days after the date of transmittal by the Intermediary of the
            initial billing for each such payment.

      2.    Any claim or loss payment due the Company hereunder shall be deemed
            due 45 business days after the proof of loss or demand for payment
            is transmitted to the Reinsurer. If such loss or claim payment is
            not received within the 45 days, interest will accrue on the payment
            or amount overdue in accordance with paragraph B above, from the
            date the proof of loss or demand for payment was transmitted to the
            Reinsurer.

      3.    As respects any payment, adjustment or return due either party not
            otherwise provided for in subparagraphs 1 and 2 of paragraph C
            above, the due date shall be as provided for in the applicable
            section of this Contract. In the event a due date is not
            specifically stated for a given payment, it shall be deemed due 10
            business days following transmittal of written notification that the
            provisions of this Article have been invoked.

      For purposes of interest calculations only, amounts due hereunder shall be
      deemed paid upon receipt by the Intermediary.

D.    Nothing herein shall be construed as limiting or prohibiting a Subscribing
      Reinsurer from contesting the validity of any claim, or from participating
      in the defense of any claim or suit, or prohibiting either party from
      contesting the validity of any payment or from initiating any arbitration
      or other proceeding in accordance with the provisions of this Contract. If
      the debtor party prevails in an arbitration or other proceeding, then any
      interest penalties due hereunder on the amount in dispute shall be null
      and void. If the debtor party loses in such proceeding, then the interest
      penalty on the amount determined to be due hereunder shall be calculated
      in accordance with the provisions set forth above unless otherwise
      determined by such proceedings. If a debtor party advances payment of any
      amount it is contesting, and proves to be correct in its contestation,
      either in whole or in part, the other party shall reimburse the debtor
      party for any such excess payment made plus interest on the excess amount
      calculated in accordance with this Article.

E.    Interest penalties arising out of the application of this Article that are
      $100 or less from any party shall be waived unless there is a pattern of
      late payments consisting of three or more items over the course of any
      12-month period.

ARTICLE XVII - OFFSET (BRMA 36A)

The Company and the Reinsurer may offset any balance or amount due from one
party to the other under this Contract or any other contract heretofore or
hereafter entered into between the Company and the Reinsurer, whether acting as
assuming reinsurer or ceding company. This provision shall not be affected by
the insolvency of either party to this Contract.

Page 16



ARTICLE XVIII - ACCESS TO RECORDS (BRMA 1D)

The Reinsurer or its designated representatives shall have access at any
reasonable time to all records of the Company which pertain in any way to this
reinsurance.

ARTICLE XIX - LIABILITY OF THE REINSURER

A.    The liability of the Reinsurer shall follow that of the Company in every
      case and be subject in all respects to all the general and specific
      stipulations, clauses, waivers and modifications of the Company's policies
      and any endorsements thereon.

B.    Nothing herein shall in any manner create any obligations or establish any
      rights against the Reinsurer in favor of any third party or any persons
      not parties to this Contract.

ARTICLE XX - NET RETAINED LINES (BRMA 32E)

A.    This Contract applies only to that portion of any policy which the Company
      retains net for its own account (prior to deduction of any underlying
      reinsurance specifically permitted in this Contract), and in calculating
      the amount of any loss hereunder and also in computing the amount or
      amounts in excess of which this Contract attaches, only loss or losses in
      respect of that portion of any policy which the Company retains net for
      its own account shall be included.

B.    The amount of the Reinsurer's liability hereunder in respect of any loss
      or losses shall not be increased by reason of the inability of the Company
      to collect from any other reinsurer(s), whether specific or general, any
      amounts which may have become due from such reinsurer(s), whether such
      inability arises from the insolvency of such other reinsurer(s) or
      otherwise.

ARTICLE XXI - ERRORS AND OMISSIONS

Except as provided in Article XI, inadvertent delays, errors or omissions made
in connection with this Contract or any transaction hereunder shall not relieve
either party from any liability which would have attached had such delay, error
or omission not occurred, provided always that such error or omission is
rectified as soon as possible after discovery.

ARTICLE XXII - TAXES (BRMA 50B)

In consideration of the terms under which this Contract is issued, the Company
will not claim a deduction in respect of the premium hereon when making tax
returns, other than income or profits tax returns, to any state or territory of
the United States of America or the District of Columbia.

Page 17



ARTICLE XXIII - RESERVES AND LETTERS OF CREDIT

(Applies only to a reinsurer which does not qualify for full credit with any
insurance regulatory authority having jurisdiction over the Company's reserves,
which is or becomes rated "B++" or lower by A.M. Best (inclusive of "Not Rated"
ratings) and/or Standard & Poor's rating is or becomes "BBB+" or lower
(inclusive of "Not Rated" ratings).)

A.    As regards policies or bonds issued by the Company coming within the scope
      of this Contract, the Company agrees that when it shall file with the
      insurance regulatory authority or set up on its books reserves for losses
      covered hereunder which it shall be required by law to set up, it will
      forward to the Reinsurer a statement showing the proportion of such
      reserves which is applicable to the Reinsurer. The Reinsurer hereby agrees
      to fund such reserves in respect of known outstanding losses that have
      been reported to the Reinsurer and allocated loss adjustment expense
      relating thereto, losses and allocated loss adjustment expense paid by the
      Company but not recovered from the Reinsurer, plus reserves for losses
      incurred but not reported, as shown in the statement prepared by the
      Company (hereinafter referred to as "Reinsurer's Obligations") by funds
      withheld, cash advances or a Letter of Credit. The Reinsurer shall have
      the option of determining the method of funding provided it is acceptable
      to the insurance regulatory authorities having jurisdiction over the
      Company's reserves with regards to unauthorized reinsurers; or, should the
      Reinsurer be downgraded, the method of funding shall be mutually agreed.

B.    When funding by a Letter of Credit, the Reinsurer agrees to apply for and
      secure timely delivery to the Company of a clean, irrevocable and
      unconditional Letter of Credit issued by a bank meeting the NAIC
      Securities Valuation Office credit standards for issuers of Letters of
      Credit and containing provisions acceptable to the insurance regulatory
      authorities having jurisdiction over the Company's reserves in an amount
      equal to the Reinsurer's proportion of said reserves. Such Letter of
      Credit shall be issued for a period of not less than one year, and shall
      contain an "evergreen" clause, which automatically extends the term for
      one year from its date of expiration or any future expiration date unless
      thirty (30) days (sixty (60) days where required by insurance regulatory
      authorities) prior to any expiration date the issuing bank shall notify
      the Company by certified or registered mail that the issuing bank elects
      not to consider the Letter of Credit extended for any additional period.

C.    The Reinsurer and Company agree that the Letters of Credit provided by the
      Reinsurer pursuant to the provisions of this Contract may be drawn upon at
      any time, notwithstanding any other provision of this Contract, and be
      utilized by the Company or any successor, by operation of law, of the
      Company including, without limitation, any liquidator, rehabilitator,
      receiver or conservator of the Company for the following purposes, unless
      otherwise provided for in a separate Trust Agreement:

      1.    To reimburse the Company for the Reinsurer's Obligations, the
            payment of which is due under the terms of this Contract and which
            has not been otherwise paid;

      2.    To make refund of any sum which is in excess of the actual amount
            required to pay the Reinsurer's Obligations under this Contract, if
            so requested by the Reinsurer;

      3.    To fund an account with the Company for the Reinsurer's Obligations.
            Such cash deposit shall be held in an interest bearing account
            separate from the Company's

Page 18



            other assets, and interest thereon not in excess of the prime rate
            shall accrue to the benefit of the Reinsurer;

      4.    To pay the Reinsurer's share of any other amounts the Company claims
            are due under this Contract.

D.    In the event the amount drawn by the Company on any Letter of Credit is in
      excess of the actual amount required for subparagraphs 1 or 3, or in the
      case of subparagraph 4, the actual amount determined to be due, the
      Company shall promptly return to the Reinsurer the excess amount so drawn.
      All of the foregoing shall be applied without diminution because of
      insolvency on the part of the Company or the Reinsurer.

E.    The issuing bank shall have no responsibility whatsoever in connection
      with the propriety of withdrawals made by the Company or the disposition
      of funds withdrawn, except to ensure that withdrawals are made only upon
      the order of properly authorized representatives of the Company.

F.    At annual intervals, or more frequently as agreed but never more
      frequently than quarterly, the Company shall prepare a specific statement
      of the Reinsurer's Obligations, for the sole purpose of amending the
      Letter of Credit, in the following manner:

      1.    If the statement shows that the Reinsurer's Obligations exceed the
            balance of credit as of the statement date, the Reinsurer shall,
            within thirty (30) days after receipt of notice of such excess,
            secure delivery to the Company of an amendment to the Letter of
            Credit increasing the amount of credit by the amount of such
            difference.

      2.    If, however, the statement shows that the Reinsurer's Obligations
            are less than the balance of credit as of the statement date, the
            Company shall, within thirty (30) days after receipt of written
            request from the Reinsurer, release such excess credit by agreeing
            to secure an amendment to the Letter of Credit reducing the amount
            of credit available by the amount of such excess credit.

ARTICLE XXIV - INSOLVENCY

A.    In the event of the insolvency of one or more of the reinsured companies,
      this reinsurance shall be payable directly to the company or to its
      liquidator, receiver, conservator or statutory successor on the basis of
      the liability of the company without diminution because of the insolvency
      of the company or because the liquidator, receiver, conservator or
      statutory successor of the company has failed to pay all or a portion of
      any claim. It is agreed, however, that the liquidator, receiver,
      conservator or statutory successor of the company shall give written
      notice to the Reinsurer of the pendency of a claim against the company
      indicating the policy or bond reinsured which claim would involve a
      possible liability on the part of the Reinsurer within a reasonable time
      after such claim is filed in the conservation or liquidation proceeding or
      in the receivership, and that during the pendency of such claim, the
      Reinsurer may investigate such claim and interpose, at its own expense, in
      the proceeding where such claim is to be adjudicated, any defense or
      defenses that it may deem available to the company or its liquidator,
      receiver, conservator or statutory successor. The expense thus incurred by
      the Reinsurer shall be chargeable, subject to the approval of the Court,
      against the company as part of the expense of conservation or

Page 19



      liquidation to the extent of a pro rata share of the benefit which may
      accrue to the company solely as a result of the defense undertaken by the
      Reinsurer.

B.    Where two or more reinsurers are involved in the same claim and a majority
      in interest elect to interpose defense to such claim, the expense shall be
      apportioned in accordance with the terms of this Contract as though such
      expense had been incurred by the company.

C.    It is further understood and agreed that, in the event of the insolvency
      of one or more of the reinsured companies, the reinsurance under this
      Contract shall be payable directly by the Reinsurer to the company or to
      its liquidator, receiver or statutory successor, except as provided by
      Section 4118(a) of the New York Insurance Law or except (1) where this
      Contract specifically provides another payee of such reinsurance in the
      event of the insolvency of the company or (2) where the Reinsurer with the
      consent of the direct insured or insureds has assumed such policy
      obligations of the company as direct obligations of the Reinsurer to the
      payees under such policies and in substitution for the obligations of the
      company to such payees.

ARTICLE XXV - ARBITRATION (BRMA 6J)

A.    As a condition precedent to any right of action hereunder, in the event of
      any dispute or difference of opinion hereafter arising with respect to
      this Contract, it is hereby mutually agreed that such dispute or
      difference of opinion shall be submitted to arbitration. One Arbiter shall
      be chosen by the Company, the other by the Reinsurer, and an Umpire shall
      be chosen by the two Arbiters before they enter upon arbitration, all of
      whom shall be active or retired disinterested executive officers of
      insurance or reinsurance companies or Lloyd's London Underwriters. In the
      event that either party should fail to choose an Arbiter within 30 days
      following a written request by the other party to do so, the requesting
      party may choose two Arbiters who shall in turn choose an Umpire before
      entering upon arbitration. If the two Arbiters fail to agree upon the
      selection of an Umpire within 30 days following their appointment, each
      Arbiter shall nominate three candidates within 10 days thereafter, two of
      whom the other shall decline, and the decision shall be made by drawing
      lots.

B.    Each party shall present its case to the Arbiters within 30 days following
      the date of appointment of the Umpire. The Arbiters shall consider this
      Contract as an honorable engagement rather than merely as a legal
      obligation and they are relieved of all judicial formalities and may
      abstain from following the strict rules of law. The decision of the
      Arbiters shall be final and binding on both parties; but failing to agree,
      they shall call in the Umpire and the decision of the majority shall be
      final and binding upon both parties. Judgment upon the final decision of
      the Arbiters may be entered in any court of competent jurisdiction.

C.    If more than one reinsurer is involved in the same dispute, all such
      reinsurers shall constitute and act as one party for purposes of this
      Article and communications shall be made by the Company to each of the
      reinsurers constituting one party, provided, however, that nothing herein
      shall impair the rights of such reinsurers to assert several, rather than
      joint, defenses or claims, nor be construed as changing the liability of
      the reinsurers participating under the terms of this Contract from several
      to joint.

Page 20



D.    Each party shall bear the expense of its own Arbiter, and shall jointly
      and equally bear with the other the expense of the Umpire and of the
      arbitration. In the event that the two Arbiters are chosen by one party,
      as above provided, the expense of the Arbiters, the Umpire and the
      arbitration shall be equally divided between the two parties.

E.    Any arbitration proceedings shall take place at a location mutually agreed
      upon by the parties to this Contract, but notwithstanding the location of
      the arbitration, all proceedings pursuant hereto shall be governed by the
      law of the state in which the Company has its principal office.

ARTICLE XXVI - SERVICE OF SUIT (BRMA 49C)

(Applicable if the Reinsurer is not domiciled in the United States of America,
and/or is not authorized in any State, Territory or District of the United
States where authorization is required by insurance regulatory authorities)

A.    It is agreed that in the event the Reinsurer fails to pay any amount
      claimed to be due hereunder, the Reinsurer, at the request of the Company,
      will submit to the jurisdiction of a court of competent jurisdiction
      within the United States. Nothing in this Article constitutes or should be
      understood to constitute a waiver of the Reinsurer's rights to commence an
      action in any court of competent jurisdiction in the United States, to
      remove an action to a United States District Court, or to seek a transfer
      of a case to another court as permitted by the laws of the United States
      or of any state in the United States.

B.    Further, pursuant to any statute of any state, territory or district of
      the United States which makes provision therefor, the Reinsurer hereby
      designates the party named in its Interests and Liabilities Agreement, or
      if no party is named therein, the Superintendent, Commissioner or Director
      of Insurance or other officer specified for that purpose in the statute,
      or his successor or successors in office, as its true and lawful attorney
      upon whom may be served any lawful process in any action, suit or
      proceeding instituted by or on behalf of the Company or any beneficiary
      hereunder arising out of this Contract.

