10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the Quarterly Period Ended September 30, 2004

Commission File Number 0-22280

PHILADELPHIA CONSOLIDATED HOLDING CORP.

(Exact name of registrant as specified in its charter)

PENNSYLVANIA	23-2202671
(State of Incorporation)	(IRS Employer Identification No.)

One Bala Plaza, Suite 100
Bala Cynwyd, Pennsylvania 19004
(610) 617-7900

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES x NO: o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

YES x NO: o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of October 29, 2004.

Common Stock, no par value, 22,242,062 shares outstanding

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
INDEX
For the Quarterly Period Ended September 30, 2004

Part I - Financial Information (Unaudited)
Item 1. Financial Statements:
Consolidated Balance Sheets – September 30, 2004 and December 31, 2003	3
Consolidated Statements of Operations and Comprehensive Income - For the three and nine months ended September 30, 2004 and 2003	4
Consolidated Statements of Changes in Shareholders’ Equity - For the nine months ended September 30, 2004 and year ended December 31, 2003	5
Consolidated Statements of Cash Flows - For the nine months ended September 30, 2004 and 2003	6
Notes to Consolidated Financial Statements	7-17
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations	18-31
Item 3.
Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.
Controls and Procedures	33
Part II - Other Information
Item 1.
Legal Proceedings	34
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.
Defaults Upon Senior Securities	34
Item 4.
Submission of Matters to a Vote of Security Holders	34
Item 5.
Other Information	34
Item 6.
Exhibits	35-39
Signatures	40
GAP QUOTA SHARE REINSURANCE CONTRACT
CASUALTY EXCESS OF LOSS REINSURANCE CONTRACT
CASUALTY (CLASS) EXCESS OF LOSS
CASUALTY SEMI-AUTOMATIC FACULTATIVE EXCESS OF LOSS
CASUALTY AUTOMATIC FACULTATIVE CERTIFICATE
FL HURRICANE FUND CONTRACT (LIBERTY AMERICAN)
FL HURRICANE FUND CONTRACT (MOBILE USA)
EXCESS CATASTROPHE REINSURANCE CONTRACT
FL ONLY EXCESS CATASTROPHE REINSURANCE CONTRACT
$50 MIL EXCESS OF $90 MIL FL ONLY EXCESS CONTRACT
UNDERLYING EXCESS CATASTROPHE COVERAGE
REINSTATEMENT PREMIUM PROTECTION CONTRACT
UNDERLYING EXCESS CATASTROPHE AND REINSTATEMENT CONTRACT
$50 MIL EXCESS OF $140 MIL FL ONLY EXCESS CONTRACT
65% FL ONLY THIRD AND FOURTH EVENT CONTRACT
35% FL ONLY THIRD AND FOURTH EVENT CONTRACT
THIRD CATASTROPHE CONTRACT PLACEMENT SLIP
THIRD CATASTROPHE CONTRACT
$50 MIL EXCESS OF $140 MIL PLACEMENT SLIP
$5 MIL EXCESS OF $190 MIL PLACEMENT SLIP
$45.0 MIL EXCESS OF $195 MIL PLACEMENT SLIP
$6.5 MIL EXCESS OF 3.5 MIL FIFTH EVENT PLACEMENT SLIP
CEO CERTIFICATION PURSUANT TO SECTION 302
CFO CERTIFICATION PURSUANT TO SECTION 302
CEO CERTIFICATION PURSUANT TO SECTION 906
CFO CERTIFICATION PURSUANT TO SECTION 906

2

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE DATA)

	As of
	September 30,			December 31,
	2004			2003
	(Unaudited)
ASSETS
INVESTMENTS:
FIXED MATURITIES AVAILABLE FOR SALE AT MARKET (AMORTIZED COST $1,234,040 AND $1,066,523)	$	1,251,297		$	1,081,694
EQUITY SECURITIES AT MARKET (COST $114,382 AND $79,813)		121,520			90,358
TOTAL INVESTMENTS		1,372,817			1,172,052
CASH AND CASH EQUIVALENTS		116,175			73,942
ACCRUED INVESTMENT INCOME		13,496			11,008
PREMIUMS RECEIVABLE		236,842			179,509
PREPAID REINSURANCE PREMIUMS AND REINSURANCE RECEIVABLES		793,197			292,157
DEFERRED INCOME TAXES		22,653			18,147
DEFERRED ACQUISITION COSTS		90,159			56,288
PROPERTY AND EQUIPMENT, NET		19,911			16,821
GOODWILL		25,724			25,724
OTHER ASSETS		69,671			25,293
TOTAL ASSETS	$	2,760,645		$	1,870,941
LIABILITIES AND SHAREHOLDERS’ EQUITY
POLICY LIABILITIES AND ACCRUALS:
UNPAID LOSS AND LOSS ADJUSTMENT EXPENSES	$	1,242,256		$	627,086
UNEARNED PREMIUMS		541,717			422,589
TOTAL POLICY LIABILITIES AND ACCRUALS		1,783,973			1,049,675
FUNDS HELD PAYABLE TO REINSURER		124,557			110,011
LOANS PAYABLE		36,781			48,482
PREMIUMS PAYABLE		77,905			35,044
OTHER LIABILITIES		131,894			82,083
TOTAL LIABILITIES		2,155,110			1,325,295
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
PREFERRED STOCK, $.01 PAR VALUE, 10,000,000 SHARES AUTHORIZED, NONE ISSUED AND OUTSTANDING		—			—
COMMON STOCK, NO PAR VALUE, 100,000,000 SHARES AUTHORIZED, 22,231,432 AND 22,007,552 SHARES ISSUED AND OUTSTANDING		291,390			281,088
NOTES RECEIVABLE FROM SHAREHOLDERS		(6,331	)		(5,444	)
ACCUMULATED OTHER COMPREHENSIVE INCOME		15,857			16,715
RETAINED EARNINGS		304,619			253,287
TOTAL SHAREHOLDERS’ EQUITY		605,535			545,646
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,760,645		$	1,870,941

The accompanying notes are an integral part of the consolidated financial statements.

3

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(Unaudited)

	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2004			2003			2004			2003
REVENUE:
NET EARNED PREMIUMS	$	187,845		$	146,676		$	548,830		$	418,387
NET INVESTMENT INCOME		10,896			9,173			31,669			28,348
NET REALIZED INVESTMENT GAIN (LOSS)		268			474			985			(1,309	)
OTHER INCOME		719			1,988			2,930			3,689
TOTAL REVENUE		199,728			158,311			584,414			449,115
LOSSES AND EXPENSES:
LOSS AND LOSS ADJUSTMENT EXPENSES		760,267			100,645			1,027,473			328,023
NET REINSURANCE RECOVERIES		(612,498	)		(21,240	)		(676,144	)		(65,232	)
NET LOSS AND LOSS ADJUSTMENT EXPENSES		147,769			79,405			351,329			262,791
ACQUISITION COSTS AND OTHER UNDERWRITING EXPENSES		56,863			41,542			155,489			120,120
OTHER OPERATING EXPENSES		1,674			2,668			6,085			5,974
TOTAL LOSSES AND EXPENSES		206,306			123,615			512,903			388,885
INCOME (LOSS) BEFORE INCOME TAXES		(6,578	)		34,696			71,511			60,230
INCOME TAX EXPENSE (BENEFIT):
CURRENT		(1,541	)		10,403			24,222			25,392
DEFERRED		(2,942	)		718			(4,043	)		(6,832	)
TOTAL INCOME TAX EXPENSE (BENEFIT)		(4,483	)		11,121			20,179			18,560
NET INCOME (LOSS)	$	(2,095	)	$	23,575		$	51,332		$	41,670
OTHER COMPREHENSIVE INCOME, NET OF TAX:
HOLDING GAIN (LOSS) ARISING DURING PERIOD	$	11,157		$	(1,568	)	$	(218	)	$	1,231
RECLASSIFICATION ADJUSTMENT		(174	)		(308	)		(640	)		851
OTHER COMPREHENSIVE INCOME (LOSS)		10,983			(1,876	)		(858	)		2,082
COMPREHENSIVE INCOME	$	8,888		$	21,699		$	50,474		$	43,752
PER AVERAGE SHARE DATA:
BASIC EARNINGS (LOSS) PER SHARE	$	(0.09	)	$	1.08		$	2.32		$	1.90
DILUTED EARNINGS (LOSS) PER SHARE	$	(0.09	)	$	1.04		$	2.21		$	1.85
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING		22,230,729			21,913,053			22,120,481			21,879,748
WEIGHTED-AVERAGE SHARE EQUIVALENTS OUTSTANDING		1,132,451			787,627			1,120,535			681,716
WEIGHTED-AVERAGE SHARES AND SHARE EQUIVALENTS OUTSTANDING		23,363,180			22,700,680			23,241,016			22,561,464

The accompanying notes are an integral part of the consolidated financial statements.