ARTICLE XXVII - ENTIRE AGREEMENT

This written Contract constitutes the entire agreement between the parties
hereto with respect to the business being reinsured hereunder, and there are no
understandings between the parties hereto other than as expressed in this
Contract. Any change or modification to this Contract will be made by amendment
to this Contract and signed by the parties.

ARTICLE XXVIII - GOVERNING LAW (BRMA 71B)

This Contract shall be governed by and construed in accordance with the laws of
the State of Louisiana.

Page 21



ARTICLE XXIX - AGENCY AGREEMENT

If more than one reinsured company is named as a party to this Contract, the
first named company shall be deemed the agent of the other reinsured companies
for purposes of sending or receiving notices required by the terms and
conditions of this Contract, and for purposes of remitting or receiving any
monies due any party.

ARTICLE XXX - INTERMEDIARY (BRMA 23A)

Benfield Inc. is hereby recognized as the Intermediary negotiating this Contract
for all business hereunder. All communications (including but not limited to
notices, statements, premium, return premium, commissions, taxes, losses, loss
adjustment expense, salvages and loss settlements) relating thereto shall be
transmitted to the Company or the Reinsurer through Benfield Inc. Payments by
the Company to the Intermediary shall be deemed to constitute payment to the
Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed to
constitute payment to the Company only to the extent that such payments are
actually received by the Company.

IN WITNESS WHEREOF, the Company by its duly authorized representative has
executed this Contract as of the date undermentioned at:

DeRidder, LA, this 31st day of January in the year 2005.

                             /s/ Allan E. Farr
                             ---------------------------------------------------
                             American Interstate Insurance Company
                             American Interstate Insurance Company of Texas
                             Silver Oak Casualty, Inc.

Page 22



      NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE (U.S.A.)
       (Approved by Lloyd's Underwriters' Fire and Non-Marine Association)

(1)   This reinsurance does not cover any loss or liability accruing to the
      Reassured as a member of, or subscriber to, any association of insurers or
      reinsurers formed for the purpose of covering nuclear energy risks or as a
      direct or indirect reinsurer of any such member, subscriber or
      association.

(2)   Without in any way restricting the operation of paragraph (1) of this
      Clause it is understood and agreed that for all purposes of this
      reinsurance all the original policies of the Reassured (new, renewal and
      replacement) of the classes specified in Clause II of this paragraph (2)
      from the time specified in Clause III in this paragraph (2) shall be
      deemed to include the following provision (specified as the Limited
      Exclusion Provision):

      LIMITED EXCLUSION PROVISION.*

        I.  It is agreed that the policy does not apply under any liability
            coverage, to
             (injury, sickness, disease, death or destruction
             (bodily injury or property damage

            with respect to which an insured under the policy is also an insured
            under a nuclear energy liability policy issued by Nuclear Energy
            Liability Insurance Association, Mutual Atomic Energy Liability
            Underwriters or Nuclear Insurance Association of Canada, or would be
            an insured under any such policy but for its termination upon
            exhaustion of its limit of liability.

       II.  Family Automobile Policies (liability only), Special Automobile
            Policies (private passenger automobiles, liability only), Farmers
            Comprehensive Personal Liability Policies (liability only),
            Comprehensive Personal Liability Policies (liability only) or
            policies of a similar nature; and the liability portion of
            combination forms related to the four classes of policies stated
            above, such as the Comprehensive Dwelling Policy and the applicable
            types of Homeowners Policies.

       III. The inception dates and thereafter of all original policies as
            described in II above, whether new, renewal or replacement, being
            policies which either

            (a)   become effective on or after 1st May, 1960, or

            (b)   become effective before that date and contain the Limited
                  Exclusion Provision set out above;

            provided this paragraph (2) shall not be applicable to Family
            Automobile Policies, Special Automobile Policies, or policies or
            combination policies of a similar nature, issued by the Reassured on
            New York risks, until 90 days following approval of the Limited
            Exclusion Provision by the Governmental Authority having
            jurisdiction thereof.

(3)   Except for those classes of policies specified in Clause II of paragraph
      (2) and without in any way restricting the operation of paragraph (1) of
      this Clause, it is understood and agreed that for all purposes of this
      reinsurance the original liability policies of the Reassured (new, renewal
      and replacement) affording the following coverages:

            Owners, Landlords and Tenants Liability, Contractual Liability,
            Elevator Liability, Owners or Contractors (including railroad)
            Protective Liability, Manufacturers and Contractors Liability,
            Product Liability, Professional and Malpractice Liability,
            Storekeepers Liability, Garage Liability, Automobile Liability
            (including Massachusetts Motor Vehicle or Garage Liability)

      shall be deemed to include, with respect to such coverages, from the time
      specified in Clause V of this paragraph (3), the following provision
      (specified as the Broad Exclusion Provision):

      BROAD EXCLUSION PROVISION.*

      It is agreed that the policy does not apply:

       I.    Under any Liability Coverage to

                  (injury, sickness, disease, death or destruction
                  (bodily injury or property damage

            (a)   with respect to which an insured under the policy is also an
                  insured under a nuclear energy liability policy issued by
                  Nuclear Energy Liability Insurance Association, Mutual Atomic
                  Energy Liability Underwriters or Nuclear Insurance Association
                  of Canada, or would be an insured under any such policy but
                  for its termination upon exhaustion of its limit of liability;
                  or

            (b)   resulting from the hazardous properties of nuclear material
                  and with respect to which (1) any person or organization is
                  required to maintain financial protection pursuant to the
                  Atomic Energy Act of 1954, or any law amendatory thereof, or
                  (2) the insured is, or had this policy not been issued would
                  be, entitled to indemnity from the United States of America,
                  or any agency thereof, under any agreement entered into by the
                  United States of America, or any agency thereof, with any
                  person or organization.

Page 1 of 2



      II.    Under any Medical Payments Coverage, or under any Supplementary
             Payments Provision relating to
              (immediate medical or surgical relief
              (first aid,

             to expenses incurred with respect to

              (bodily injury, sickness, disease or death
              (bodily injury

             resulting from the hazardous properties of nuclear material and
             arising out of the operation of a nuclear facility by any person or
             organization.

     III.    Under any Liability Coverage to

              (injury, sickness, disease, death or destruction
              (bodily injury or property damage

             resulting from the hazardous properties of nuclear material, if

             (a)  the nuclear material (1) is at any nuclear facility owned by,
                  or operated by or on behalf of, an insured or (2) has been
                  discharged or dispersed therefrom;

             (b)  the nuclear material is contained in spent fuel or waste at
                  any time possessed, handled, used, processed, stored,
                  transported or disposed of by or on behalf of an insured; or

             (c)  the

                     (injury, sickness, disease, death or destruction
                     (bodily injury or property damage

                  arises out of the furnishing by an insured of services,
                  materials, parts or equipment in connection with the planning,
                  construction, maintenance, operation or use of any nuclear
                  facility, but if such facility is located within the United
                  States of America, its territories, or possessions or Canada,
                  this exclusion (c) applies only to

                     (injury to or destruction of property at such nuclear
                     facility
                     (property damage to such nuclear facility and any property
                     thereat.

      IV.    As used in this endorsement:

             "hazardous properties" include radioactive, toxic or explosive
             properties; "nuclear material" means source material, special
             nuclear material or byproduct material; "source material", "special
             nuclear material", and "byproduct material" have the meanings given
             them in the Atomic Energy Act of 1954 or in any law amendatory
             thereof; "spent fuel" means any fuel element or fuel component,
             solid or liquid, which has been used or exposed to radiation in a
             nuclear reactor; "waste" means any waste material (1) containing
             byproduct material and (2) resulting from the operation by any
             person or organization of any nuclear facility included within the
             definition of nuclear facility under paragraph (a) or (b) thereof;
             "nuclear facility" means

             (a)   any nuclear reactor,

             (b)  any equipment or device designed or used for (1) separating
                  the isotopes of uranium or plutonium, (2) processing or
                  utilizing spent fuel, or (3) handling processing or packaging
                  waste,

             (c)  any equipment or device used for the processing, fabricating
                  or alloying of special nuclear material if at any time the
                  total amount of such material in the custody of the insured at
                  the premises where such equipment or device is located
                  consists of or contains more than 25 grams of plutonium or
                  uranium 233 or any combination thereof, or more than 250 grams
                  of uranium 235,

             (d)  any structure, basin, excavation, premises or place prepared
                  or used for the storage or disposal of waste, and includes the
                  site on which any of the foregoing is located, all operations
                  conducted on such site and all premises used for such
                  operations; "nuclear reactor" means any apparatus designed or
                  used to sustain nuclear fission in a self-supporting chain
                  reaction or to contain a critical mass of fissionable
                  material;

                  (With respect to injury to or destruction of property, the
                  word "injury" or "destruction,"

                  ("property damage" includes all forms of radioactive
                  contamination of property,

                  (includes all forms of radioactive contamination of property.

      V.     The inception dates and thereafter of all original policies
             affording coverages specified in this paragraph (3), whether new,
             renewal or replacement, being policies which become effective on or
             after 1st May, 1960, provided this paragraph (3) shall not be
             applicable to

                  (i)   Garage and Automobile Policies issued by the Reassured
                        on New York risks, or

                  (ii)  statutory liability insurance required under Chapter 90,
                        General Laws of Massachusetts, until 90 days following
                        approval of the Broad Exclusion Provision by the
                        Governmental Authority having jurisdiction thereof.

(4)   Without in any way restricting the operation of paragraph (1) of this
      Clause, it is understood and agreed that paragraphs (2) and (3) above are
      not applicable to original liability policies of the Reassured in Canada
      and that with respect to such policies this Clause shall be deemed to
      include the Nuclear Energy Liability Exclusion Provisions adopted by the
      Canadian Underwriters' Association or the Independent Insurance Conference
      of Canada.

- -------------
*NOTE. The words printed in italics in the Limited Exclusion Provision and in
       the Broad Exclusion Provision shall apply only in relation to original
       liability policies which include a Limited Exclusion Provision or a Broad
       Exclusion Provision containing those words.

21/9/67
N.M.A. 1590

Page 2 of 2


                         SECOND CASUALTY EXCESS OF LOSS
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 2005

                                    issued to

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group



REINSURERS                                                      PARTICIPATIONS
THROUGH BENFIELD LIMITED
                                                             
Lloyd's Underwriters and Companies                                   100%
  Per Signing Schedule(s)

TOTAL                                                                100%




                       INTERESTS AND LIABILITIES AGREEMENT

                                       of

                     Certain Underwriting Members of Lloyd's
                  shown in the Signing Schedule attached hereto
            (hereinafter referred to as the "Subscribing Reinsurer")

                               with respect to the

                         SECOND CASUALTY EXCESS OF LOSS
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 2005

                         issued to and duly executed by

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group

The Subscribing Reinsurer hereby accepts a 65.0% share in the interests and
liabilities of the "Reinsurer" as set forth in the attached Contract captioned
above.

This Agreement shall become effective at 12:01 a.m., Local Standard Time,
January 1, 2005, and shall continue in force until terminated in accordance with
the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and liabilities of the
other reinsurers.

In any action, suit or proceeding to enforce the Subscribing Reinsurer's
obligations under the attached Contract, service of process may be made upon
Mendes & Mount, 750 Seventh Avenue, New York, New York 10019.

Signed for and on behalf of the Subscribing Reinsurer in the Signing Schedule
attached hereto.



                       INTERESTS AND LIABILITIES AGREEMENT

                                       of

                           Certain Insurance Companies
                shown in the Signing Schedule(s) attached hereto
            (hereinafter referred to as the "Subscribing Reinsurer")

                               with respect to the

                         SECOND CASUALTY EXCESS OF LOSS
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 2005

                         issued to and duly executed by

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group

The Subscribing Reinsurer hereby accepts a 35.0% share in the interests and
liabilities of the "Reinsurer" as set forth in the attached Contract captioned
above.

This Agreement shall become effective at 12:01 a.m., Local Standard Time,
January 1, 2005, and shall continue in force until terminated in accordance with
the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and liabilities of the
other reinsurers.

In any action, suit or proceeding to enforce the Subscribing Reinsurer's
obligations under the attached Contract, service of process may be made upon
Mendes & Mount, 750 Seventh Avenue, New York, New York 10019.

Signed for and on behalf of the Subscribing Reinsurer in the Signing Schedule(s)
attached hereto.

EX-10.14

                                                                   Exhibit 10.14

                WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 2005

                                    issued to

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group



                                TABLE OF CONTENTS



 ARTICLE                                                                     PAGE
                                                                       
     I         Classes of Business Reinsured                                  1
    II         Commencement and Termination                                   1
   III         Territory (BRMA 51A)                                           3
    IV         Exclusions                                                     3
     V         Special Acceptances                                            7
    VI         Retention and Limit                                            7
   VII         Reinstatement                                                  8
  VIII         Definitions                                                    9
    IX         Annuities at Company's Option                                 11
     X         Claims                                                        12
    XI         Sunset                                                        12
   XII         Special Commutation                                           12
  XIII         Salvage and Subrogation                                       14
   XIV         Federal Terrorism Coverage                                    14
    XV         Reinsurance Premium                                           15
   XVI         Late Payments                                                 15
  XVII         Offset (BRMA 36A)                                             17
 XVIII         Access to Records (BRMA 1D)                                   17
   XIX         Liability of the Reinsurer                                    17
    XX         Net Retained Lines (BRMA 32E)                                 17
   XXI         Errors and Omissions                                          18
  XXII         Taxes (BRMA 50B)                                              18
 XXIII         Reserves and Letters of Credit                                18
  XXIV         Insolvency                                                    20
   XXV         Arbitration (BRMA 6J)                                         20
  XXVI         Service of Suit (BRMA 49C)                                    21
 XXVII         Entire Agreement                                              22
XXVIII         Governing Law (BRMA 71B)                                      22
  XXIX         Agency Agreement                                              22
   XXX         Intermediary                                                  22
               Schedule A




                WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 2005

                                    issued to

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group
             (hereinafter referred to collectively as the "Company")

                                       by

                   The Subscribing Reinsurer(s) Executing the
                     Interests and Liabilities Agreement(s)
                                 Attached Hereto
                  (hereinafter referred to as the "Reinsurer")

ARTICLE I - CLASSES OF BUSINESS REINSURED

By this Contract the Reinsurer agrees to reinsure the excess liability which may
accrue to the Company under its policies, contracts and binders of insurance or
reinsurance (hereinafter called "policies") in force at the effective date
hereof or issued or renewed on or after that date, and classified by the Company
as Workers' Compensation, Employers Liability, including coverage provided under
the U.S. Longshore and Harbor Workers' Compensation Act and the Jones Act, and
General Liability business, subject to the terms, conditions and limitations set
forth herein and in Schedule A attached to and forming part of this Contract.

ARTICLE II - COMMENCEMENT AND TERMINATION

A.    This Contract shall become effective at 12:01 a.m., Local Standard Time,
      January 1, 2005, with respect to losses arising out of occurrences
      commencing at or after that time and date, and shall continue in force
      thereafter until terminated.