4

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS’ EQUITY

(IN THOUSANDS, EXCEPT SHARE DATA)

	For the Nine
	Months Ended
	September 30, 2004			For the Year Ended
	(Unaudited)			December 31, 2003
COMMON SHARES:
BALANCE AT BEGINNING OF YEAR		22,007,552			21,868,877
EXERCISE OF EMPLOYEE STOCK OPTIONS		26,000			99,875
ISSUANCES OF SHARES PURSUANT TO STOCK PURCHASE PLANS, NET		197,880			38,800
BALANCE AT END OF PERIOD		22,231,432			22,007,552
TREASURY SHARES:
BALANCE AT BEGINNING OF YEAR		—			—
SHARES REPURCHASED PURSUANT TO AUTHORIZATION		—			10,000
EXERCISE OF EMPLOYEE STOCK OPTIONS		—			(6,500	)
ISSUANCES OF SHARES PURSUANT TO STOCK PURCHASE PLANS, NET		—			(3,500	)
BALANCE AT END OF PERIOD		—			—
COMMON STOCK:
BALANCE AT BEGINNING OF YEAR	$	281,088		$	276,945
EXERCISE OF EMPLOYEE STOCK OPTIONS		819			2,852
ISSUANCES OF SHARES PURSUANT TO STOCK PURCHASE PLANS		9,483			1,291
BALANCE AT END OF PERIOD		291,390			281,088
NOTES RECEIVABLE FROM SHAREHOLDERS:
BALANCE AT BEGINNING OF YEAR		(5,444	)		(6,407	)
NOTES RECEIVABLE ISSUED PURSUANT TO EMPLOYEE STOCK PURCHASE PLANS		(2,307	)		(1,065	)
COLLECTION OF NOTES RECEIVABLE		1,420			2,028
BALANCE AT END OF PERIOD		(6,331	)		(5,444	)
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET OF DEFERRED INCOME TAXES:
BALANCE AT BEGINNING OF YEAR		16,715			16,185
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES		(858	)		530
BALANCE AT END OF PERIOD		15,857			16,715
RETAINED EARNINGS:
BALANCE AT BEGINNING OF YEAR		253,287			191,100
NET INCOME		51,332			62,187
BALANCE AT END OF PERIOD		304,619			253,287
COMMON STOCK HELD IN TREASURY:
BALANCE AT BEGINNING OF YEAR		—			—
EXERCISE OF EMPLOYEE STOCK OPTIONS		—			94
COMMON SHARES REPURCHASED		—			(300	)
ISSUANCES OF SHARES PURSUANT TO STOCK PURCHASE PLANS		—			206
BALANCE AT END OF PERIOD		—			—
TOTAL SHAREHOLDERS’ EQUITY	$	605,535		$	545,646

The accompanying notes are an integral part of the consolidated financial statements.

5

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(Unaudited)

	For the Nine Months Ended September 30,
	2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME	$	51,332		$	41,670
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
NET REALIZED INVESTMENT (GAIN) LOSS		(985	)		1,309
DEPRECIATION AND AMORTIZATION EXPENSE		9,374			6,148
DEFERRED INCOME TAX BENEFIT		(4,043	)		(6,832	)
CHANGE IN PREMIUMS RECEIVABLE		(57,333	)		(51,854	)
CHANGE IN PREPAID REINSURANCE PREMIUMS AND REINSURANCE RECEIVABLES, NET OF FUNDS HELD PAYABLE TO REINSURER		(486,494	)		(33,389	)
CHANGE IN OTHER RECEIVABLES		(2,488	)		(1,941	)
CHANGE IN INCOME TAXES PAYABLE		(16,932	)		636
CHANGE IN DEFERRED ACQUISITION COSTS		(33,871	)		7,111
CHANGE IN OTHER ASSETS		(15,681	)		(4,750	)
CHANGE IN UNPAID LOSS AND LOSS ADJUSTMENT EXPENSES		615,170			147,979
CHANGE IN UNEARNED PREMIUMS		119,128			125,698
CHANGE IN OTHER LIABILITIES		80,125			20,763
TAX BENEFIT FROM EXERCISE OF EMPLOYEE STOCK OPTIONS		387			495
NET CASH PROVIDED BY OPERATING ACTIVITIES		257,689			253,043
CASH FLOWS FROM INVESTING ACTIVITIES:
PROCEEDS FROM SALES OF INVESTMENTS IN FIXED MATURITIES		117,764			71,674
PROCEEDS FROM MATURITY OF INVESTMENTS IN FIXED MATURITIES		136,319			162,032
PROCEEDS FROM SALES OF INVESTMENTS IN EQUITY SECURITIES		32,938			10,936
COST OF FIXED MATURITIES ACQUIRED		(430,584	)		(419,264	)
COST OF EQUITY SECURITIES ACQUIRED		(63,338	)		(38,593	)
PURCHASE OF PROPERTY AND EQUIPMENT		(5,882	)		(4,632	)
NET CASH USED BY INVESTING ACTIVITIES		(212,783	)		(217,847	)
CASH FLOWS FROM FINANCING ACTIVITIES:
REPAYMENTS ON LOANS PAYABLE		(57,615	)		(34,245	)
PROCEEDS FROM LOANS PAYABLE		45,914			44,882
PROCEEDS FROM EXERCISE OF EMPLOYEE STOCK OPTIONS		432			1,590
PROCEEDS FROM COLLECTION OF NOTES RECEIVABLE		1,420			1,364
PROCEEDS FROM SHARES ISSUED PURSUANT TO STOCK PURCHASE PLANS		7,176			402
COST OF COMMON STOCK REPURCHASED		—			(300	)
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES		(2,673	)		13,693
NET INCREASE IN CASH AND CASH EQUIVALENTS		42,233			48,889
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		73,942			42,002
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	116,175		$	90,891
CASH PAID DURING THE PERIOD FOR:
INCOME TAXES	$	41,442		$	23,635
INTEREST	$	451		$	487
NON-CASH TRANSACTIONS:
ISSUANCE OF SHARES PURSUANT TO EMPLOYEE STOCK PURCHASE PLAN IN EXCHANGE FOR NOTES RECEIVABLE	$	2,307		$	1,154

The accompanying notes are an integral part of the consolidated financial statements.