B.    Either party may terminate this Contract on any December 31 by giving the
      other party not less than 90 days prior notice by certified or registered
      mail.

Page 1



C.    Notwithstanding the provisions of paragraph B above, the Company may
      terminate a Subscribing Reinsurer's percentage share in this Contract by
      giving 90 days prior written notice to the Subscribing Reinsurer in the
      event any of the following circumstances occur, or as clarified by public
      announcement as respects subparagraphs 1 through 7 below or upon discovery
      as respects subparagraph 8 below, effective retroactively to the start of
      the calendar quarter preceding such circumstance:

      1.    The Subscribing Reinsurer's policyholders' surplus at the beginning
            of any contract year has been reduced by more than 20.0% of the
            amount of surplus 12 months prior to that date; or

      2.    The Subscribing Reinsurer's policyholders' surplus at any time
            during any contract year has been reduced by more than 20.0% of the
            amount of surplus at the date of the Subscribing Reinsurer's most
            recent financial statement filed with regulatory authorities and
            available to the public as of the beginning of the contract year; or

      3.    The Subscribing Reinsurer's A.M. Best's rating has been assigned or
            downgraded below A- (inclusive of "Not Rated" ratings) and/or
            Standard & Poor's rating has been assigned or downgraded below BBB+
            (inclusive of "Not Rated" ratings); or

      4.    The Subscribing Reinsurer has become merged with, acquired by or
            controlled by any other company, corporation or individual(s) not
            controlling the Subscribing Reinsurer's operations previously; or

      5.    A State Insurance Department or other legal authority has ordered
            the Subscribing Reinsurer to cease writing business; or

      6.    The Subscribing Reinsurer has become insolvent or has been placed
            into liquidation or receivership (whether voluntary or involuntary)
            or proceedings have been instituted against the Subscribing
            Reinsurer for the appointment of a receiver, liquidator,
            rehabilitator, conservator or trustee in bankruptcy, or other agent
            known by whatever name, to take possession of its assets or control
            of its operations; or

      7.    The Subscribing Reinsurer has reinsured its entire liability under
            this Contract without the Company's prior written consent; or

      8.    The Subscribing Reinsurer has ceased assuming new and renewal treaty
            reinsurance business.

D.    Unless the Company elects that the Reinsurer have no liability for losses
      arising out of occurrences commencing after the effective date of
      termination, and so notifies the Reinsurer prior to or as promptly as
      possible after the effective date of termination, reinsurance hereunder on
      business in force on the effective date of termination shall remain in
      full force and effect until expiration, cancellation or next premium
      anniversary of such business, whichever first occurs, but in no event
      beyond 12 months plus odd time (not exceeding 18 months in all) following
      the effective date of termination.

Page 2



ARTICLE III - TERRITORY (BRMA 51A)

The territorial limits of this Contract shall be identical with those of the
Company's policies.

ARTICLE IV - EXCLUSIONS

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

      1.    Lines of business not identified in Article I.

      2.    All excess of loss reinsurance assumed by the Company.

      3.    Reinsurance assumed by the Company under obligatory reinsurance
            agreements, except:

            a.    Agency reinsurance where the policies involved are to be
                  reunderwritten in accordance with the underwriting standards
                  of the Company and reissued as Company policies at the next
                  anniversary or expiration date; and

            b.    Intercompany reinsurance between any of the reinsured
                  companies under this Contract.

      4.    Business written by the Company on a co-indemnity basis where the
            Company is not the controlling carrier.

      5.    Business written to apply in excess of a deductible of more than
            $25,000, and business issued to apply specifically in excess over
            underlying insurance. However, if the Company is required, by any
            state regulation, to provide a deductible of more than $25,000, this
            exclusion shall not apply.

      6.    Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
            Liability - Reinsurance (U.S.A.)" attached to and forming part of
            this Contract.

      7.    As regards interests which at time of loss or damage are on shore,
            no liability shall attach hereto in respect of any loss or damage
            which is occasioned by war, invasion, hostilities, acts of foreign
            enemies, civil war, rebellion, insurrection, military or usurped
            power, or martial law or confiscation by order of any government or
            public authority. This War Exclusion Clause shall not, however,
            apply to interests which at time of loss or damage are within the
            territorial limits of the United States of America (comprising the
            Fifty States of the Union, the District of Columbia, and including
            bridges between the United States of America and Mexico provided
            they are under United States ownership), Canada, St. Pierre and
            Miquelon, provided such interests are insured under policies
            containing a standard war or hostilities or warlike operations
            exclusion clause.

      8.    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.

Page 3



      9.    All liability of the Company arising by contract, operation of 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, however denominated,
            established or governed, which provides for any assessment of or
            payment or assumption by the Company of part or 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.

      10.   Workers' Compensation where the principal exposures, as defined by
            the governing class code, include:

            a.    Operation of aircraft but only if the annual estimated policy
                  premium is $250,000 or more;

            b.    Railroad, subway, or street railway operations;

            c.    Operation or navigation of vessels or barges;

            d.    Manufacture, production, or refining of gas, natural or
                  artificial fuel, or other liquefied petroleum fuel, but only
                  if the annual estimated policy premium is $250,000 or more;

            e.    Manufacturing, assembly, packing, or processing of fireworks,
                  fuses, nitroglycerine, magnesium, pyroxylin, ammunition, or
                  explosives. This exclusion does not apply to the assembly,
                  packing, or processing of explosives when the estimated annual
                  premium is under $250,000;

            f.    Wrecking or demolition of structures but only if the annual
                  estimated policy premium is $250,000 or more;

            g.    Underground mining.

      11.   As respects Workers' Compensation and Employers' Liability only,
            unless otherwise excluded as set forth above, the reinsurance
            provided under this Contract shall not apply to any loss, cost or
            expense arising out of or related to, either directly or indirectly,
            any "terrorist activity," as defined herein, but this exclusion
            shall only apply when the activity includes, involves, or is
            associated with the use of any biological, chemical, radioactive, or
            nuclear agent, material, device or weapon, or when the predominant
            business of the policyholder as defined by the governing class code
            is:

            a.    The operation of: airports and aircraft; flight schools;
                  bridges, dams, tunnels, or locks; department stores; shopping
                  malls; chain retail stores; casinos and casino hotels; cruise
                  lines; railroads; ports/public transit authorities; security
                  services; stadiums; convention/exhibition centers; or
                  theme/amusement parks.

            b.    The manufacture and distribution of: automobiles; chemicals,
                  petrochemicals, pharmaceuticals; utilities (electric, gas,
                  water, and sewer); major

Page 4



                  defense/aerospace products; or, high-tech equipment, but only
                  if the policyholder employs more than 20 personnel at the
                  location of a terrorist activity at the time of its
                  occurrence.

            c.    The management or operation of the following type of
                  structures, but only if greater than 25 stories in height:
                  apartments/condominiums/co-ops; hotels/motels; or office
                  buildings.

            d.    Businesses primarily engaged in the entertainment, media, or
                  transportation industry limited to the following: major media
                  providers (NBC, FOX, ABC, CBS, etc.); television and motion
                  picture studios; Broadway theaters; major internet companies
                  (AOL, Yahoo, etc.); professional sports teams; major
                  telecommunications companies (AT&T, Worldcom/MCI, etc.);
                  national truck rental companies (Ryder, Penske, UHaul, etc.);
                  or major national motor freight common carriers (J.B. Hunt,
                  Red Arrow, etc.).

            e.    Policyholders primarily located in, or predominantly doing
                  business as: hospitals; universities; nuclear facilities;
                  financial institutions; or governmental buildings and national
                  landmarks.

            "Terrorist activity" shall mean any deliberate, unlawful act that:

            a.    Is declared by any authorized government official to be or to
                  involve terrorism, terrorist activity or acts of terrorism; or

            b.    Includes, involves, or is associated with the use or
                  threatened use of force, violence or harm against any person,
                  tangible or intangible property, the environment, or any
                  natural resources, where the act or threatened act is
                  intended, in whole or in part, to:

                  i.    Promote or further any political, ideological,
                        philosophical, racial, ethnic, social or religious cause
                        or objective of the perpetrator or any organization,
                        association or group affiliated with the perpetrator; or

                  ii.   Influence, disrupt or interfere with any government
                        related operations, activities or policies; or

                  iii.  Intimidate, coerce or frighten the general public or any
                        segment of the general public; or

                  iv.   Disrupt or interfere with a national economy or any
                        segment of a national economy; or

            c.    Includes, involves, or is associated with, in whole or in
                  part, any of the following activities, or the threat thereof:

                  i.    Hijacking or sabotage of any form of transportation or
                        conveyance, including but not limited to spacecraft,
                        satellite, aircraft, train, vessel, or motor vehicle;

Page 5



                  ii.   Hostage taking or kidnapping;

                  iii.  The use of any bomb, incendiary device, explosive or
                        firearm;

                  iv.   The interference with or disruption of basic public or
                        commercial services and systems, including but not
                        limited to the following services or systems:
                        electricity, natural gas, power, postal, communications,
                        telecommunications, information, public transportation,
                        water, fuel, sewer or waste disposal;

                  v.    The injuring or assassination of any elected or
                        appointed government official or any government
                        employee;

                  vi.   The seizure, blockage, interference with, disruption of,
                        or damage to any government buildings, institutions,
                        functions, events, tangible or intangible property or
                        other assets; or

                  vii.  The seizure, blockage, interference with, disruption of,
                        or damage to tunnels, roads, streets, highways, or other
                        places of public transportation or conveyance.

            d.    Any of the activities listed in subparagraph c, above, shall
                  be considered terrorist activity except where the Company can
                  demonstrate to the Reinsurer that the foregoing activities or
                  threats thereof were motivated solely by personal objectives
                  of the perpetrator that are unrelated, in whole or in part, to
                  any intention to:

                  i.    Promote or further any political, ideological,
                        philosophical, racial, ethnic, social or religious cause
                        or objective of the perpetrator or any organization,
                        association or group affiliated with the perpetrator;

                  ii.   Influence, disrupt or interfere with any
                        government-related operations, activities or policies;

                  iii.  Intimidate, coerce or frighten the general public or any
                        segment of the general public; or

                  iv.   Disrupt or interfere with a national economy or any
                        segment of a national economy.

      12.   As respects General Liability policies, exposures, other than those
            identified below, as included in the General Liability section of
            the Company's Commercial Lines Manual:

            a.    Class 97111 - Logging;

            b.    Class 58873 - Sawmill;

            c.    Class 59984 - Woodyard and Drivers;

            d.    Class 95410 - Grading of Land;

Page 6



            e.    Class 45819 - Lumber Yard;

            f.    Class 10073 - Repair Shops and Drivers;

            g.    Class 43822 - Timber Cruiser;

            h.    Class 99793 - Truckman Not Otherwise Classified;

            i.    Class 91591 - Contractors - Subcontracted Work Other Than
                  Construction;

            j.    Class 49452 - Vacant Land.

B.    Any exclusion set forth in subparagraphs 10 and/or 12 of paragraph A shall
      be waived automatically when, in the opinion of the Company, the exposure
      excluded therein is incidental to the principal exposure on the risk in
      question.

C.    If the Company is bound, without the knowledge and contrary to the
      instructions of the Company's supervisory underwriting personnel, on any
      business falling within the scope of one or more of the exclusions set
      forth in subparagraphs 10 and/or 12 of paragraph A, the exclusion shall be
      suspended with respect to such business until the Company has the first
      opportunity to cancel the policy in compliance with governmental
      requirements.

D.    If the Company is required to accept an assigned risk which conflicts with
      one or more of the exclusions set forth in subparagraph 10 of paragraph A,
      reinsurance shall apply, but only for the difference between the Company's
      retention and the minimum limit required by the applicable state statute,
      and in no event shall the Reinsurer's liability exceed the limit set forth
      in Article VI.

ARTICLE V - SPECIAL ACCEPTANCES

From time to time the Company may request a special acceptance of reinsurance
falling outside the scope of the provisions set forth herein. As respects each
layer of this Contract separately, if each Subscribing Reinsurer whose share in
the interests and liabilities of the Reinsurer is 20.0% or greater agrees to a
special acceptance, such special acceptance shall be binding on all Subscribing
Reinsurers with respect to their respective shares of each such layer. In the
event agreement is not achieved, such special acceptance shall be made to a
layer or layers of this Contract only with respect to the interests and
liabilities of each Subscribing Reinsurer on such layer or layers who agrees to
such special acceptance. In the event a reinsurer becomes a party to this
Contract subsequent to one or more special acceptances hereunder, the new
reinsurer shall automatically accept such special acceptance(s) as being covered
hereunder.

ARTICLE VI - RETENTION AND LIMIT

A.    As respects each excess layer of reinsurance coverage provided by this
      Contract, the Company shall retain and be liable for the first amount of
      ultimate net loss, shown as "Company's Retention" for that excess layer in
      Schedule A attached hereto, arising out of

Page 7



      each occurrence. The Reinsurer shall then be liable, as respects each
      excess layer, for the amount by which such ultimate net loss exceeds the
      Company's applicable retention, but the liability of the Reinsurer under
      each excess layer shall not exceed the amount shown as "Reinsurer's Per
      Occurrence Limit" for that excess layer in Schedule A attached hereto, as
      respects any one occurrence.

B.    The Company's ultimate net loss, for the purpose of this Contract, shall
      be deemed to be a maximum of $5,000,000 any one life.

C.    The Company shall be permitted to carry excess of loss and quota share
      reinsurance, recoveries under which shall inure solely to the benefit of
      the Company and be entirely disregarded in applying all of the provisions
      of this Contract.

D.    The Company shall be permitted to carry excess of loss reinsurance
      applying to Workers' Compensation risks in the State of Minnesota,
      recoveries under which shall inure to the benefit of this Contract.

      Such coverage shall be provided through the Minnesota Workers'
      Compensation Reinsurance Association. It is understood that the liability
      of the Reinsurer for Minnesota Workers' Compensation risks is not
      released.

      In the event the Company accrues liability that is not provided by any
      inuring reinsurance, for whatever reason, the Reinsurer agrees to reinsure
      such excess liability.

E.    In the event this Contract is terminated on a "runoff" basis, additional
      reinstatement coverage shall be negotiated on or prior to the effective
      date of termination.

ARTICLE VII - REINSTATEMENT

A.    In the event all or any portion of the reinsurance under any excess layer
      of reinsurance coverage provided by this Contract is exhausted by loss,
      the amount so exhausted shall be reinstated immediately from the time the
      occurrence commences hereon. For each amount so reinstated the Company
      agrees to pay additional premium equal to the product of the following:

      1.    The percentage of the occurrence limit for the excess layer
            reinstated (based on the loss paid by the Reinsurer under that
            excess layer); times

      2.    The earned reinsurance premium for the excess layer reinstated for
            the contract year (exclusive of reinstatement premium).

B.    Whenever the Company requests payment by the Reinsurer of any loss under
      any excess layer hereunder, the Company shall submit a statement to the
      Reinsurer of reinstatement premium due the Reinsurer for that excess
      layer. If the earned reinsurance premium for any excess layer for the
      contract year has not been finally determined as of the date of any such
      statement, the calculation of reinstatement premium due for that excess
      layer shall be based on the annual deposit premium for that excess layer
      and shall be readjusted when the earned reinsurance premium for that
      excess layer for the contract year has been finally


Page 8


      determined. Any reinstatement premium shown to be due the Reinsurer for
      any excess layer as reflected by any such statement (less prior payments,
      if any, for that excess layer) shall be payable by the Company
      concurrently with payment by the Reinsurer of the requested loss for that
      excess layer. Any return reinstatement premium shown to be due the Company
      shall be remitted by the Reinsurer as promptly as possible after receipt
      and verification of the Company's statement.

C.    Notwithstanding anything stated herein, the liability of the Reinsurer
      under any excess layer of reinsurance coverage provided by this Contract
      shall not exceed any of the following:

      1.    The amount, shown as "Reinsurer's Per Occurrence Limit" for that
            excess layer in Schedule A attached hereto, as respects loss or
            losses arising out of any one occurrence; or

      2.    The amount, shown as "Reinsurer's Annual Limit" for that excess
            layer in Schedule A attached hereto, in all during the contract
            year.

ARTICLE VIII - DEFINITIONS

A.    "Ultimate net loss" as used herein is defined as the sum or sums
      (including loss in excess of policy limits, extra contractual obligations
      and any loss adjustment expense, as hereinafter defined) paid or payable
      by the Company in settlement of claims and in satisfaction of judgments
      rendered on account of such claims, after deduction of all salvage, all
      recoveries and all claims on inuring insurance or reinsurance, whether
      collectible or not. Nothing herein shall be construed to mean that losses
      under this Contract are not recoverable until the Company's ultimate net
      loss has been ascertained.

B.    "Loss in excess of policy limits" and "extra contractual obligations" as
      used herein shall be defined as follows:

      1.    "Loss in excess of policy limits" shall mean 90.0% of any amount
            paid or payable by the Company in excess of its policy limits, but
            otherwise within the terms of its policy, such loss in excess of the
            Company's policy limits having been incurred because of, but not
            limited to, failure by the Company to settle within the policy
            limits or by reason of the Company's alleged or actual negligence,
            fraud or bad faith in rejecting an offer of settlement or in the
            preparation of the defense or in the trial of an action against its
            insured or reinsured or in the preparation or prosecution of an
            appeal consequent upon such an action.

      2.    "Extra contractual obligations" shall mean 90.0% of any punitive,
            exemplary, compensatory or consequential damages paid or payable by
            the Company, not covered by any other provision of this Contract and
            which arise from the handling of any claim on business subject to
            this Contract, such liabilities arising because of, but not limited
            to, failure by the Company to settle within the policy limits or by
            reason of the Company's alleged or actual negligence, fraud or bad
            faith in rejecting an offer of settlement or in the preparation of
            the defense or in the trial of any action against its insured or
            reinsured or in the preparation or prosecution of an appeal
            consequent upon such an action. An extra contractual obligation
            shall be deemed, in all

Page 9



            circumstances, to have occurred on the same date as the loss covered
            or alleged to be covered under the policy.

      If any provision of this Article shall be rendered illegal or
      unenforceable by the laws, regulations or public policy of any state, such
      provision shall be considered void in such state, but this shall not
      affect the validity or enforceability of any other provision of this
      Contract or the enforceability of such provision in any other
      jurisdiction.

      Notwithstanding anything stated herein, this Contract shall not apply to
      any loss in excess of policy limits or any extra contractual obligation
      incurred by the Company as a result of any fraudulent and/or criminal act
      by any officer or director of the Company acting individually or
      collectively or in collusion with any individual or corporation or any
      other organization or party involved in the presentation, defense or
      settlement of any claim covered hereunder.

C.    "Occurrence" as used herein is defined as an accident or occurrence or a
      series of accidents or occurrences arising out of or caused by one event,
      except that:

      1.    As respects General Liability policies where the Company's limit of
            liability for Products and Completed Operations coverages is
            determined on the basis of the insured's aggregate losses during a
            policy period, all such losses proceeding from or traceable to the
            same causative agency shall, at the Company's option, be deemed to
            have been caused by one occurrence commencing at the beginning of
            the policy period, it being understood and agreed that each renewal
            or annual anniversary date of the policy involved shall be deemed
            the beginning of a new policy period;

      2.    Each occupational disease case or cumulative trauma case contracted
            by an employee of an insured shall be deemed to have been caused by
            a separate occurrence commencing on:

            a.    The date of disability for which compensation is payable if
                  the case is compensable under the Workers' Compensation Law;

            b.    The date disability due to the disease actually began if the
                  case is not compensable under the Workers' Compensation Law;

            c.    The date of cessation of employment if claim is made after
                  employment has ceased.

      3.    Notwithstanding the provisions of subparagraph 2 above, as respects
            losses resulting from occupational disease or cumulative trauma
            suffered by employees of an insured for which the employer is
            liable, as a result of a sudden and accidental event not exceeding
            72 hours in duration, all such losses shall be considered one
            occurrence and may be combined with losses classified as other than
            occupational disease or cumulative trauma which arise out of the
            same event and the combination of such losses shall be considered as
            one occurrence within the meaning hereof.

Page 10



D.    "Occupational disease" or industrial disease is any abnormal condition
      that fulfills all of the following conditions:

      1.    It is not traceable to a definite compensable accident occurring
            during the employee's past or present employment.

      2.    It has been caused by exposure to a disease producing agent or
            agents present in the workers' occupational environment.

      3.    It has resulted in disability or death.

E.    "Cumulative trauma" is an injury that fulfills all of the following
      conditions:

      1.    It is not traceable to a definite compensable accident occurring
            during the employee's past or present employment.

      2.    It has occurred from and has been aggravated by a repetitive
            employment related activity.

      3.    It has resulted in disability or death.

F.    "Loss adjustment expense" as used herein shall mean expenses allocable to
      the investigation, defense and/or settlement of specific claims, including
      litigation expenses, interest on judgments, declaratory judgment expenses
      or other legal expenses and costs incurred in connection with coverage
      questions and legal actions connected thereto, and salaries and expenses
      of salaried adjusters associated with claims covered under policies of the
      Company reinsured hereunder but not including office expenses or salaries
      of the Company's regular employees.

G.    "Contract year" as used in this Contract shall mean the period from
      January 1, 2005 to December 31, 2005, both days inclusive, and each
      respective 12-month period thereafter that this Contract continues in
      force. However, if this Contract is terminated, the final contract year
      shall be from the beginning of the then current contract year through the
      date of termination if this Contract is terminated on a "cutoff" basis, or
      the end of the runoff period if this Contract is terminated on a "runoff"
      basis.

ARTICLE IX - ANNUITIES AT COMPANY'S OPTION

A.    Whenever the Company is required, or elects, to purchase an annuity or to
      negotiate a structured settlement, either in satisfaction of a judgment or
      in an out-of-court settlement or otherwise, the cost of the annuity or the
      structured settlement, as the case may be, shall be deemed part of the
      Company's ultimate net loss.

B.    The terms "annuity" or "structured settlement" shall be understood to mean
      any insurance policy, lump sum payment, agreement or device of whatever
      nature resulting in the payment of a lump sum by the Company in settlement
      of any or all future liabilities which may attach to it as a result of an
      occurrence.

Page 11



C.    In the event the Company purchases an annuity which inures in whole or in
      part to the benefit of the Reinsurer, it is understood that the liability
      of the Reinsurer is not released thereby. In the event the Company is
      required to provide benefits not provided by the annuity for whatever
      reason, the Reinsurer shall pay its proportional share of any loss.

ARTICLE X - CLAIMS

A.    Whenever a claim is reserved by the Company for an amount greater than
      50.0% of its retention hereunder and/or whenever a claim appears likely to
      result in a claim under this Contract, the Company shall notify the
      Reinsurer. Further, the Company shall notify the Reinsurer whenever a
      claim involves a fatality, major limb amputation, spinal cord damage,
      brain damage, blindness or extensive burns, regardless of liability, if
      the policy limits or statutory benefits applicable to the claim are
      greater than the Company's retention hereunder. The Reinsurer shall have
      the right to participate, at its own expense, in the defense of any claim
      or suit or proceeding involving this reinsurance.

B.    All claim settlements made by the Company, provided they are within the
      terms of this Contract (including but not limited to ex-gratia payments),
      shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all
      amounts for which it may be liable upon receipt of satisfactory evidence
      of the amount paid by the Company.

ARTICLE XI - SUNSET

Ten years after the effective date of termination of this Contract (or after the
end of the runoff period, if applicable), the Company shall advise the Reinsurer
of any outstanding claims and/or occurrences (each hereinafter referred to as a
"claim") arising during any contract year, which have not been finally settled
and which may cause a recovery under this Contract. Unless mutually agreed, no
liability shall attach hereunder for any claim not reported to the Reinsurer
within 90 days following the 10-year period.

ARTICLE XII - SPECIAL COMMUTATION

A.    In the event a Subscribing Reinsurer meets the following conditions, the
      Company may require a commutation of that portion of any excess loss
      hereunder represented by any outstanding claim or claims, including any
      related loss adjustment expense.

      1.    The Subscribing Reinsurer's A.M. Best's rating has been assigned or
            downgraded below A- (inclusive of "Not Rated" ratings) and/or
            Standard & Poor's rating has been assigned or downgraded below BBB+
            (inclusive of "Not Rated" ratings); or

      2.    The Subscribing Reinsurer has ceased assuming new and renewal
            property and casualty treaty reinsurance business.

      "Outstanding claim or claims" shall be defined as known or unknown claims,
      including any billed yet unpaid claims. However, unless otherwise mutually
      agreed, this paragraph shall not apply unless the outstanding claim or
      claims is for an amount not less than $5,000.

Page 12



B.    If the Company elects to require commutation as provided in paragraph A
      above, the Company shall submit a Statement of Valuation of the
      outstanding claim or claims as of the last day of the month immediately
      preceding the month in which the Company elects to require commutation, as
      determined by the Company. Such Statement of Valuation shall include the
      elements considered reasonable to establish the excess loss and shall set
      forth or attach the information relied upon by the Company and the
      methodology employed to calculate the excess loss. The Subscribing
      Reinsurer shall then pay the amount requested within 30 calendar days of
      receipt of such Statement of Valuation, unless the Subscribing Reinsurer
      needs additional information from the Company to assess the Company's
      Statement of Valuation or contests such amount.

C.    If the Subscribing Reinsurer needs additional information from the Company
      to assess the Company's Statement of Valuation or contests the amount
      requested, the Subscribing Reinsurer shall so notify the Company within 15
      calendar days of receipt of the Company's Statement of Valuation. The
      Company shall supply any reasonably requested information to the
      Subscribing Reinsurer within 15 calendar days of receipt of the
      notification. Within 30 calendar days of the date of the notification or
      of the receipt of the information, whichever is later, the Subscribing
      Reinsurer shall provide the Company with its Statement of Valuation of the
      outstanding claim or claims as of the last day of the month immediately
      preceding the month in which the Company elects to require commutation, as
      determined by the Subscribing Reinsurer. Such Statement of Valuation shall
      include the elements considered reasonable to establish the excess loss
      and shall set forth or attach the information relied upon by the
      Subscribing Reinsurer and the methodology employed to calculate the excess
      loss.

D.    In the event the Subscribing Reinsurer's Statement of Valuation of the
      outstanding claim or claims is viewed as unacceptable to the Company, the
      Company may either abandon the commutation effort, or may seek to settle
      any difference by using an independent actuary agreed to by the parties.

E.    If the parties cannot agree on an acceptable independent actuary within 15
      calendar days of the date of the Subscribing Reinsurer's Statement of
      Valuation, then each party shall appoint an actuary as party arbitrators
      for the limited and sole purpose of selecting an independent actuary. If
      the actuaries cannot agree on an acceptable independent actuary within 15
      calendar days of the date of the Subscribing Reinsurer's Statement of
      Valuation, the Company shall supply the Subscribing Reinsurer with a list
      of at least three proposed independent actuaries, and the Subscribing
      Reinsurer shall select the independent actuary from that list.

F.    Upon selection of the independent actuary, both parties shall present
      their respective written submissions to the independent actuary. The
      independent actuary may, at his or her discretion, request additional
      information. The independent actuary shall issue his or her decision
      within 45 calendar days after the written submissions have been filed and
      any additional information has been provided.

G.    The decision of the independent actuary shall be final and binding. The
      expense of the independent actuary shall be equally divided between the
      two parties. For the purposes of

Page 13



      this Article, unless mutually agreed otherwise, an "independent actuary"
      shall be an actuary who satisfies each of the following criteria:

      1.    Is regularly engaged in the valuation of claims resulting from lines
            of business subject to this Contract; and

      2.    Is either a Fellow of the Casualty Actuarial Society or of the
            American Academy of Actuaries; and

      3.    Is disinterested and impartial regarding this commutation.

H.    Notwithstanding paragraph A, B and C above, in the event that the
      Subscribing Reinsurer no longer meets the conditions set forth in
      subparagraph 1 or 2 in paragraph A above, this commutation may continue on
      a mutually agreed basis.

I.    Payment by the Subscribing Reinsurer of the amount requested in accordance
      with paragraph B, C or F above, shall release the Subscribing Reinsurer
      from all further liability for outstanding claim or claims, known or
      unknown, under this Contract, which shall release the Company from all
      further liability for payments of salvage or subrogation amounts, known or
      unknown, to the Subscribing Reinsurer under this Contract.

J.    In the event of any conflict between this Article and any other Article of
      this Contract, the terms of this Article shall control.

K.    This Article shall survive the termination of this Contract.

ARTICLE XIII - SALVAGE AND SUBROGATION

The Reinsurer shall be credited with salvage (i.e., reimbursement obtained or
recovery made by the Company, less the actual cost, excluding salaries of
officials and employees of the Company and sums paid to attorneys as retainer,
of obtaining such reimbursement or making such recovery) or subrogation on
account of claims and settlements involving reinsurance hereunder. Salvage or
subrogation thereon shall always be used to reimburse the excess carriers in the
reverse order of their priority according to their participation before being
used in any way to reimburse the Company for its primary loss. The Company
hereby agrees to enforce its rights to salvage or subrogation where it is
economically reasonable in the judgment of the Company, relating to any loss, a
part of which loss was sustained by the Reinsurer, and to prosecute all claims
arising out of such rights.

ARTICLE XIV - FEDERAL TERRORISM COVERAGE

A.    Any loss reimbursement the Company receives from the United States
      Government under the Terrorism Risk Insurance Act of 2002 (the "Terrorism
      Act") as a result of occurrences commencing during the contract year shall
      inure to the benefit of this Contract in the proportion that the Company's
      insured losses (as defined in the Terrorism Act) in that occurrence under
      policies reinsured under this Contract bear to the Company's total insured
      losses in that occurrence.