6

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

1.	Basis of Presentation
	The consolidated financial statements for the quarterly period ended September 30, 2004 are unaudited, but in the opinion of management have been prepared on the same basis as the annual audited consolidated financial statements and reflect all adjustments, consisting of normal recurring adjustments and accruals, necessary for a fair statement of the information set forth therein. The results of operations for the nine months ended September 30, 2004 are not necessarily indicative of the operating results to be expected for the full year or any other period. Certain prior years’ amounts have been reclassified for comparative purposes.
	These consolidated financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Reports on Form 10-K and Form 10-K/A, Amendment No. 1 As of and For the Year Ended December 31, 2003.
2.	Stock-Based Compensation
	Stock-based compensation plans are accounted for under the provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. Accordingly, no compensation expense is recognized for fixed stock option grants and the Company’s stock purchase plans. The following table illustrates the effect on net income and earnings per share as if the provisions of statement of Financial Accounting Standards (SFAS) No. 123 (as amended by SFAS No. 148), “Accounting for Stock-Based Compensation,” had been applied for the three and nine months ended September 30, 2004 and 2003, respectively:

(In thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2004			2003			2004			2003
Net Income (Loss) As Reported	$	(2,095	)	$	23,575		$	51,332		$	41,670
Assumed Stock Compensation Cost		(1,134	)		(785	)		(2,932	)		(2,206	)
Pro Forma Net Income (Loss)	$	(3,229	)	$	22,790		$	48,400		$	39,464
Basic Earnings (Loss) Per Share:
As Reported	$	(0.09	)	$	1.08		$	2.32		$	1.90
Pro Forma	$	(0.15	)	$	1.04		$	2.19		$	1.80
Diluted Earnings (Loss) Per Share:
As Reported	$	(0.09	)	$	1.04		$	2.21		$	1.85
Pro Forma	$	(0.14	)	$	1.00		$	2.08		$	1.75

3.	Investments
	The carrying amounts for the Company’s investments approximate their estimated fair value. The Company measures the fair value of investments based upon quoted market prices or by obtaining quotes from dealers. At September 30, 2004, the Company held no derivative financial instruments or other securities containing embedded derivatives.
	The Company performs various analytical procedures with respect to its investments, including identifying any security whose fair value is below its cost. Upon identification of such securities, a detailed review is performed for such securities, excluding interests in securitized assets, meeting predetermined thresholds to determine whether a decline in fair value below a security’s cost basis is other than temporary. If the Company determines a decline in value to be other than temporary, the cost basis of the security is written down to its fair value with the amount of the write down included in earnings as a realized loss in the period the impairment

7

arose. This evaluation resulted in non-cash realized investment losses of $1.0 million and $0 million, respectively, for the three months ended September 30, 2004 and 2003 and $1.0 million and $0.9 million, respectively, for the nine months ended September 30, 2004 and 2003.

The Company’s impairment evaluation and recognition for interests in securitized assets is conducted in accordance with the guidance provided by the Emerging Issues Task Force of the Financial Accounting Standards Board. Under this guidance, impairment losses on securities must be recognized if both the fair value of the security is less than its book value and the net present value of expected future cash flows is less than the net present value of expected future cash flows at the most recent (prior) estimation date. If these criteria are met, an impairment charge, calculated as the difference between the current book value of the security and its fair value, is included in earnings as a realized loss in the period the impairment arose. Non-cash realized investment losses recorded for the three and nine months ended September 30, 2004 and 2003 were $4.7 million and $0.4 million, respectively, and $7.3 million and $2.6 million, respectively, as a result of the Company’s impairment evaluation for investments in securitized assets.

The following table (in thousands) identifies the period of time securities with an unrealized loss at September 30, 2004 have continuously been in an unrealized loss position. Included in the amounts displayed in the table are $0.1 million of unrealized losses due to non-investment grade fixed maturity securities having a fair value of $11.8 million. No issuer of securities or industry represents more than 4.9% and 17.1%, respectively, of the total estimated fair value, or 10.4% and 11.6%, respectively, of the total gross unrealized loss included in the table below. As previously discussed, there are certain risks and uncertainties inherent in the Company’s impairment methodology, including, but not limited to, the financial condition of specific industry sectors and the resultant effect on any such underlying security collateral values and changes in accounting, tax and/or regulatory requirements which may have an effect on either, or both, the investor and/or issuer. Should the Company subsequently determine a decline in the fair value below the cost basis to be other than temporary, the security would be written down to its fair value and the difference would be included in earnings as a realized loss for the period such determination was made.

	Less Than 12 Months				12 Months or More				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Fixed Maturities:
Available for Sale
U.S. Treasury Securities and Obligations of U.S. Government Corporations and Agencies	$	36,790	$	112	$	591	$	16	$	37,381	$	128
Obligations of States and Political Subdivisions		86,424		913		8,754		109		95,178		1,022
Corporate and Bank Debt Securities		137,780		1,152		1,444		20		139,224		1,172
Asset Backed Securities		31,785		171		4,687		153		36,472		324
Mortgage Pass-Through Securities		69,317		123		6,988		261		76,305		384
Collateralized Mortgage Obligations		29,726		195		4,158		191		33,884		386
Total Fixed Maturities Available for Sale		391,822		2,666		26,622		750		418,444		3,416
Equity Securities		28,612		3,397		—		—		28,612		3,397
Total Investments	$	420,434	$	6,063	$	26,622	$	750	$	447,056	$	6,813

Based upon the Company’s impairment evaluation as of September 30, 2004, it was concluded that the remaining unrealized losses in the table above are not other than temporary. The factors considered in reaching the conclusion that a decline below cost is other than temporary include, but are not limited to: whether the issuer is in financial distress; the performance of the collateral underlying a secured investment; whether a significant credit rating action has occurred; whether scheduled interest payments have been delayed or missed; whether changes in laws and/or regulations have impacted an issuer or industry; an assessment of the timing of a security’s recovery to fair value; and an ability and intent to hold the security to recovery of fair value.

8

4.	Restricted Assets
	The Insurance Subsidiaries have investments, principally U.S. Treasury securities and Obligations of States and Political Subdivisions, on deposit with the various states in which they are licensed insurers. At September 30, 2004 and December 31, 2003, the carrying value of the securities on deposit totaled $15.1 million and $15.5 million, respectively.
	Additionally, the Insurance Subsidiaries have investments, principally Mortgage Pass-Through securities, which collateralize the borrowings from the Federal Home Loan Bank of Pittsburgh, see Note 8. The carrying value of these investments was $53.1 million and $59.1 million as of September 30, 2004 and December 31, 2003, respectively.
5.	Goodwill
	The carrying amount of goodwill is subject, at a minimum, to an annual impairment test to identify potential goodwill impairment and measure the amount of a goodwill impairment loss to be recognized (if any). As a result of the impairment analysis, no change in the carrying amount of goodwill was recorded by the Company for the year ended December 31, 2003. The Company performed an interim impairment test during the third quarter of 2004 due to hurricane catastrophe losses incurred and associated accelerated reinsurance premium expense and concluded that the carrying amount of goodwill was not impaired. Consequently no change in the carrying amount of goodwill has been recorded for the nine months ended September 30, 2004.
6.	Liability for Unpaid Loss and Loss Adjustment Expenses
	The liability for unpaid loss and loss adjustment expenses reflects the Company’s best estimate for future amounts needed to pay losses and related settlement expenses with respect to insured events which have occurred. The process of establishing the ultimate claims liability is necessarily a complex and imprecise process, requiring the use of informed estimates and judgments using data currently available. The liability includes an amount determined on the basis of claim adjusters’ evaluations with respect to insured events that have occurred and an amount for losses incurred that have not been reported to the Company. In some cases significant periods of time, up to several years or more, may elapse between the occurrence of an insured loss and the reporting of such to the Company. The method for determining the Company’s liability for unpaid loss and loss adjustment expenses includes, but is not limited to, reviewing past loss experience and, industry data and considering other factors such as legal, social, and economic developments. The methods of making such estimates and establishing the resulting liabilities are regularly reviewed and updated and any adjustments there from are made in the accounting period in which the adjustment arose. If the Company’s ultimate losses, net of reinsurance, prove to differ substantially from the amounts recorded at September 30, 2004, the related adjustments could have a material impact on the Company’s financial condition, and results of operations.
	During the three months ended September 30, 2004, the Company increased the estimated gross and net unpaid loss and loss adjustment expenses for accident years 1997 through 2002 and decreased the estimated gross and net unpaid loss and loss adjustment expenses for accident year 2003 by the following amounts:

(In millions)

	Gross Basis			Net Basis
	increase (decrease)			increase (decrease)
Accident Year 2003	$	(22.7	)	$	(18.0	)
Accident Year 2002		32.6			30.5
Accident Years 2001-1997		13.7			12.6
Total	$	23.6		$	25.1

9

The increase in accident years 1997 through 2002 is principally attributable to continued case reserve development above expectations primarily across various professional liability products in the specialty lines segment and general liability and commercial automobile coverages in the commercial lines segment, as noted in the table below. The decrease in accident year 2003 is principally attributable to continued better than expected claim frequency primarily for general liability and commercial automobile coverages in the commercial lines segment, as noted in the table below:

(In millions)

	Gross Basis
	increase (decrease)
	Professional		General Liability			Commercial Auto
Accident Year	Liability Coverages		Coverages			Coverages			Other
2003	$	7.7	$	(10.6	)	$	(18.7	)	$	(1.1	)
2002	$	16.9	$	7.1		$	7.7		$	0.9
1997 – 2001	$	10.9	$	2.4		$	0.3		$	0.1

(In millions)

	Net Basis
	increase (decrease)
	Professional		General Liability			Commercial Auto
Accident Year	Liability Coverages		Coverages			Coverages			Other
2003	$	6.4	$	(7.7	)	$	(18.5	)	$	1.8
2002	$	14.2	$	6.8		$	8.9		$	0.6
1997 – 2001	$	6.8	$	2.0		$	1.6		$	2.2

The net decrease in estimated losses for accident year 2003 reduced the losses ceded by the Company to a quota share reinsurance agreement and resulted in the Company accruing an additional $2.9 million in ceding commission and $1.0 million in profit commission under the treaty.