Page 14



B.    If a loss reimbursement received by the Company under the Terrorism Act is
      based on the Company's insured losses in more than one occurrence and the
      United States Government does not designate the amount allocable to each
      occurrence, the reimbursement shall be prorated in the proportion that the
      Company's insured losses in each occurrence bear to the Company's total
      insured losses arising out of all occurrences to which the recovery
      applies.

ARTICLE XV - REINSURANCE PREMIUM

A.    As premium for each excess layer of reinsurance coverage provided by this
      Contract, the Company shall pay the Reinsurer the greater of the
      following:

      1.    The amount, shown as "Annual Minimum Premium" for that excess layer
            in Schedule A attached hereto (or a pro rata portion thereof if the
            contract year is less than 12 months); or

      2.    The percentage, shown as "Premium Rate" for that excess layer in
            Schedule A attached hereto, of the Company's net earned premium for
            the contract year.

B.    The Company shall pay the Reinsurer a deposit premium for each excess
      layer of the amount, shown as "Annual Deposit Premium" for that excess
      layer in Schedule A attached hereto, in four equal installments of the
      amount, shown as "Quarterly Deposit Premium" for that excess layer in
      Schedule A attached hereto, on January 1, April 1, July 1 and October 1 of
      each contract year (except the runoff contract year, if any). However, if
      this Contract is terminated, no deposit premium installments shall be due
      after the effective date of termination.

C.    Within 60 days after the end of each contract year (or within 60 days
      after the effective date of termination if this Contract is terminated on
      a "runoff" basis), the Company shall provide a report to the Reinsurer
      setting forth the premium due hereunder for each excess layer, computed in
      accordance with paragraph A, and any additional premium due the Reinsurer
      or return premium due the Company for each excess layer shall be remitted
      promptly.

D.    In the event this Contract is terminated on a "runoff" basis, the deposit
      premium shall be calculated by multiplying the unearned portion of premium
      in force at the effective date of termination by the percentage, shown as
      "Premium Rate" for that excess layer in Schedule A attached hereto, and
      paid semi-annually.

E.    "Net earned premium" as used herein is defined as the Company's gross
      earned premium collected on the classes of business subject to this
      Contract, less only the earned portion of premiums, if any, ceded by the
      Company for reinsurance which inures to the benefit of this Contract and
      less dividends incurred.

ARTICLE XVI - LATE PAYMENTS

A.    The provisions of this Article shall not be implemented unless
      specifically invoked, in writing, by one of the parties to this Contract.

Page 15



B.    In the event any premium, loss or other payment due either party is not
      received by the intermediary named in Article XXX (hereinafter referred to
      as the "Intermediary") by the payment due date, the party to whom payment
      is due, may, by notifying the Intermediary in writing, require the debtor
      party to pay, and the debtor party agrees to pay, an interest penalty on
      the amount past due calculated for each such payment on the last business
      day of each month as follows:

      1.    The number of full days which have expired since the due date or the
            last monthly calculation, whichever the lesser; times

      2.    1/365ths of the sum of 400 basis points plus the six-month United
            States Treasury Bill rate as quoted in The Wall Street Journal on
            the first business day of the month for which the calculation is
            made; times

      3.    The amount past due, including accrued interest.

      It is agreed that interest shall accumulate until payment of the original
      amount due plus interest penalties have been received by the Intermediary.

C.    The establishment of the due date shall, for purposes of this Article, be
      determined as follows:

      1.    As respects the payment of routine deposits and premiums due the
            Reinsurer, the due date shall be as provided for in the applicable
            section of this Contract. In the event a due date is not
            specifically stated for a given payment, it shall be deemed due 30
            days after the date of transmittal by the Intermediary of the
            initial billing for each such payment.

      2.    Any claim or loss payment due the Company hereunder shall be deemed
            due 45 business days after the proof of loss or demand for payment
            is transmitted to the Reinsurer. If such loss or claim payment is
            not received within the 45 days, interest will accrue on the payment
            or amount overdue in accordance with paragraph B above, from the
            date the proof of loss or demand for payment was transmitted to the
            Reinsurer.

      3.    As respects any payment, adjustment or return due either party not
            otherwise provided for in subparagraphs 1 and 2 of paragraph C
            above, the due date shall be as provided for in the applicable
            section of this Contract. In the event a due date is not
            specifically stated for a given payment, it shall be deemed due 10
            business days following transmittal of written notification that the
            provisions of this Article have been invoked.

      For purposes of interest calculations only, amounts due hereunder shall be
      deemed paid upon receipt by the Intermediary.

D.    Nothing herein shall be construed as limiting or prohibiting a Subscribing
      Reinsurer from contesting the validity of any claim, or from participating
      in the defense of any claim or suit, or prohibiting either party from
      contesting the validity of any payment or from initiating any

Page 16



      arbitration or other proceeding in accordance with the provisions of this
      Contract. If the debtor party prevails in an arbitration or other
      proceeding, then any interest penalties due hereunder on the amount in
      dispute shall be null and void. If the debtor party loses in such
      proceeding, then the interest penalty on the amount determined to be due
      hereunder shall be calculated in accordance with the provisions set forth
      above unless otherwise determined by such proceedings. If a debtor party
      advances payment of any amount it is contesting, and proves to be correct
      in its contestation, either in whole or in part, the other party shall
      reimburse the debtor party for any such excess payment made plus interest
      on the excess amount calculated in accordance with this Article.

E.    Interest penalties arising out of the application of this Article that are
      $100 or less from any party shall be waived unless there is a pattern of
      late payments consisting of three or more items over the course of any
      12-month period.

ARTICLE XVII - OFFSET (BRMA 36A)

The Company and the Reinsurer may offset any balance or amount due from one
party to the other under this Contract or any other contract heretofore or
hereafter entered into between the Company and the Reinsurer, whether acting as
assuming reinsurer or ceding company. This provision shall not be affected by
the insolvency of either party to this Contract.

ARTICLE XVIII - ACCESS TO RECORDS (BRMA 1D)

The Reinsurer or its designated representatives shall have access at any
reasonable time to all records of the Company which pertain in any way to this
reinsurance.

ARTICLE XIX - LIABILITY OF THE REINSURER

A.    The liability of the Reinsurer shall follow that of the Company in every
      case and be subject in all respects to all the general and specific
      stipulations, clauses, waivers and modifications of the Company's policies
      and any endorsements thereon.

B.    Nothing herein shall in any manner create any obligations or establish any
      rights against the Reinsurer in favor of any third party or any persons
      not parties to this Contract.

ARTICLE XX - NET RETAINED LINES (BRMA 32E)

A.    This Contract applies only to that portion of any policy which the Company
      retains net for its own account (prior to deduction of any underlying
      reinsurance specifically permitted in this Contract), and in calculating
      the amount of any loss hereunder and also in computing the amount or
      amounts in excess of which this Contract attaches, only loss or losses in
      respect of that portion of any policy which the Company retains net for
      its own account shall be included.

Page 17



B.    The amount of the Reinsurer's liability hereunder in respect of any loss
      or losses shall not be increased by reason of the inability of the Company
      to collect from any other reinsurer(s), whether specific or general, any
      amounts which may have become due from such reinsurer(s), whether such
      inability arises from the insolvency of such other reinsurer(s) or
      otherwise.

ARTICLE XXI - ERRORS AND OMISSIONS

Except as provided in Article XI, inadvertent delays, errors or omissions made
in connection with this Contract or any transaction hereunder shall not relieve
either party from any liability which would have attached had such delay, error
or omission not occurred, provided always that such error or omission is
rectified as soon as possible after discovery.

ARTICLE XXII - TAXES (BRMA 50B)

In consideration of the terms under which this Contract is issued, the Company
will not claim a deduction in respect of the premium hereon when making tax
returns, other than income or profits tax returns, to any state or territory of
the United States of America or the District of Columbia.

ARTICLE XXIII - RESERVES AND LETTERS OF CREDIT

[Applies only to a reinsurer which does not qualify for full credit with any
insurance regulatory authority having jurisdiction over the Company's reserves,
which is or becomes rated "B++" or lower by A.M. Best (inclusive of "Not Rated"
ratings) and/or Standard & Poor's rating is or becomes "BBB+" or lower
(inclusive of "Not Rated" ratings.)]

A.    As regards policies or bonds issued by the Company coming within the scope
      of this Contract, the Company agrees that when it shall file with the
      insurance regulatory authority or set up on its books reserves for losses
      covered hereunder which it shall be required by law to set up, it will
      forward to the Reinsurer a statement showing the proportion of such
      reserves which is applicable to the Reinsurer. The Reinsurer hereby agrees
      to fund such reserves in respect of known outstanding losses that have
      been reported to the Reinsurer and allocated loss adjustment expense
      relating thereto, losses and allocated loss adjustment expense paid by the
      Company but not recovered from the Reinsurer, plus reserves for losses
      incurred but not reported, as shown in the statement prepared by the
      Company (hereinafter referred to as "Reinsurer's Obligations") by funds
      withheld, cash advances or a Letter of Credit. The Reinsurer shall have
      the option of determining the method of funding provided it is acceptable
      to the insurance regulatory authorities having jurisdiction over the
      Company's reserves with regards to unauthorized reinsurers; or, should the
      Reinsurer be downgraded, the method of funding shall be mutually agreed.

B.    When funding by a Letter of Credit, the Reinsurer agrees to apply for and
      secure timely delivery to the Company of a clean, irrevocable and
      unconditional Letter of Credit issued by a bank meeting the NAIC
      Securities Valuation Office credit standards for issuers of Letters of
      Credit and containing provisions acceptable to the insurance regulatory
      authorities

Page 18



      having jurisdiction over the Company's reserves in an amount equal to the
      Reinsurer's proportion of said reserves. Such Letter of Credit shall be
      issued for a period of not less than one year, and shall contain an
      "evergreen" clause, which automatically extends the term for one year from
      its date of expiration or any future expiration date unless thirty (30)
      days (sixty (60) days where required by insurance regulatory authorities)
      prior to any expiration date the issuing bank shall notify the Company by
      certified or registered mail that the issuing bank elects not to consider
      the Letter of Credit extended for any additional period.

C.    The Reinsurer and Company agree that the Letters of Credit provided by the
      Reinsurer pursuant to the provisions of this Contract may be drawn upon at
      any time, notwithstanding any other provision of this Contract, and be
      utilized by the Company or any successor, by operation of law, of the
      Company including, without limitation, any liquidator, rehabilitator,
      receiver or conservator of the Company for the following purposes, unless
      otherwise provided for in a separate Trust Agreement:

      1.    To reimburse the Company for the Reinsurer's Obligations, the
            payment of which is due under the terms of this Contract and which
            has not been otherwise paid;

      2.    To make refund of any sum which is in excess of the actual amount
            required to pay the Reinsurer's Obligations under this Contract, if
            so requested by the Reinsurer;

      3.    To fund an account with the Company for the Reinsurer's Obligations.
            Such cash deposit shall be held in an interest bearing account
            separate from the Company's other assets, and interest thereon not
            in excess of the prime rate shall accrue to the benefit of the
            Reinsurer;

      4.    To pay the Reinsurer's share of any other amounts the Company claims
            are due under this Contract.

D.    In the event the amount drawn by the Company on any Letter of Credit is in
      excess of the actual amount required for subparagraphs 1 or 3, or in the
      case of subparagraph 4, the actual amount determined to be due, the
      Company shall promptly return to the Reinsurer the excess amount so drawn.
      All of the foregoing shall be applied without diminution because of
      insolvency on the part of the Company or the Reinsurer.

E.    The issuing bank shall have no responsibility whatsoever in connection
      with the propriety of withdrawals made by the Company or the disposition
      of funds withdrawn, except to ensure that withdrawals are made only upon
      the order of properly authorized representatives of the Company.

F.    At annual intervals, or more frequently as agreed but never more
      frequently than quarterly, the Company shall prepare a specific statement
      of the Reinsurer's Obligations, for the sole purpose of amending the
      Letter of Credit, in the following manner:

      1.    If the statement shows that the Reinsurer's Obligations exceed the
            balance of credit as of the statement date, the Reinsurer shall,
            within thirty (30) days after receipt of notice of such excess,
            secure delivery to the Company of an amendment to the Letter of
            Credit increasing the amount of credit by the amount of such
            difference.

Page 19



      2.    If, however, the statement shows that the Reinsurer's Obligations
            are less than the balance of credit as of the statement date, the
            Company shall, within thirty (30) days after receipt of written
            request from the Reinsurer, release such excess credit by agreeing
            to secure an amendment to the Letter of Credit reducing the amount
            of credit available by the amount of such excess credit.

ARTICLE XXIV - INSOLVENCY

A.    In the event of the insolvency of one or more of the reinsured companies,
      this reinsurance shall be payable directly to the company or to its
      liquidator, receiver, conservator or statutory successor on the basis of
      the liability of the company without diminution because of the insolvency
      of the company or because the liquidator, receiver, conservator or
      statutory successor of the company has failed to pay all or a portion of
      any claim. It is agreed, however, that the liquidator, receiver,
      conservator or statutory successor of the company shall give written
      notice to the Reinsurer of the pendency of a claim against the company
      indicating the policy or bond reinsured which claim would involve a
      possible liability on the part of the Reinsurer within a reasonable time
      after such claim is filed in the conservation or liquidation proceeding or
      in the receivership, and that during the pendency of such claim, the
      Reinsurer may investigate such claim and interpose, at its own expense, in
      the proceeding where such claim is to be adjudicated, any defense or
      defenses that it may deem available to the company or its liquidator,
      receiver, conservator or statutory successor. The expense thus incurred by
      the Reinsurer shall be chargeable, subject to the approval of the Court,
      against the company as part of the expense of conservation or liquidation
      to the extent of a pro rata share of the benefit which may accrue to the
      company solely as a result of the defense undertaken by the Reinsurer.

B.    Where two or more reinsurers are involved in the same claim and a majority
      in interest elect to interpose defense to such claim, the expense shall be
      apportioned in accordance with the terms of this Contract as though such
      expense had been incurred by the company.

C.    It is further understood and agreed that, in the event of the insolvency
      of one or more of the reinsured companies, the reinsurance under this
      Contract shall be payable directly by the Reinsurer to the company or to
      its liquidator, receiver or statutory successor, except as provided by
      Section 4118(a) of the New York Insurance Law or except (1) where this
      Contract specifically provides another payee of such reinsurance in the
      event of the insolvency of the company or (2) where the Reinsurer with the
      consent of the direct insured or insureds has assumed such policy
      obligations of the company as direct obligations of the Reinsurer to the
      payees under such policies and in substitution for the obligations of the
      company to such payees.

ARTICLE XXV - ARBITRATION (BRMA 6J)

A.    As a condition precedent to any right of action hereunder, in the event of
      any dispute or difference of opinion hereafter arising with respect to
      this Contract, it is hereby mutually agreed that such dispute or
      difference of opinion shall be submitted to arbitration. One Arbiter shall
      be chosen by the Company, the other by the Reinsurer, and an Umpire shall

Page 20



      be chosen by the two Arbiters before they enter upon arbitration, all of
      whom shall be active or retired disinterested executive officers of
      insurance or reinsurance companies or Lloyd's London Underwriters. In the
      event that either party should fail to choose an Arbiter within 30 days
      following a written request by the other party to do so, the requesting
      party may choose two Arbiters who shall in turn choose an Umpire before
      entering upon arbitration. If the two Arbiters fail to agree upon the
      selection of an Umpire within 30 days following their appointment, each
      Arbiter shall nominate three candidates within 10 days thereafter, two of
      whom the other shall decline, and the decision shall be made by drawing
      lots.

B.    Each party shall present its case to the Arbiters within 30 days following
      the date of appointment of the Umpire. The Arbiters shall consider this
      Contract as an honorable engagement rather than merely as a legal
      obligation and they are relieved of all judicial formalities and may
      abstain from following the strict rules of law. The decision of the
      Arbiters shall be final and binding on both parties; but failing to agree,
      they shall call in the Umpire and the decision of the majority shall be
      final and binding upon both parties. Judgment upon the final decision of
      the Arbiters may be entered in any court of competent jurisdiction.

C.    If more than one reinsurer is involved in the same dispute, all such
      reinsurers shall constitute and act as one party for purposes of this
      Article and communications shall be made by the Company to each of the
      reinsurers constituting one party, provided, however, that nothing herein
      shall impair the rights of such reinsurers to assert several, rather than
      joint, defenses or claims, nor be construed as changing the liability of
      the reinsurers participating under the terms of this Contract from several
      to joint.

D.    Each party shall bear the expense of its own Arbiter, and shall jointly
      and equally bear with the other the expense of the Umpire and of the
      arbitration. In the event that the two Arbiters are chosen by one party,
      as above provided, the expense of the Arbiters, the Umpire and the
      arbitration shall be equally divided between the two parties.

E.    Any arbitration proceedings shall take place at a location mutually agreed
      upon by the parties to this Contract, but notwithstanding the location of
      the arbitration, all proceedings pursuant hereto shall be governed by the
      law of the state in which the Company has its principal office.

ARTICLE XXVI - SERVICE OF SUIT (BRMA 49C)

(Applicable if the Reinsurer is not domiciled in the United States of America,
and/or is not authorized in any State, Territory or District of the United
States where authorization is required by insurance regulatory authorities)

A.    It is agreed that in the event the Reinsurer fails to pay any amount
      claimed to be due hereunder, the Reinsurer, at the request of the Company,
      will submit to the jurisdiction of a court of competent jurisdiction
      within the United States. Nothing in this Article constitutes or should be
      understood to constitute a waiver of the Reinsurer's rights to commence an
      action in any court of competent jurisdiction in the United States, to
      remove an action to a United States District Court, or to seek a transfer
      of a case to another court as permitted by the laws of the United States
      or of any state in the United States.

Page 21



B.    Further, pursuant to any statute of any state, territory or district of
      the United States which makes provision therefor, the Reinsurer hereby
      designates the party named in its Interests and Liabilities Agreement, or
      if no party is named therein, the Superintendent, Commissioner or Director
      of Insurance or other officer specified for that purpose in the statute,
      or his successor or successors in office, as its true and lawful attorney
      upon whom may be served any lawful process in any action, suit or
      proceeding instituted by or on behalf of the Company or any beneficiary
      hereunder arising out of this Contract.

ARTICLE XXVII - ENTIRE AGREEMENT

This written Contract constitutes the entire agreement between the parties
hereto with respect to the business being reinsured hereunder, and there are no
understandings between the parties hereto other than as expressed in this
Contract. Any change or modification to this Contract will be made by amendment
to this Contract and signed by the parties.

ARTICLE XXVIII - GOVERNING LAW (BRMA 71B)

This Contract shall be governed by and construed in accordance with the laws of
the State of Louisiana.

ARTICLE XXIX - AGENCY AGREEMENT

If more than one reinsured company is named as a party to this Contract, the
first named company shall be deemed the agent of the other reinsured companies
for purposes of sending or receiving notices required by the terms and
conditions of this Contract, and for purposes of remitting or receiving any
monies due any party.

ARTICLE XXX - INTERMEDIARY

Benfield Inc. is hereby recognized as the Intermediary negotiating this Contract
for all business hereunder. All communications relating thereto (including but
not limited to notices, statements, premium, return premium, commissions, taxes,
losses, loss adjustment expense, salvages and loss settlements) relating thereto
shall be transmitted to the Company or the Reinsurer through Benfield Inc.
Payments by the Company to the Intermediary shall be deemed to constitute
payment to the Reinsurer. Payments by the Reinsurer to the Intermediary shall be
deemed to constitute payment to the Company only to the extent that such
payments are actually received by the Company.

IN WITNESS WHEREOF, the Company by its duly authorized representative has
executed this Contract as of the date undermentioned at:

DeRidder, LA, this 20th day of April in the year 2005.

                             /s/ Allan E. Farr
                             ------------------------------------------------
                             American Interstate Insurance Company
                             American Interstate Insurance Company of Texas
                             Silver Oak Casualty, Inc.

Page 22



                                   SCHEDULE A

                WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 2005

                                    issued to

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group



                                            FIRST
               EXCESS                      EXCESS               SECOND
- --------------------------------         -----------         -----------
                                                       
Company's Retention                      $10,000,000         $10,000,000

Reinsurer's Per Occurrence Limit         $10,000,000         $20,000,000

Reinsurer's Annual Limit                 $20,000,000         $20,000,000

Annual Minimum Premium                   $   648,000         $   440,000

Premium Rate                                  0.300%               0.204%

Annual Deposit Premium                   $   810,000         $   550,000

Quarterly Deposit Premium                $   202,500         $   137,500


The figures listed above for each excess layer shall apply to each Subscribing
Reinsurer in the percentage share for that excess layer as expressed in its
Interests and Liabilities Agreement attached hereto.

Schedule A



      NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE (U.S.A.)
      (Approved by Lloyd's Underwriters' Fire and Non-Marine Association)

(1)   This reinsurance does not cover any loss or liability accruing to the
      Reassured as a member of, or subscriber to, any association of insurers or
      reinsurers formed for the purpose of covering nuclear energy risks or as a
      direct or indirect reinsurer of any such member, subscriber or
      association.

(2)   Without in any way restricting the operation of paragraph (1) of this
      Clause it is understood and agreed that for all purposes of this
      reinsurance all the original policies of the Reassured (new, renewal and
      replacement) of the classes specified in Clause II of this paragraph (2)
      from the time specified in Clause III in this paragraph (2) shall be
      deemed to include the following provision (specified as the Limited
      Exclusion Provision):

      LIMITED EXCLUSION PROVISION.*

      I.    It is agreed that the policy does not apply under any liability
            coverage, to

                (injury, sickness, disease, death or destruction
                (bodily injury or property damage

            with respect to which an insured under the policy is also an insured
            under a nuclear energy liability policy issued by Nuclear Energy
            Liability Insurance Association, Mutual Atomic Energy Liability
            Underwriters or Nuclear Insurance Association of Canada, or would be
            an insured under any such policy but for its termination upon
            exhaustion of its limit of liability.

      II.   Family Automobile Policies (liability only), Special Automobile
            Policies (private passenger automobiles, liability only), Farmers
            Comprehensive Personal Liability Policies (liability only),
            Comprehensive Personal Liability Policies (liability only) or
            policies of a similar nature; and the liability portion of
            combination forms related to the four classes of policies stated
            above, such as the Comprehensive Dwelling Policy and the applicable
            types of Homeowners Policies.

      III.  The inception dates and thereafter of all original policies as
            described in II above, whether new, renewal or replacement, being
            policies which either

            (a)   become effective on or after 1st May, 1960, or

            (b)   become effective before that date and contain the Limited
                  Exclusion Provision set out above;

            provided this paragraph (2) shall not be applicable to Family
            Automobile Policies, Special Automobile Policies, or policies or
            combination policies of a similar nature, issued by the Reassured on
            New York risks, until 90 days following approval of the Limited
            Exclusion Provision by the Governmental Authority having
            jurisdiction thereof.

(3)   Except for those classes of policies specified in Clause II of paragraph
      (2) and without in any way restricting the operation of paragraph (1) of
      this Clause, it is understood and agreed that for all purposes of this
      reinsurance the original liability policies of the Reassured (new, renewal
      and replacement) affording the following coverages:

            Owners, Landlords and Tenants Liability, Contractual Liability,
            Elevator Liability, Owners or Contractors (including railroad)
            Protective Liability, Manufacturers and Contractors Liability,
            Product Liability, Professional and Malpractice Liability,
            Storekeepers Liability, Garage Liability, Automobile Liability
            (including Massachusetts Motor Vehicle or Garage Liability)

      shall be deemed to include, with respect to such coverages, from the time
      specified in Clause V of this paragraph (3), the following provision
      (specified as the Broad Exclusion Provision):

      BROAD EXCLUSION PROVISION.*

      It is agreed that the policy does not apply:

       I.    Under any Liability Coverage to

                  (injury, sickness, disease, death or destruction
                  (bodily injury or property damage

            (a)   with respect to which an insured under the policy is also an
                  insured under a nuclear energy liability policy issued by
                  Nuclear Energy Liability Insurance Association, Mutual Atomic
                  Energy Liability Underwriters or Nuclear Insurance Association
                  of Canada, or would be an insured under any such policy but
                  for its termination upon exhaustion of its limit of liability;
                  or

            (b)   resulting from the hazardous properties of nuclear material
                  and with respect to which (1) any person or organization is
                  required to maintain financial protection pursuant to the
                  Atomic Energy Act of 1954, or any law amendatory thereof, or
                  (2) the insured is, or had this policy not been issued would
                  be, entitled to indemnity from the United States of America,
                  or any agency thereof, under any agreement entered into by the
                  United States of America, or any agency thereof, with any
                  person or organization.

Page 1 of 2



      II.   Under any Medical Payments Coverage, or under any Supplementary
            Payments Provision relating to

            (immediate medical or surgical relief
            (first aid,

            to expenses incurred with respect to

            (bodily injury, sickness, disease or death
            (bodily injury

            resulting from the hazardous properties of nuclear material and
            arising out of the operation of a nuclear facility by any person or
            organization.

    III.    Under any Liability Coverage to

                  (injury, sickness, disease, death or destruction
                  (bodily injury or property damage

            resulting from the hazardous properties of nuclear material, if

            (a)   the nuclear material (1) is at any nuclear facility owned by,
                  or operated by or on behalf of, an insured or (2) has been
                  discharged or dispersed therefrom;

            (b)   the nuclear material is contained in spent fuel or waste at
                  any time possessed, handled, used, processed, stored,
                  transported or disposed of by or on behalf of an insured; or

            (c)   the

                        (injury, sickness, disease, death or destruction
                        (bodily injury or property damage

            arises out of the furnishing by an insured of services, materials,
            parts or equipment in connection with the planning, construction,
            maintenance, operation or use of any nuclear facility, but if such
            facility is located within the United States of America, its
            territories, or possessions or Canada, this exclusion (c) applies
            only to

                        (injury to or destruction of property at such nuclear
                        facility
                        (property damage to such nuclear facility and any
                        property thereat.

      IV.   As used in this endorsement:

            "hazardous properties" include radioactive, toxic or explosive
            properties; "nuclear material" means source material, special
            nuclear material or byproduct material; "source material", "special
            nuclear material", and "byproduct material" have the meanings given
            them in the Atomic Energy Act of 1954 or in any law amendatory
            thereof; "spent fuel" means any fuel element or fuel component,
            solid or liquid, which has been used or exposed to radiation in a
            nuclear reactor; "waste" means any waste material (1) containing
            byproduct material and (2) resulting from the operation by any
            person or organization of any nuclear facility included within the
            definition of nuclear facility under paragraph (a) or (b) thereof;
            "nuclear facility" means

            (a)   any nuclear reactor,

            (b)   any equipment or device designed or used for (1) separating
                  the isotopes of uranium or plutonium, (2) processing or
                  utilizing spent fuel, or (3) handling processing or packaging
                  waste,

            (c)   any equipment or device used for the processing, fabricating
                  or alloying of special nuclear material if at any time the
                  total amount of such material in the custody of the insured at
                  the premises where such equipment or device is located
                  consists of or contains more than 25 grams of plutonium or
                  uranium 233 or any combination thereof, or more than 250 grams
                  of uranium 235,

            (d)   any structure, basin, excavation, premises or place prepared
                  or used for the storage or disposal of waste, and includes the
                  site on which any of the foregoing is located, all operations
                  conducted on such site and all premises used for such
                  operations; "nuclear reactor" means any apparatus designed or
                  used to sustain nuclear fission in a self-supporting chain
                  reaction or to contain a critical mass of fissionable
                  material;

                  (With respect to injury to or destruction of property, the
                  word "injury" or "destruction,"

                  ("property damage" includes all forms of radioactive
                  contamination of property,

                  (includes all forms of radioactive contamination of property.

      V.    The inception dates and thereafter of all original policies
            affording coverages specified in this paragraph (3), whether new,
            renewal or replacement, being policies which become effective on or
            after 1st May, 1960, provided this paragraph (3) shall not be
            applicable to

                  (i)   Garage and Automobile Policies issued by the Reassured
                        on New York risks, or

                  (ii)  statutory liability insurance required under Chapter 90,
                        General Laws of Massachusetts, until 90 days following
                        approval of the Broad Exclusion Provision by the
                        Governmental Authority having jurisdiction thereof.

(4)   Without in any way restricting the operation of paragraph (1) of this
      Clause, it is understood and agreed that paragraphs (2) and (3) above are
      not applicable to original liability policies of the Reassured in Canada
      and that with respect to such policies this Clause shall be deemed to
      include the Nuclear Energy Liability Exclusion Provisions adopted by the
      Canadian Underwriters' Association or the Independent Insurance Conference
      of Canada.

- -----------------

*NOTE. The words printed in italics in the Limited Exclusion Provision and in
       the Broad Exclusion Provision shall apply only in relation to original
       liability policies which include a Limited Exclusion Provision or a Broad
       Exclusion Provision containing those words.