Additionally, the Company decreased the 2004 accident year ultimate loss ratio to recognize better than anticipated pricing and loss trends. This decrease in the 2004 accident year loss ratio resulted in a release of $34.9 million and $27.2 million of 2004 gross and net accident year loss reserves, respectively. This decrease primarily occurred across general liability, commercial automobile and property coverages in the commercial lines segment, as noted below:

(In millions)

	Accident Year 2004
	increase (decrease)
	Professional		General Liability			Commercial Auto
	Liability Coverages		Coverages			Coverages			Other
Gross Basis	$	—	$	(8.9	)	$	(14.5	)	$	(11.5	)
Net Basis	$	3.7	$	(9.6	)	$	(12.8	)	$	(8.5	)

10

During the three months ended September 30, 2004, the Company experienced catastrophe losses attributable to Hurricanes Charley, Frances, Ivan and Jeanne. These catastrophe losses, as noted in the table below, impacted both the Company’s personal and commercial lines segments. With some areas having been affected multiple times, loss and loss adjustment expense estimates are still evolving due, in part, to the difficulty in making any precise estimate at this time of future remediation and repair costs.

(In millions)

Date of Event:	8/13/04		9/5/04		9/15/04		9/25/04
Hurricane:	Charley		Frances		Ivan		Jeanne		Total
Gross Loss and Loss Adjustment Expense Estimates:
Personal Lines Segment	$	205.2	$	118.2	$	14.0	$	267.4	$	604.8
Commercial Lines Segment		16.9		9.2		3.4		11.3		40.8
Total	$	222.1	$	127.4	$	17.4	$	278.7	$	645.6

Under the Company’s catastrophe reinsurance programs in place for these hurricanes, the Company had a $3.5 million pre-tax per occurrence loss retention for its personal lines catastrophe losses and a $7.0 million pre-tax per occurrence loss retention for its commercial lines catastrophe losses. The Company’s retention by hurricane is summarized in the table below:

(In millions)

Hurricane:	Charley		Frances		Ivan		Jeanne		Total
Net Loss and Loss Adjustment Expense Estimates:
Personal Lines Segment	$	3.5	$	3.5	$	3.5	$	3.5	$	14.0
Commercial Lines Segment		7.0		7.0		3.4		7.0		24.4
Total	$	10.5	$	10.5	$	6.9	$	10.5	$	38.4

11

7. Funds Held Payable To Reinsurer

Effective April 1, 2003, the Company entered into a quota share reinsurance agreement. Under this agreement, the Company ceded 22% of its net written premiums and loss and loss adjustment expenses for substantially all of the Company’s lines of business on policies effective April 1, 2003 through December 31, 2003, and 10% of its commercial and specialty lines net written premiums and loss and loss adjustment expenses for policies effective January 1, 2004 and thereafter. The Company receives a provisional commission of 33.0% adjusted pro-rata based upon the ratio of losses incurred to premiums earned. Pursuant to this reinsurance agreement the Company withholds the reinsurance premium due the reinsurers reduced by the reinsurers’ expense allowance, and the Company’s ceding commission allowance in a Funds Held Payable to Reinsurer account. This Funds Held Payable to Reinsurer account is also reduced by ceded paid losses and loss adjustment expenses under this agreement, and increased by an interest credit. In addition, the agreement allows for a profit commission to be paid to the Company upon commutation. Activity for the Funds Held Payable to Reinsurer is summarized as follows (in thousands):

	As of and For the			As of and For the
	Nine Months Ended			Year Ended
	September 30, 2004			December 31, 2003
Funds Held Payable to Reinsurer Balance at Beginning of Period	$	110,011		$	—
Net Written Premiums Ceded		71,696			199,358
Reinsurer Expense Allowance		(2,518	)		(7,376	)
Provisional Commission		(39,001	)		(73,933	)
Paid Loss and Loss Adjustment Expenses		(18,927	)		(10,701	)
Interest Credit		3,582			2,318
Other		(286	)		345
Subtotal Activity		14,546			110,011
Funds Held Payable to Reinsurer Balance at End of Period	$	124,557		$	110,011

	The Company has also accrued a profit commission receivable based upon the experience of the underlying business ceded to this reinsurance agreement, in the amounts of $4.0 million and $9.1 million for the three and nine months ended September 30, 2004, respectively. The profit commission reduces ceded written and earned premiums and increases net written and earned premiums.
8.	Loans Payable
	As of September 30, 2004, the Company had aggregate borrowings of $36.8 million from the Federal Home Loan Bank. These borrowings bear interest at adjusted LIBOR and mature twelve months or less from inception. The proceeds from these borrowings are invested in collateralized mortgage obligation and asset backed securities to achieve a positive spread between the rate of interest on these securities and the borrowing rates.

12

9. Earnings Per Share

Earnings per common share have been calculated by dividing net income for the period by the weighted average number of common shares and common share equivalents outstanding during the period. Following is the computation of earnings per share for the three and nine months ended September 30, 2004 and 2003, respectively (in thousands, except per share data):

	As of and For the Three					As of and For the Nine
	Months Ended September 30,					Months Ended September 30
	2004			2003		2004		2003
Weighted-Average Common Shares Outstanding		22,231			21,913		22,120		21,880
Weighted-Average Potential Shares Issuable		1,132			788		1,121		681
Weighted-Average Shares and Potential Shares Issuable		23,363			22,701		23,241		22,561
Net Income (Loss)	$	(2,095	)	$	23,575	$	51,332	$	41,670
Basic Earnings (Loss) per Share	$	(0.09	)	$	1.08	$	2.32	$	1.90
Diluted Earnings (Loss) per Share	$	(0.09	)	$	1.04	$	2.21	$	1.85

10.	Income Taxes
	The effective tax rate differs from the 35% marginal tax rate principally as a result of tax-exempt interest income, the dividend received deduction and other differences in the recognition of revenues and expenses for tax and financial reporting purposes.
11.	Reinsurance
	In the normal course of business, the Company has entered into various reinsurance contracts with unrelated reinsurers. The Company participates in such agreements for the purpose of limiting loss exposure and diversifying business. Reinsurance contracts do not relieve the Company from its obligations to policyholders. The effect of reinsurance on premiums written and earned is as follows (See Note 7):

(In thousands)

	For the Three Months Ended				For the Nine Months Ended
	September 30, 2004				September 30, 2004
	Written		Earned		Written		Earned
Direct Business	$	366,229	$	279,422	$	896,625	$	775,365
Reinsurance Assumed		1,197		1,756		3,620		5,753
Reinsurance Ceded		101,723		93,333		207,765		232,288
Net Premiums	$	265,703	$	187,845	$	692,480	$	548,830