21/9/67
N.M.A. 1590

Page 2 of 2

                WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 2005

                                    issued to

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group


               First Workers' Compensation Catastrophe Reinsurance

               REINSURERS                                 PARTICIPATIONS

IOA RE, Inc.
  (for Catlin Insurance Company Ltd.)                        10.0%
Platinum Underwriters Reinsurance, Inc.                      10.0

THROUGH BENFIELD LIMITED
Lloyd's Underwriters and Companies
  Per Signing Schedule(s)                                    80.0

TOTAL                                                       100.0%


              Second Workers' Compensation Catastrophe Reinsurance

               REINSURERS                                 PARTICIPATIONS

Chubb Re, Inc.
  (for Federal Insurance Company)                            20.0%
IOA RE, Inc.
  (for Catlin Insurance Company Ltd.)                        10.0
Platinum Underwriters Reinsurance, Inc.                      10.0

THROUGH BENFIELD LIMITED
Lloyd's Underwriters and Companies
  Per Signing Schedule(s)                                    60.0

TOTAL                                                       100.0%





                       INTERESTS AND LIABILITIES AGREEMENT

                                       of

                            Federal Insurance Company
                              Indianapolis, Indiana
                                     through
                                 Chubb Re, Inc.
                            Bernardsville, New Jersey
            (hereinafter referred to as the "Subscribing Reinsurer")

                               with respect to the

                WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 2005

                         issued to and duly executed by

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group


The Subscribing Reinsurer hereby accepts the following percentage shares in the
interests and liabilities of the "Reinsurer" as set forth in the attached
Contract captioned above:

                0%  of the First Workers' Compensation Catastrophe Reinsurance
             20.0%  of the Second Workers' Compensation Catastrophe Reinsurance

This Agreement shall become effective at 12:01 a.m., Local Standard Time,
January 1, 2005, and shall continue in force until terminated in accordance with
the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and liabilities of the
other reinsurers.

IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date undermentioned at:

Bernardsville, New Jersey, this 1st day of March in the year 2005.

               /s/ William Pentony
               ---------------------------------------------------------------
               Chubb Re, Inc. (for and on behalf of Federal Insurance Company)





                       INTERESTS AND LIABILITIES AGREEMENT

                                       of

                          Catlin Insurance Company Ltd.
                                Hamilton, Bermuda
                                       by
                                  IOA RE, Inc.
                           East Norriton, Pennsylvania
            (hereinafter referred to as the "Subscribing Reinsurer")

                               with respect to the

                WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 2005

                         issued to and duly executed by

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group


The Subscribing Reinsurer hereby accepts the following percentage shares in the
interests and liabilities of the "Reinsurer" as set forth in the attached
Contract captioned above:

             10.0%  of the First Workers' Compensation Catastrophe Reinsurance
             10.0%  of the Second Workers' Compensation Catastrophe Reinsurance

This Agreement shall become effective at 12:01 a.m., Local Standard Time,
January 1, 2005, and shall continue in force until terminated in accordance with
the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and liabilities of the
other reinsurers.

IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date undermentioned at:

East Norriton, Pennsylvania, this 16th day of February in the year 2005.

                             /s/ William Reichert
                             --------------------------------------------------
                             IOA RE, Inc. (for and on behalf of
                             Catlin Insurance Company Ltd.)





                       INTERESTS AND LIABILITIES AGREEMENT

                                       of

                     Platinum Underwriters Reinsurance, Inc.
                               Baltimore, Maryland
            (hereinafter referred to as the "Subscribing Reinsurer")

                               with respect to the

                WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 2005

                         issued to and duly executed by

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group


The Subscribing Reinsurer hereby accepts the following percentage shares in the
interests and liabilities of the "Reinsurer" as set forth in the attached
Contract captioned above:

             10.0%  of the First Workers' Compensation Catastrophe Reinsurance
             10.0%  of the Second Workers' Compensation Catastrophe Reinsurance

This Agreement shall become effective at 12:01 a.m., Local Standard Time,
January 1, 2005, and shall continue in force until terminated in accordance with
the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and liabilities of the
other reinsurers.

IN WITNESS WHEREOF, the Subscribing Reinsurer by its duly authorized
representative has executed this Agreement as of the date undermentioned at:

New York, New York, this 11th day of March in the year 2005.

                             /s/ Michael Smiley
                             -------------------------------------------------
                             Platinum Underwriters Reinsurance, Inc.





                       INTERESTS AND LIABILITIES AGREEMENT

                                       of

                     Certain Underwriting Members of Lloyd's
                 shown in the Signing Schedules attached hereto
            (hereinafter referred to as the "Subscribing Reinsurer")

                               with respect to the

                WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 2005

                         issued to and duly executed by

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group


The Subscribing Reinsurer hereby accepts the following percentage shares in the
interests and liabilities of the "Reinsurer" as set forth in the attached
Contract captioned above:

             60.0%  of the First Workers' Compensation Catastrophe Reinsurance
             40.0%  of the Second Workers' Compensation Catastrophe Reinsurance

This Agreement shall become effective at 12:01 a.m., Local Standard Time,
January 1, 2005, and shall continue in force until terminated in accordance with
the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and liabilities of the
other reinsurers.

In any action, suit or proceeding to enforce the Subscribing Reinsurer's
obligations under the attached Contract, service of process may be made upon
Mendes & Mount, 750 Seventh Avenue, New York, New York 10019.

Signed for and on behalf of the Subscribing Reinsurer in the Signing Schedules
attached hereto.





                       INTERESTS AND LIABILITIES AGREEMENT

                                       of

                           Certain Insurance Companies
                shown in the Signing Schedule(s) attached hereto
            (hereinafter referred to as the "Subscribing Reinsurer")

                               with respect to the

                WORKERS' COMPENSATION CATASTROPHE EXCESS OF LOSS
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 2005

                         issued to and duly executed by

                      American Interstate Insurance Company
                               DeRidder, Louisiana
                 American Interstate Insurance Company of Texas
                                  Austin, Texas
                            Silver Oak Casualty, Inc.
                               DeRidder, Louisiana
                                       and
                 any other insurance companies which are now or
          hereafter come under the ownership, control or management of
                            Amerisafe Insurance Group


The Subscribing Reinsurer hereby accepts the following percentage shares in the
interests and liabilities of the "Reinsurer" as set forth in the attached
Contract captioned above:

             20.0%  of the First Workers' Compensation Catastrophe Reinsurance
             20.0%  of the Second Workers' Compensation Catastrophe Reinsurance

This Agreement shall become effective at 12:01 a.m., Local Standard Time,
January 1, 2005, and shall continue in force until terminated in accordance with
the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and
apart from the shares of the other reinsurers, and shall not be joint with the
shares of the other reinsurers, it being understood that the Subscribing
Reinsurer shall in no event participate in the interests and liabilities of the
other reinsurers.

In any action, suit or proceeding to enforce the Subscribing Reinsurer's
obligations under the attached Contract, service of process may be made upon
Mendes & Mount, 750 Seventh Avenue, New York, New York 10019.

Signed for and on behalf of the Subscribing Reinsurer in the Signing Schedule(s)
attached hereto.

EX-10.15

                                                                   Exhibit 10.15

                        COMMUTATION AND RELEASE AGREEMENT

As of the Effective Date, this Commutation and Release Agreement (this
"Commutation Agreement") is made and entered into by and between AMERISAFE,
Inc., (also known as Amerisafe Insurance Group of DeRidder, Louisiana) on behalf
of itself and all of its Affiliated (as defined herein) and/or subsidiary
companies, including, but not limited to, American Interstate Insurance Company
and Silver Oak Casualty, Inc., and Converium Reinsurance (North America) Inc.
(formerly known as Zurich Reinsurance (North America), Inc.) of Stamford,
Connecticut.

WHEREAS, Company (as defined herein) and Reinsurer (as defined herein) have
entered into the Reinsurance Agreements (as defined herein) pursuant to which
Company ceded to Reinsurer, and Reinsurer assumed from Company, certain
liabilities arising out of policies of insurance written by Company; and

WHEREAS, Company and Reinsurer wish to terminate and extinguish the Reinsurance
Agreements and to fully and finally settle, resolve and commute, by means of the
payment described herein, all their rights, privileges, duties, liabilities and
obligations under the Reinsurance Agreements; and

WHEREAS, Company and Reinsurer understand and acknowledge that Reinsurer's
liabilities and obligations to Company under the Reinsurance Agreements include
paid and outstanding losses and loss adjustment expenses, as well as losses
incurred but not reported, and therefore can be estimated but cannot presently
be determined in an amount certain; and

WHEREAS, Company and Reinsurer intend by this Commutation Agreement to fully and
forever release and discharge each other from their respective existing and
future liabilities and obligations, including contingent and uncertain
liabilities, under the Reinsurance Agreements; and

WHEREAS, Company and Reinsurer agree that it is in each of their best interests
to freely and voluntarily enter into this Commutation Agreement and to
compromise, resolve and settle all amounts due, or which may become due, between
each other.

NOW, THEREFORE, and in consideration of the premises and mutual covenants and
conditions set forth herein and the payment to be made hereunder, and intending
to be legally bound, Company and Reinsurer agree as follows:

                             ARTICLE I - DEFINITIONS

A.    "Affiliate" or "Affiliated" means that the person in question is an
      "affiliate" of, or a person "affiliated" with a specified person, if the
      person in question is a person that directly, or indirectly, through one
      or more intermediaries, controls, or is controlled by, or is under common
      control with, such specified person.

B.    "Company" means AMERISAFE, Inc., (also known as Amerisafe Insurance Group
      of DeRidder, Louisiana) and its predecessors, successors and assigns, and


       all Affiliated and/or subsidiary insurers that are presently, or were at
       one time, parties to any Reinsurance Agreement, including, but not
       limited to, the following persons: American Interstate Insurance Company
       and Silver Oak Casualty, Inc.

C.    "Closing Date" is July 27, 2005

D.    "Effective Date" is June 30, 2005.

E.    "Reinsurer" is Converium Reinsurance (North America) Inc. (formerly known
      as Zurich Reinsurance (North America), Inc.) and its predecessors,
      successors and assigns.

F.    "Reinsurance Agreements" are: (i) the specific treaty reinsurance
      agreements, including all amendments, endorsements and addenda thereto,
      entered into by and between Company and Reinsurer as follows: (CRNA ref.
      no. WC3080A) First Casualty Excess of Loss Reinsurance Agreement -
      A20500-221 99-0101 A4, (CRNA ref. no. WC3080B) Second Casualty Excess of
      Loss Reinsurance Agreement- A20500-222 99-0101 A4, (CRNA ref. no. WC3080C)
      Third Casualty Excess of Loss Reinsurance Agreement - A20500-223 99-01-01
      A4; and (ii) also any and all other insurance or reinsurance agreements
      that are not identified specifically in this paragraph (F) and that are
      agreements pursuant to which Reinsurer assumes or has assumed from Company
      liabilities or obligations arising out of insurance written and/or
      reinsurance assumed by Company with the exception of the following
      treaties that are excluded from the scope of this Commutation Agreement
      and shall remain in full force and effect: (CRNA ref. no. WC3080D) Fourth
      Casualty Excess of Loss Reinsurance Agreement - A20500-224 99-01-01 A4,
      (CRNA ref. no. WC3080E) Fifth Casualty Excess of Loss Reinsurance
      Agreement - A20500-225 99-01-01 A4.

                              ARTICLE II - PAYMENT

A.    Reinsurer shall pay to Company the sum of USD $61,296,796.68 (the
      "Commutation Amount").

B.    Reinsurer shall remit payment of 81% of the Commutation Amount via direct
      wire transfer, in immediately available funds, to the account designated
      by Company in Exhibit A (that is attached hereto and incorporated herein
      by reference) within two (2) business days of the Closing Date. Reinsurer
      shall remit payment of the remaining 19% of the Commutation Amount via
      direct wire transfer, in immediately available funds, to the account
      designated by Company in Exhibit A within eight (8) business days of the
      Closing Date.

                              ARTICLE III - RELEASE

As of the Effective Date, the Reinsurance Agreements shall be terminated and
commuted in full and the parties agree as follows:

                                       2


A.    In consideration for Reinsurer's payment of the Commutation Amount,
      Company, on behalf of itself, its Affiliates, and its successors and
      assigns, hereby fully and unconditionally releases and forever discharges
      Reinsurer and its Affiliates, its successors and assigns, and their
      officers, directors, shareholders, employees, representatives and
      attorneys and their heirs, executors and assigns from any and all
      liabilities and obligations arising out of, in respect of, or relating to
      the Reinsurance Agreements, including, but not limited to, any and all
      premiums, losses, claims, liabilities, damages, judgments, debts, duties,
      sums of money, covenants, errors, omissions, counter-claims, suits,
      accounts, contributions, indemnifications, promises, interest credit,
      ultimate net loss amounts, return premium amounts, funds withheld account
      balance amounts (whether such balance amounts are positive or negative as
      of the Effective Date), experience refund amounts, dividends, expenses,
      costs, offsets, attorney's fees, and all other causes of action and
      demands whatsoever, whether in law, in equity, or otherwise, whether known
      or unknown, vested or contingent, liquidated or unliquidated, matured or
      unmatured, reported or unreported, disputed or undisputed, quantified or
      not quantified and whether currently existing or arising in the future.
      Company acknowledges that its receipt of the Commutation Amount effects a
      complete discharge, release, accord, satisfaction, settlement and
      commutation of all of the past, present and future liabilities and
      obligations of Reinsurer arising out of, in respect of, or relating to the
      Reinsurance Agreements.

B.    Effective simultaneously with Company's release of Reinsurer as provided
      in Paragraph A herein, Reinsurer on behalf of itself, its Affiliates, and
      its successors and assigns, hereby fully and unconditionally releases and
      forever discharges Company and its Affiliates, its successors and assigns,
      and their officers, directors, shareholders, employees, representatives
      and attorneys and their heirs, executors and assigns from any and all
      liabilities and obligations arising out of, in respect of, or relating to
      the Reinsurance Agreements, including, but not limited to, any and all
      premiums, losses, claims, liabilities, damages, judgments, debts, duties,
      sums of money, covenants, errors, omissions, counter-claims, suits,
      accounts, contributions, indemnifications, promises, interest credit,
      ultimate net loss amounts, return premium amounts, funds withheld account
      balance amounts (whether such balance amounts are positive or negative as
      of the Effective Date), experience refund amounts, dividends, expenses,
      costs, offsets, attorney's fees, and all other causes of action and
      demands whatsoever, whether in law, in equity, or otherwise, whether known
      or unknown, vested or contingent, liquidated or unliquidated, matured or
      unmatured, reported or unreported, disputed or undisputed, quantified or
      not quantified and whether currently existing or arising in the future, it
      being the intention of the parties that this Commutation Agreement
      operates as a full and final settlement of any and all of the parties'
      respective obligations and liabilities related to the Reinsurance
      Agreements.

C.    Nothing in this Commutation Agreement shall be construed as releasing any
      claims that Company or Reinsurer may have against any person that is not a
      person (or category or subset of persons) that is included within the
      scope of the general release language set forth in Paragraph A and
      Paragraph B herein,

                                       3


      including but not limited to, any claims or potential claims that
      Reinsurer may have against its retrocessionaires that arise out of or are
      related to one or more of the Reinsurance Agreements. This Commutation
      Agreement shall not confer any rights or benefits upon any third party,
      except as may be expressly provided herein.