	For the Three Months Ended				For the Nine Months Ended
	September 30, 2003				September 30, 2003
	Written		Earned		Written		Earned
Direct Business	$	283,112	$	210,013	$	684,810	$	561,718
Reinsurance Assumed		3,330		1,738		5,829		3,222
Reinsurance Ceded		86,077		65,075		238,523		146,553
Net Premiums	$	200,365	$	146,676	$	452,116	$	418,387

13

	Certain of the Company’s reinsurance contracts have provisions whereby the Company is entitled to a return profit commission based on the ultimate experience of the underlying business ceded to the contracts. Under the terms of these contracts, the Company accrued profit commissions of $4.6 million and $4.0 million for the three months ended September 30, 2004 and 2003, respectively, and $13.3 million and $5.9 million for the nine months ended September 30, 2004 and 2003, respectively. The profit commissions reduce ceded written and earned premiums and increase net written and earned premiums.
	During the three months ended September 30, 2004 the Company experienced catastrophe losses attributable to Hurricanes Charley, Frances, Ivan and Jeanne. Due to these multiple hurricane events, the Company purchased additional catastrophe reinsurance coverages (which provide coverage from the inception date of the coverage through May 31, 2005) to supplement its original reinsurance programs. The estimated aggregate pre-tax cost of these additional catastrophe reinsurance coverages is $18.8 million. Additionally, these multiple hurricane events resulted in accelerating the recognition of $27.7 million (pre-tax) catastrophe reinsurance premium expense due to the utilization of certain of the catastrophe reinsurance coverages. Of this $27.7 million, $13.0 million was attributable to the additional reinsurance coverages referred to above. This increase in reinsurance premium expense increased reinsurance ceded written and earned premiums and reduced net written and earned premiums.
	Prior to Hurricane Charley, the Company had coverage in place under its 2004 catastrophe reinsurance programs which provided $338.5 million in excess of a $3.5 million per occurrence retention for the Company’s personal lines catastrophe losses and $108.0 million in excess of a $7.0 million per occurrence retention for its commercial lines catastrophe losses. As noted above, due to the multiple hurricane events the Company purchased additional reinsurance coverages to supplement the original catastrophe reinsurance coverage which was utilized. Subsequent to Hurricanes Charley, Frances, and Ivan and prior to Hurricane Jeanne, the Company had coverage in place under its catastrophe reinsurance programs which provided approximately $285.0 million in excess of a $3.5 million per occurrence retention for its personal lines catastrophe losses and $108.0 million in excess of a $7.0 million per occurrence retention for its commercial lines catastrophe losses. Based upon the Company’s hurricane catastrophe loss estimates, the catastrophe reinsurance programs in place after Hurricane Jeanne provide $337.0 million in excess of a $3.5 million per occurrence retention for the Company’s personal lines catastrophe losses and $105.0 million in excess of a $10.0 million per occurrence retention for its commercial lines catastrophe losses. These catastrophe reinsurance programs provide catastrophe reinsurance coverage through May 31, 2005.
12.	Commitments and Contingencies
	The Company is subject to routine legal proceedings in connection with its property and casualty insurance business. The Company is not involved in any other pending or threatened legal or administrative proceedings which management believes can reasonably be expected to have a material adverse effect on the Company’s financial condition or results of operations.
13.	Comprehensive Income
	Components of comprehensive income, as detailed in the Consolidated Statements of Operations and Comprehensive Income, are net of tax. The related tax effect of Holding Gains (Losses) arising during the three and nine months ended September 30, 2004 and 2003 was $6.0 million and $(0.8) million, respectively and $(0.1) million and $0.7 million, respectively. The related tax effect of Reclassification Adjustments for the three and nine months ended September 30, 2004 and 2003 was $(0.1) million and $(0.2) million, respectively and $(0.3) million and $0.5 million, respectively.
14.	Segment Information
	The Company’s operations are classified into three reportable business segments which are organized around its three underwriting divisions: The Commercial Lines Underwriting Group, which has underwriting responsibility for the Commercial Automobile and Commercial Property and Commercial multi-peril package insurance products; The Specialty Lines Underwriting Group, which has underwriting responsibility for the professional liability insurance products; and The Personal Lines Group, which designs, markets and underwrites personal property and casualty insurance products for the Manufactured Housing and Homeowners

14

markets. Each business segment’s responsibilities include: pricing, managing the risk selection process and monitoring the loss ratios by product and insured. The reportable segments operate solely within the United States and have not been aggregated.

The segments follow the same accounting policies used for the Company’s consolidated financial statements, as described in the summary of significant accounting policies. Management evaluates a segment’s performance based upon premium production and the associated loss experience, which includes paid losses, an amount determined on the basis of claim adjusters’ evaluation with respect to insured events that have occurred and an amount for losses incurred that have not been reported. Investments and investment performance, including investment income and net realized investment gain (loss), acquisition costs and other underwriting expenses, including commissions, premium taxes and other acquisition costs, and other operating expenses are managed at a corporate level by the corporate accounting function in conjunction with other corporate departments, and are included in “Corporate”.

Following is a tabulation of business segment information for the nine and three months ended September 30, 2004 and 2003. Corporate information is included to reconcile segment data to the consolidated financial statements (in thousands):

15

	Nine Months Ended,
	Commercial		Specialty		Personal
	Lines		Lines		Lines			Corporate			Total
September 30, 2004:
Gross Written Premiums	$	662,691	$	143,188	$	94,367		$	—		$	900,246
Net Written Premiums	$	547,690	$	119,819	$	24,971		$	—		$	692,480
Revenue:
Net Earned Premiums	$	445,910	$	96,808	$	6,112		$	—		$	548,830
Net Investment Income		—		—		—			31,669			31,669
Net Realized Investment Gain		—		- -		- -			985			985
Other Income		—		—		2,179			751			2,930
Total Revenue		445,910		96,808		8,291			33,405			584,414
Losses and Expenses:
Net Loss and Loss Adjustment Expenses		225,016		92,033		34,280			—			351,329
Acquisition Costs and Other Underwriting Expenses		—		—		—			155,489			155,489
Other Operating Expenses		—		—		1,508			4,577			6,085
Total Losses and Expenses		225,016		92,033		35,788			160,066			512,903
Income Before Income Taxes		220,894		4,775		(27,497	)		(126,661	)		71,511
Total Income Tax Expense		—		—		—			20,179			20,179
Net Income	$	220,894	$	4,775	$	(27,497	)	$	(146,840	)	$	51,332
Total Assets	$	—	$	—	$	788,607		$	1,972,038		$	2,760,645
September 30, 2003:
Gross Written Premiums	$	499,840	$	119,848	$	70,927		$	—		$	690,615
Net Written Premiums	$	344,809	$	82,620	$	24,687		$	—		$	452,116
Revenue:
Net Earned Premiums	$	311,534	$	80,457	$	26,396		$	—		$	418,387
Net Investment Income		—		—		—			28,348			28,348
Net Realized Investment Loss		—		—		—			(1,309	)		(1,309	)
Other Income		—		—		3,361			328			3,689
Total Revenue		311,534		80,457		29,757			27,367			449,115
Losses and Expenses:
Net Loss and Loss Adjustment Expenses		202,357		45,941		14,493			—			262,791
Acquisition Costs and Other Underwriting Expenses		—		—		—			120,120			120,120
Other Operating Expenses		—		—		2,422			3,552			5,974
Total Losses and Expenses		202,357		45,941		16,915			123,672			388,885
Income Before Income Taxes		109,177		34,516		12,842			(96,305	)		60,230
Total Income Tax Expense		—		—		—			18,560			18,560
Net Income	$	109,177	$	34,516	$	12,842		$	(114,865	)	$	41,670
Total Assets	$	—	$	—	$	283,625		$	1,558,902		$	1,842,527