D.    Company and Reinsurer expressly assume the risk that acts, omissions,
      matters, causes or things may have occurred which are not known or are not
      expected to exist by either of them. To the fullest extent permitted by
      law, Company and Reinsurer hereby waive, and shall not seek the protection
      of the terms and provisions of any statute, rule or doctrine of common law
      which:

            (i)   narrowly construes releases that purport by their terms to
                  release claims based upon, relating to or arising out of such
                  acts, omissions, matters, causes or things referred to above
                  in this Paragraph D, or

            (ii)  restricts or prohibits the release of such claims.

                            ARTICLE IV - NON-RELIANCE

A.    This Commutation Agreement fully and finally resolves the rights, duties
      and obligations of Company and Reinsurer under the Reinsurance Agreements,
      and neither party shall:

            (i)   have any remedy in respect of any representation, warranty or
                  undertaking of the other that is not specifically set forth in
                  this Commutation Agreement, whether or not relied upon by the
                  other party, or

            (ii)  seek to reopen or set aside this Commutation Agreement or any
                  of the Reinsurance Agreements on any basis whatsoever,
                  including, without limitation, that this Commutation Agreement
                  or any of the Reinsurance Agreements is void or voidable due
                  to a mistake or change in law or mistake of fact in any way
                  related to this Commutation Agreement or any of the
                  Reinsurance Agreements.

B.    Each of Company and Reinsurer has entered voluntarily into this
      Commutation Agreement based upon its own independent assessment of the
      relevant facts and its rights and obligations under the Reinsurance
      Agreements and not based upon any representations that were made or
      disclosures that were not made by the other party, its Affiliates,
      officers, directors, shareholders, employees, representatives, agents,
      attorneys or their respective heirs, administrators, predecessors,
      successors and assigns. Company and Reinsurer acknowledge that each has
      had a full and fair opportunity to consult with, and seek the advice and
      recommendations of, its counsel prior to its execution of this Commutation
      Agreement.

                                       4


                                ARTICLE V - OTHER

A.    Each of Company and Reinsurer represents and warrants to the other that:

            (i)   it is authorized to enter into this Commutation Agreement;

            (ii)  the persons executing this Commutation Agreement on behalf of
                  the party have the necessary and appropriate authority to do
                  so and that this Commutation Agreement has been duly and
                  validly executed by such party;

            (iii) this Commutation Agreement constitutes the valid and binding
                  obligation of such party and is enforceable according to its
                  terms;

            (iv)  there are no pending or existing agreements, transactions, or
                  negotiations to which either party is a party that would
                  render this Commutation Agreement, or any part thereof, void,
                  voidable or unenforceable;

            (v)   it has obtained all authorizations, consents or approvals of
                  any governmental or regulatory entity required to make this
                  Commutation Agreement valid and binding; and

            (vi)  no claim or loss being released by this Commutation Agreement
                  has been assigned, transferred or sold to any other person or
                  entity.

B.    Company represents and warrants to Reinsurer the following: (i) all
      Affiliated insurers that are presently, or were at one time, parties to
      any Reinsurance Agreement are listed specifically in the definition of
      "Company" in this Commutation Agreement; and (ii) there are no insurers
      that were formerly Affiliated with Company and that are presently, or were
      at one time, parties to any Reinsurance Agreement that are now controlled
      by a person that is not Affiliated with Company.

C.    This Commutation Agreement may not be modified except by written amendment
      executed by both Company and Reinsurer.

D.    This Commutation Agreement, and the rights, duties and obligations set
      forth herein, shall inure to the benefit of, and be binding upon,
      Company's and Reinsurer's officers, directors, employees, affiliates,
      stockholders, predecessors, successors, assigns and, to the extent
      permitted by law, liquidators, rehabilitators, receivers and other
      statutory successors.

E.    Company and Reinsurer each intend and agree that the existence of this
      Commutation Agreement, and the terms hereof, shall remain strictly
      confidential. Neither Company nor Reinsurer (including their respective
      attorneys, agents, representatives and/or Affiliates) shall disclose or
      disseminate in any way the facts or terms related to this Commutation
      Agreement, except as may be

                                       5


      necessary or appropriate to parent companies and/or Affiliates,
      retrocessionaires, auditors, reinsurance intermediaries, rating agencies,
      governmental or regulatory authorities, in filings with the Securities and
      Exchange Commission, or as may be required by legal or regulatory process
      or for any purpose relating to or arising from such filings.

F.    This Commutation Agreement may be executed and delivered in multiple
      counterparts, each of which, when so executed and delivered, shall
      constitute an original, and all of which taken together shall constitute
      one instrument. This Commutation Agreement may be executed and transmitted
      by facsimile provided that an original executed copy shall be exchanged
      promptly and be substituted for copies executed and transmitted by
      facsimile.

G.    This Commutation Agreement shall be construed and governed by the laws of
      the State of Louisiana, without regard for the State of Louisiana's
      conflicts of law provision, and any action brought to enforce the terms of
      this Commutation Agreement shall be brought solely in the State or Federal
      Courts for the State of Louisiana. In any such action, the Parties consent
      to the jurisdiction of the State or Federal Courts for the State of
      Louisiana and waive any right to argue that the State or Federal Courts
      for the State of Louisiana are an inappropriate or inconvenient forum.

H.    The parties, as between and among themselves, understand that they may
      have sustained damages or incurred obligations that may not yet be
      manifest and that are presently unknown, but nevertheless, the parties
      deliberately intend and do hereby fully release one another as provided in
      this Commutation Agreement. Furthermore, the parties expressly accept and
      assume the risk that the factual or legal assumptions made by either party
      in connection with this Commutation Agreement may be found hereafter to be
      different from the true facts or law, and the parties agree that this
      Commutation Agreement (including the release of claims contemplated
      thereby) shall be and remain in full force and effect notwithstanding such
      differences in facts or law.

I.    The parties specifically agree and acknowledge that Reinsurer's payment of
      the value of the Commutation Amount is being paid in good faith and
      constitutes fair consideration for the discharge of amounts allegedly
      owing now or potentially owing in the future by either party in respect of
      the Reinsurance Agreements.

J.    Each party has had the opportunity to negotiate the terms and modify the
      draftsmanship of this Commutation Agreement. Therefore, the terms of this
      Commutation Agreement shall be considered and interpreted without any
      presumption, inference or rule requiring construction or interpretation of
      any provision of this Commutation Agreement against the interest of the
      drafter of the Commutation Agreement.

K.    The failure of the parties to enforce any provision of this Commutation
      Agreement shall not be construed as a waiver of such provision or any
      other provision of this Commutation Agreement. No waiver of any provision
      of this

                                       6


      Commutation Agreement shall be deemed a waiver of any of its other terms,
      nor shall such waiver constitute a continuing waiver.

L.    The Parties agree that in the event payment of the Commutation Amount by
      Reinsurer, as described in Article II herein, is not received by Company,
      then this Commutation Agreement shall be considered null and void ab
      initio. Moreover, if any court of competent jurisdiction issues an order,
      decision or ruling in accordance with applicable law declaring this
      Commutation Agreement, any of the provisions contained in Article III(A)
      or Article III(B) herein, or the payment of the Commutation Amount made
      under Article II herein to be null, void, illegal, avoided or otherwise
      unenforceable or rescinded ab initio and such order, decision or ruling
      becomes final and unappealable with no appeal or stay pending (the "Final
      Order"), then this Commutation Agreement shall be rescinded immediately
      and be declared null and void ab initio, each of Reinsurer and Company
      shall be restored to the position they were in just prior to the execution
      of this Commutation Agreement and the Reinsurance Agreements shall be in
      full force and effect as if this Commutation Agreement had never existed.
      Company shall return the Commutation Amount plus an Investment Credit
      Amount (as defined herein) within ten (10) business days of the date of
      such Final Order, subject to deduction and/or offset by Company for
      amounts that would have become due and owing under the Reinsurance
      Agreements during the period commencing with the Effective Date and ending
      with the date of the Final Order. In the event that Company wrongfully
      fails to return the Commutation Amount plus the Investment Credit Amount
      within ten (10) business days of such Final Order (subject to deduction
      and/or offset by Company for amounts that Reinsurer would have paid to
      Company under the Reinsurance Agreements had this Commutation Agreement
      not been in effect) and Reinsurer institutes legal proceedings against
      Company to enforce its rights under this Commutation Agreement, Company
      shall pay all of Reinsurer's reasonable and necessary expenses and costs,
      including, but not limited to, Reinsurer's reasonable attorneys' fees,
      associated with such legal proceedings. The "Investment Credit Amount"
      shall be defined as the sum of all Quarterly Investment Credits (as
      defined herein) for each calendar quarter from the date that the
      Commutation Amount was paid by Reinsurer to the date that Reinsurer
      receives payment in full pursuant to this paragraph L. The "Quarterly
      Investment Credit" shall be calculated quarterly, commencing with the
      calendar quarter following the date that the Commutation Amount was paid
      by Reinsurer, by applying the coupon rate on a 10-Year U.S. Treasury Bond
      as of the last business day of each calendar quarter, divided by 4, to the
      Remaining Balance (as defined herein) as of the end of each calendar
      quarter. If Reinsurer is repaid at other than quarter-end, the final
      Quarterly Investment Credit will be pro-rated accordingly. The "Remaining
      Balance" shall be defined as the Commutation Amount less all amounts that
      would have been paid to Company under the Reinsurance Agreements if this
      Commutation Agreement had never existed. In the event of a Final Order,
      Reinsurer expressly reserves all rights it has to challenge any claims
      billed to it by Company under the Reinsurance Agreements and the parties
      each reserve all rights to setoff, recoupment, counterclaim and defenses
      that it may have. Company agrees that neither the foregoing provision nor
      any other provision in this paragraph is intended to be and shall not be

                                       7


      deemed or argued to constitute a waiver by Reinsurer of any and all rights
      that it may have to audit, question, challenge, or dispute any claims
      deducted or offset from the Commutation Amount by Company under this
      paragraph, and Reinsurer expressly reserves all such rights. In the event
      that any part of this Commutation Agreement (except for any of the
      provisions contained in Article III(A) or Article III(B) herein or the
      payment of the Commutation Amount made under Article II) should for any
      reason become or be found to be null, void, illegal or otherwise
      unenforceable, it shall be struck out to the extent that it is so null,
      void, illegal or unenforceable, and the remaining provisions of this
      Commutation Agreement shall remain in full force and effect.

M.    This Commutation Agreement constitutes the entire agreement between
      Company and Reinsurer and supersedes all prior and contemporaneous oral
      and/or written agreements and understandings between the parties relating
      to the Reinsurance Agreements.

N.    Company and Reinsurer absolutely and unconditionally covenant and agree
      with each other, and their respective successors and assigns, that
      subsequent to the Closing Date of this Commutation Agreement, neither
      party will hereafter for any reason whatsoever, demand, claim, file suit
      or initiate arbitration, mediation, litigation or other legal proceedings
      against the other in respect of any matters relating to the Reinsurance
      Agreements, except for a legal proceeding to enforce rights and/or
      remedies that are provided for expressly pursuant to this Commutation
      Agreement.

                                       8


IN WITNESS WHEREOF, the parties have executed this Commutation Agreement by
their respective duly authorized officers.

AMERISAFE, INC. (ALSO KNOWN AS AMERISAFE INSURANCE GROUP) ON BEHALF OF ITSELF
AND ALL OF ITS AFFILIATED AND/OR SUBSIDIARY COMPANIES, INCLUDING, BUT NOT
LIMITED TO, AMERICAN INTERSTATE INSURANCE COMPANY AND SILVER OAK CASUALTY, INC.

By: /s/  C Allen Bradley, Jr.
    ----------------------------------------------------
Title:  President and Chief Executive Officer

CONVERIUM REINSURANCE (NORTH AMERICA) INC.
(FORMERLY KNOWN AS ZURICH REINSURANCE (NORTH AMERICA), INC.)

By: /s/  Raymond Dowling
    --------------------------------------------------
         Raymond Dowling
       _______________________________________________
Title: Senior Vice President and Chief Reinsurance
       Officer

                                       9

EX-21.1

                                                                               .
                                                                               .
                                                                               .

                                                                    Exhibit 21.1

                         SUBSIDIARIES OF AMERISAFE, INC.


NAME                                                        JURISDICTION
- ----                                                        ------------
                                                         
American Interstate Insurance Company                         Louisiana

      - American Interstate Insurance Company of Texas        Texas

      - Silver Oak Casualty, Inc.                             Louisiana

Amerisafe Risk Services, Inc.                                 Louisiana

Amerisafe General Agency, Inc.                                Louisiana

EX-23.2

exv23w2

EX-24.1

                                                                    Exhibit 24.1

                               POWERS OF ATTORNEY

      KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned hereby
constitutes and appoints Mark R. Anderson, C. Allen Bradley, Jr., Geoffrey R.
Banta and Arthur L. Hunt, and each of them, the true and lawful attorney or
attorneys-in-fact, with full power of substitution and resubstitution, for him
and in his name, place and stead, to sign on his behalf as a director or officer
or both, as the case may be, of AMERISAFE, Inc. (the "Corporation") a
Registration Statement on Form S-1 (and any abbreviated registration statement
relating thereto permitted pursuant to Rule 462(b) under the Securities Act of
1933, as amended (the "Securities Act")), for the purpose of registering under
the Securities Act shares of the Corporation's common stock, par value $0.01 per
share, and to sign any or all amendments and any or all post-effective
amendments to such Registration Statement (and any such abbreviated registration
statement) and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney or attorneys-in-fact, and each of them with or without the
others, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could in person, hereby ratifying and
confirming all that said attorney or attorneys-in-fact or any of them or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

      /s/ Mark R. Anderson                      /s/  Sean M. Traynor
- ----------------------------------       ---------------------------------------
      Mark R. Anderson                          Sean M. Traynor

      /s/ C. Allen Bradley, Jr.                 /s/  Paul B. Queally
- ----------------------------------       ---------------------------------------
      C. Allen Bradley, Jr.                     Paul B. Queally

      /s/ Geoffrey R. Banta
- ----------------------------------
      Geoffrey R. Banta

Dated:  August 1, 2005

EX-99.1

                                                                    Exhibit 99.1

                           CONSENT OF DIRECTOR NOMINEE

      I hereby consent to the use of my name, disclosure regarding my agreement
to join the Board of Directors of AMERISAFE, Inc. (the "Company") upon the
consummation of the Company's initial public offering, and the disclosure of my
biographical information included under the heading "Management" and elsewhere
in the Company's Registration Statement on Form S-1 to be filed with the
Securities and Exchange Commission on or about August 2, 2005, and in all
amendments or supplements thereto.

                                             /s/ Jared Morris
                                             --------------------------------
                                                     Jared Morris

Dated August 1, 2005