16

	Three Months Ended,
	Commercial		Specialty			Personal
	Lines		Lines			Lines			Corporate			Total
September 30, 2004:
Gross Written Premiums	$	289,002	$	49,358		$	29,066		$	—		$	367,426
Net Written Premiums	$	237,925	$	41,626		$	(13,848	)	$	—		$	265,703
Revenue:
Net Earned Premiums	$	165,756	$	35,791		$	(13,702	)	$	—		$	187,845
Net Investment Income		—		—			—			10,896			10,896
Net Realized Investment Gain		—		—			—			268			268
Other Income		—		—			376			343			719
Total Revenue		165,756		35,791			(13,326	)		11,507			199,728
Losses and Expenses:
Net Loss and Loss Adjustment Expenses		70,023		52,280			25,466			—			147,769
Acquisition Costs and Other Underwriting Expenses		—		—			—			56,863			56,863
Other Operating Expenses		—		—			396			1,278			1,674
Total Losses and Expenses		70,023		52,280			25,862			58,141			206,306
Loss Before Income Taxes		95,733		(16,489	)		(39,188	)		(46,634	)		(6,578	)
Total Income Tax Benefit		—		—			—			(4,483	)		(4,483	)
Net Loss	$	95,733	$	(16,489	)	$	(39,188	)	$	(42,151	)	$	(2,095	)
Total Assets	$	—	$	—		$	788,607		$	1,972,038		$	2,760,645
September 30, 2003:
Gross Written Premiums	$	224,781	$	41,459		$	20,186		$	—		$	286,426
Net Written Premiums	$	163,575	$	30,452		$	6,338		$	—		$	200,365
Revenue:
Net Earned Premiums	$	112,131	$	26,478		$	8,067		$	—		$	146,676
Net Investment Income		—		—			—			9,173			9,173
Net Realized Investment Gain		—		—			—			474			474
Other Income		—		—			1,807			181			1,988
Total Revenue		112,131		26,478			9,874			9,828			158,311
Losses and Expenses:
Net Loss and Loss Adjustment Expenses		61,277		13,948			4,180			—			79,405
Acquisition Costs and Other Underwriting Expenses		—		—			—			41,542			41,542
Other Operating Expenses		—		—			1,364			1,304			2,668
Total Losses and Expenses		61,277		13,948			5,544			42,846			123,615
Income Before Income Taxes		50,854		12,530			4,330			(33,018	)		34,696
Total Income Tax Expense		—		—			—			11,121			11,121
Net Income	$	50,854	$	12,530		$	4,330		$	(44,139	)	$	23,575
Total Assets	$	—	$	—		$	283,507		$	1,558,902		$	1,842,527

17

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

Although the Company’s financial performance is dependent upon its own specific business characteristics, certain risk factors can affect the profitability and/or the financial condition of the Company. These include, but are not limited to:

• Industry factors — Historically the financial performance of the property and casualty insurance industry has tended to fluctuate in cyclical patterns of soft markets followed by hard markets. The Company’s strategy is to focus on underwriting profits, and accordingly the Company’s marketing organization is being directed into those niche businesses that exhibit the greatest potential for underwriting profits.

• Competition — The Company competes in the property and casualty business with other domestic and international insurers having greater financial and other resources than the Company.

• Financial Strength Rating — If A.M. Best Company downgrades the rating of the Company’s subsidiaries, the Company may not be able to compete as effectively with its commercial and specialty lines competitors.

• Regulation — The Company’s insurance subsidiaries are subject to a substantial degree of regulatory oversight, which generally is designed to protect the interests of policyholders, as opposed to shareholders.

• Litigation — Adverse rulings in any material litigation to which the Company is a party could materially affect its financial position and results of operations.

• Inflation — Property and casualty insurance premiums are established before the amount of losses and loss adjustment expenses, or the extent to which inflation may affect such amounts is known.

• Investment Risk — Substantial future increases in interest rates could result in a decline in the market value of the Company’s investment portfolio and resulting losses and/or reduction in shareholders’ equity.

• Claims development and the process of estimating loss reserves – Estimating the Company’s ultimate liability for unpaid loss and loss adjustment expenses is necessarily a complex and judgmental process, inasmuch as the amounts of any ultimate liability of the Company with respect to such claims are based on management’s informed estimates and judgments using data currently available.

• Catastrophe Exposure – The Company’s insurance subsidiaries issue insurance policies which provide coverage for commercial and personal property and casualty risks. It is possible that a catastrophic event could greatly increase claims under the insurance policies the insurance subsidiaries issue. Catastrophes may result from a variety of events or conditions, including hurricanes, windstorms, earthquakes, hail and other severe weather conditions and may include terrorist events. It is possible that a catastrophic event could adversely impact profitability.

• Reinsurance – The adequacy of reinsurance coverage which may be obtained by the Company and the ability and willingness of the Company’s reinsurers to pay.

The above risk factors should be read in conjunction with the Certain Critical Accounting Estimates and Judgments included in the Company’s Annual Report on Form 10-K and Form 10-K/A, Amendment No. 1 for the fiscal year ended December 31, 2003.

18

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)

In October, 2004, the New York Attorney General’s office filed a complaint in New York state court against Marsh & McClennan Companies, Inc. (“Marsh”), the nation’s largest insurance broker. The complaint accuses Marsh of participating in bid-rigging schemes and improper disclosure to its customers of the fact that Marsh was receiving contingent commissions from insurers which issued insurance policies to such customers. These commissions are based on the volume and/or profitability of business placed by Marsh. The complaint also asserted that a number of insurers engaged in bid rigging. Shortly after this complaint was filed, Marsh and a number of the insurers named in the complaint publicly announced that they would be terminating their contingent commission arrangements. The Pennsylvania Insurance Commissioner has stated that a national insurance commissioners group will be drafting a model law requiring disclosure to customers of contingent commission arrangements.

The Company has arrangements with approximately 56 agents and 78 brokers (collectively “Preferred Agents”) under which the Company pays profit share based on the profitability to the Company of business placed by these Preferred Agents with the Company. Approximately 25% of the Company’s gross written premiums are produced through Preferred Agents with which the Company has profit share arrangements. It is possible that the filing of the complaint against Marsh and/or future legislation, regulations and/or case law could affect these arrangements. The impact of such matters, if any, on the Company is not able to be predicted at this time.

Investments

The Company’s investment objective is the realization of relatively high levels of after-tax net investment income while generating competitive after-tax total rates of return within a prudent level of risk and within the constraints of maintaining adequate securities in amount and duration to meet cash requirements of current operations and long-term liabilities, as well as maintaining and improving the Company’s A.M. Best rating. The Company utilizes external independent professional investment managers for its fixed maturity and equity investments. These investments consist of diversified issuers and issues, and as of September 30, 2004, approximately 85.7% and 8.0% of the total invested assets (total investments plus cash equivalents) on a cost basis consisted of investments in fixed maturity and equity securities, respectively, versus 87.8% and 6.6%, respectively, at December 31, 2003.

Asset backed, mortgage pass-through, and collateralized mortgage obligation securities, on a cost basis, amounted to $117.0 million, $192.5 million and $59.4 million, respectively, as of September 30, 2004 and $183.0 million, $159.2 million and $53.8 million, respectively, as of December 31, 2003. The asset backed, mortgage pass-through, and collateralized mortgage obligation investments are amortizing securities possessing favorable prepayment risk and/or extension profiles.

The Company regularly performs various analytical procedures with respect to its investments, including identifying any security whose fair value is below its cost. Upon identification of such securities, a detailed review is performed for all securities, except interests in securitized assets, meeting predetermined thresholds to determine whether such decline is other than temporary. If the Company determines a decline in value to be other than temporary, based upon its detailed review, or if a decline in value for an equity investment has persisted continuously for nine months, the cost basis of the security is written down to its fair value. The factors considered in reaching the conclusion that a decline below cost is other than temporary include, but are not limited to: whether the issuer is in financial distress; the performance of the collateral underlying a secured investment; whether a significant credit rating action has occurred; whether scheduled interest payments have been delayed or missed; whether changes in laws and/or regulations have impacted an issuer or industry; an assessment of the timing of a security’s recovery to fair value; and an ability and intent to hold the security to recovery of fair value. The amount of any write down is included in earnings as a realized loss in the period the impairment arose. This evaluation resulted in non-cash realized investment losses of $1.0 million and $0 million, respectively, for the three months ended September 30, 2004 and 2003 and $1.0 million and $0.9 million, respectively, for the nine months ended September 30, 2004 and 2003. The Company attributes these other than temporary declines in fair value primarily to issuer specific conditions.

Additionally, the Company conducts its impairment evaluation and recognition for interests in securitized assets in accordance with the guidance provided by the Emerging Issues Task Force of the Financial Accounting Standards Board. Under this guidance, impairment losses on securities must be recognized if both the fair value of the security

19

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)

is less than its book value and the net present value of expected future cash flows is less than the net present value of expected future cash flows at the most recent (prior) estimation date. If these criteria are met, an impairment charge, calculated as the difference between the current book value of the security and its fair value, is included in earnings as a realized loss in the period the impairment arose. This evaluation resulted in non-cash realized investment losses of $4.7 million and $0.4 million, respectively, and $7.3 million and $2.6 million, respectively, for the three and nine months ended September 30, 2004 and 2003, respectively. These non-cash realized investment losses were from investments primarily in collateralized bond obligations which were impacted by recent years’ non investment grade default rates that were higher than historic averages and from investments in other asset backed securities which experienced extension of cash flows on the underlying collateral.

The Company’s fixed maturity portfolio amounted to $1,251.3 million and $1,081.7 million, as of September 30, 2004 and December 31, 2003, respectively, of which 99.0% and 98.6% of the portfolio as of September 30, 2004 and December 31, 2003, respectively, was comprised of investment grade securities. The Company had fixed maturity investments with unrealized losses amounting to $3.4 million and $10.6 million as of September 30, 2004 and December 31, 2003, respectively. Of these amounts, interests in securitized assets had unrealized losses amounting to $1.1 million and $9.2 million as of September 30, 2004 and December 31, 2003, respectively. This decrease in fixed maturity unrealized losses between December 31, 2003 and September 30, 2004 can be largely attributed to the impairment losses on interests in securitized assets recognized in the third quarter of 2004. The remaining unrealized losses are attributable largely to market price changes due to interest rate increases since the investments were purchased, and are not considered to be other than temporary impairments, given the ability and intent to hold the securities to recovery. As discussed above, the Company’s impairment evaluation and recognition for interests in securitized assets is conducted in accordance with the guidance provided by the EITF.

The following table identifies the period of time securities with an unrealized loss at September 30, 2004 have continuously been in an unrealized loss position. Included in the amounts displayed in the table are $0.1 million of unrealized losses due to non-investment grade fixed maturity securities having a fair value of $11.8 million. No issuer of securities or industry represents more than 4.9% and 17.1%, respectively, of the total estimated fair value, or 10.4% and 11.6%, respectively, of the total gross unrealized loss included in the table below. As previously discussed, there are certain risks and uncertainties inherent in the Company’s impairment methodology, including, but not limited to, the financial condition of specific industry sectors and the resultant effect on any such underlying security collateral values and changes in accounting, tax, and/or regulatory requirements which may have an effect on either, or both, the investor and/or the issuer. Should the Company subsequently determine a decline in the fair value below the cost basis to be other than temporary, the security would be written down to its fair value and the difference would be included in earnings as a realized loss for the period such determination was made.

20

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)

	Gross Unrealized Losses
	(in millions)
	Fixed Maturities
Continuous	Available for Sale				Total
time in unrealized	Excluding Interests		Interests in		Fixed Maturities
loss position	in Securitized Assets		Securitized Assets		Available for Sale		Equity Securities		Total Investments
0 – 3 months	$	0.3	$	0.1	$	0.4	$	2.2	$	2.6
4 – 6 months		1.1		0.3		1.4		0.7		2.1
7 – 9 months		0.6		0.1		0.7		0.5		1.2
10 – 12 months		0.2		—		0.2		—		0.2
13 – 18 months		0.1		0.5		0.6		—		0.6
19 – 24 months		—		—		—		—		—
> 24 months		—		0.1		0.1		—		0.1
Total Gross Unrealized Losses	$	2.3	$	1.1	$	3.4	$	3.4	$	6.8
Estimated fair value of securities with a gross unrealized loss	$	271.8	$	146.7	$	418.5	$	28.6	$	447.1

Based upon the Company’s impairment evaluation as of September 30, 2004, it was concluded that the remaining unrealized losses in the table above are not other than temporary. The factors considered in reaching the conclusion that a decline below cost is other than temporary include, but are not limited to: whether the issuer is in financial distress; the performance of the collateral underlying a secured investment; whether a significant credit rating action has occurred; whether scheduled interest payments have been delayed or missed; whether changes in laws and/or regulations have impacted an issuer or industry; an assessment of the timing of the security’s recovery to fair value; and an ability and intent to hold the security to recovery of fair value.

For the three months ended September 30, 2004 the Company’s gross loss on the sale of fixed maturity and equity securities amounted to $0.4 million and $0.3 million, respectively. The fair value of the fixed maturity and equity securities at the time of sale was $20.1 million and $0.9 million, respectively. For the three months ended September 30, 2003 the Company’s gross loss on the sale of fixed maturity and equity securities amounted to $0.2 million and $0 million, respectively. The fair value of the fixed maturity and equity securities at the time of sale was $13.0 million and $0.1 million, respectively.

For the nine months ended September 30, 2004 the Company’s gross loss on the sale of fixed maturity and equity securities amounted to $0.7 million and $0.7 million, respectively. The fair value of the fixed maturity and equity securities at the time of sale was $27.2 million and $4.8 million, respectively. For the nine months ended September 30, 2003 the Company’s gross loss on the sale of fixed maturity and equity securities amounted to $0.3 million and $0.7 million, respectively. The fair value of the fixed maturity and equity securities at the time of sale was $14.5 million and $3.5 million, respectively.

The decision to sell these securities was based upon an assessment of economic conditions and ongoing portfolio management objectives of maximizing the Company’s after-tax net investment income.

21

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)

Results of Operations (Nine Months ended September 30, 2004 vs. September 30, 2003)

     Premiums: Premium information for the nine months ended September 30, 2004 vs. September 30, 2003 for the Company’s business segments is as follows (in millions):

	Commercial Lines			Specialty Lines			Personal Lines			Total
2004 Gross Written Premiums	$	662.7		$	143.2		$	94.4		$	900.3
2003 Gross Written Premiums	$	499.9		$	119.8		$	70.9		$	690.6
Percentage Increase		32.6	%		19.5	%		33.1	%		30.4	%
2004 Gross Earned Premiums	$	580.0		$	124.9		$	76.2		$	781.1
2003 Gross Earned Premiums	$	400.4		$	101.1		$	63.4		$	564.9
Percentage Increase		44.9	%		23.5	%		20.2	%		38.3	%

The overall growth in gross written premiums is primarily attributable to the following:

• Further rating downgrades of certain major competitor property and casualty insurance companies have led to their diminished presence in the Company’s commercial and specialty lines business segments and continue to result in additional prospects and increased premium writings, most notably for the Company’s various commercial package and non-profit D&O product lines.

• The displacement of certain competitor property and casualty insurance companies and their independent agency relationships continues to result in new agency relationship opportunities for the Company. These relationship opportunities have resulted in additional policyholders and premium writings for the Company’s commercial and specialty lines segments.

• Continued expansion of marketing efforts relating to commercial lines and specialty lines products through the Company’s field organization and preferred agents.

• The insurance subsidiaries of Liberty American Insurance Group, Inc. (a subsidiary of the Company) have recently commenced writing a previously brokered homeowners product on a direct basis due to a recent termination of a brokerage agreement. Gross written premiums from this homeowners product approximated $14.7 million for the nine months ended September 30, 2004.

• In-force policy counts as of September 30, 2004 versus September 30, 2003 have increased 10.2%, 28.7% and 17.4% for the commercial lines, specialty lines and personal lines segments, respectively, primarily as a result of the factors discussed above.

• Realized average rate increases on renewal business approximating 2.6%, 2.6%, and 8.3% for the commercial, specialty and personal lines segments, respectively.

The respective net written premium changes for commercial lines, specialty lines and personal lines segments for the nine months ended September 30, 2004 vs. September 30, 2003 were (in millions):

	Commercial Lines			Specialty Lines			Personal Lines			Total
2004 Net Written Premiums	$	547.7		$	119.8		$	25.0		$	692.5
2003 Net Written Premiums	$	344.8		$	82.6		$	24.7		$	452.1
Percentage Increase		58.8	%		45.0	%		1.2	%		53.2	%
2004 Net Earned Premiums	$	445.9		$	96.8		$	6.1		$	548.8
2003 Net Earned Premiums	$	311.5		$	80.5		$	26.4		$	418.4
Percentage Increase		43.1	%		20.3	%		-76.9	%		31.2	%

22

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)

The differing percentage changes in net premiums versus gross premiums for the commercial lines, specialty lines and personal lines segments during the quarter results primarily from the following:

• A change in the Company’s reinsurance program whereby effective April 1, 2003, the Company entered into a Quota Share reinsurance agreement covering substantially all of the Company’s lines of business. Under this agreement:

• The Company cedes 22% of its net written premiums and loss and loss adjustment expenses for policies effective April 1, 2003 through December 31, 2003 and 10% of its commercial and specialty lines net written premiums and loss and loss adjustment expenses for policies effective January 1, 2004 and thereafter. During the nine months ended September 30, 2004 and 2003, the Company ceded $71.7 million and $158.5 million of net written premiums, respectively, and $106.9 million and $74.5 million of net earned premiums, respectively.

• Of the $158.5 million of net written premiums ceded during the nine months ended September 30, 2003, $63.6 million represents 22% of the Company’s April 1, 2003 unearned premium reserve which was ceded upon entering into the quota share agreement. This cession of the unearned premium reserve reduced net written premiums which approximated the following by segment: commercial lines ($44.2 million), specialty lines ($13.3 million), and personal lines ($6.1 million).

• Certain of the Company’s reinsurance contracts have provisions whereby the Company is entitled to a return profit commission based on the ultimate experience of the underlying business ceded to the contracts. Under the terms of these contracts, the Company accrued profit commissions of $ $13.3 million and $5.9 million for the nine months ended September 30, 2004 and 2003, respectively. The profit commissions reduce ceded written and earned premiums and increase net written and earned premiums.

• The Company experienced catastrophe losses attributable to Hurricanes Charley, Frances, Ivan and Jeanne. Due to these multiple hurricane events, the Company purchased additional catastrophe reinsurance coverages (which provide coverage from the inception date of the coverage through May 31, 2005) to supplement its original reinsurance programs. The estimated aggregate pre-tax cost of these additional catastrophe reinsurance coverages is $18.8 million. Additionally, these multiple hurricane events resulted in accelerating the recognition of $27.7 million (Commercial Lines Segment ($2.6 million), Personal Lines Segment ($25.1 million)) catastrophe reinsurance premium expense due to the utilization of certain of the catastrophe reinsurance coverages. Of this $27.7 million, $13.0 million was attributable to the additional reinsurance coverages referred to above. This acceleration of reinsurance premium expense increased reinsurance ceded written and earned premiums and reduced net written and earned premiums.

     Net Investment Income Net investment income approximated $31.7 million for the nine months ended September 30, 2004 and $28.3 million for the same period of 2003. Total investments grew to $1,372.8 million at September 30, 2004 from $1,161.0 million at September 30, 2003. The growth in investment income is due to investing net cash flows provided from operating activities. The Company’s average duration of its fixed income portfolio approximated 4.0 years at September 30, 2004 and September 30, 2003, respectively. The Company’s taxable equivalent book yield on its fixed income holdings approximated 4.6% at September 30, 2004, compared to 5.0% at September 30, 2003. Net investment income was reduced by $3.6 million and $1.3 million for the nine months ended September 30, 2004 and 2003, respectively, due to the interest credit on the Funds Held Account balance pursuant to the Company’s quota share reinsurance agreement (see Premiums).

     The total return, which includes the effects of both income and price returns on securities, of the Company’s fixed income portfolio was 3.14% and 3.27% for the nine months ended September 30, 2004 and 2003, respectively, and was similar to the Lehman Brothers Intermediate Aggregate Bond Index (“the Index”) total return of 2.95% and 3.37% for the same periods, respectively. The Company expects some variation in its portfolio’s total

23

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)

return compared to the index because of the differing sector, security and duration composition of its portfolio compared to the index.

     Net Realized Investment Gain (Loss): Net realized investment gains (losses) were $1.0 million for the nine months ended September 30, 2004 and $(1.3) million for the same period in 2003. The Company realized net investment gains of $2.8 million and $6.5 million from the sale of fixed maturity and equity securities, respectively, for the nine months ended September 30, 2004, and $6.1 million and $2.2 million in non-cash realized investment losses for fixed maturity and equity securities, respectively, as a result of the Company’s impairment evaluation.

     The Company realized net investment gains of $1.5 million and $0.7 million from the sale of fixed maturity and equity securities, respectively, for the nine months ended September 30, 2003, and $2.6 million and $0.9 million in non-cash realized investment losses for fixed maturity and equity securities, respectively, as a result of the Company’s impairment evaluation.

     Other Income: Other income approximated $2.9 million for the nine months ended September 30, 2004 and $3.7 million for the same period of 2003. Other income primarily consists of commissions earned on brokered personal lines business, and to a lesser extent brokered commercial lines business. The decrease in other income is due primarily to reduced commissions earned on brokered personal lines business due to terminations of certain brokering agreements.

     Net Loss and Loss Adjustment Expenses: Net loss and loss adjustment expenses increased $88.5 million (33.7%) to $351.3 million for the nine months ended September 30, 2004 from $262.8 million for the same period of 2003 and the loss ratio increased to 64.0% in 2004 from 62.8% in 2003. This increase in net loss and loss adjustment expenses and/or loss ratio was primarily due to:

• A 31.2% growth in net earned premiums

• Multiple hurricane events wherein:

• $38.4 million of hurricane catastrophe losses were incurred; and

• These multiple hurricane events resulted in accelerating the recognition of $27.7 million of catastrophe reinsurance premium expense, which reduced net earned premiums, due to the utilization of certain of the catastrophe reinsurance coverages. The hurricane losses and associated accelerated catastrophe reinsurance premium expense contributed 11.0 percentage points to the combined ratio.

• Reserve actions taken during the nine months ended September 30, 2004 wherein the estimated gross and net unpaid loss and loss adjustment expenses for accident years 1996 through 2002 were increased by $69.0 million and $65.0 million, respectively, due principally to continued case reserve development above expectations primarily across various professional liability products in the specialty lines segment and general liability and commercial automobile liability coverages in the commercial lines segment.

These increases to the loss and loss adjustment expenses and/or loss ratio were offset in part by:

• Reserve actions taken during the nine months ended September 30, 2004 wherein:

• The estimated gross and net unpaid loss and loss adjustment expenses for accident year 2003 were decreased by $43.4 million and $36.1 million, respectively, due principally to continued better than expected claim frequency primarily for general liability and commercial automobile coverages in the commercial lines segment.

• The 2004 accident year ultimate loss ratio was decreased to recognize better than anticipated pricing and loss trends. This decrease in the 2004 accident year loss ratio resulted in a release of $34.9 million and $27.2 million of 2004 gross and net accident year reserves, respectively.

24

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)

• Reserve actions taken during the nine months ended September 30, 2003 wherein the estimated gross and net liability for residual value policies were increased by $33.0 million and the estimated gross and net liability for accident year 2002 was decreased by approximately $9.0 million, due to better than expected loss experience principally in the property line of the commercial package products. These reserve actions increased the nine months ended September 30, 2003 loss ratio by 5.8 percentage points.

Additionally, during the nine months ended September 30, 2004 and 2003, the Company ceded $106.9 million and $74.5 million of net earned premium, respectively, and $46.9 million and $40.3 million in net loss and loss adjustment expenses, respectively, pursuant to a quota share reinsurance agreement (see Premiums).

     Acquisition Costs and Other Underwriting Expenses: Acquisition costs and other underwriting expenses increased $35.4 million (29.5%) to $155.5 million for the nine months ended September 30, 2004 from $120.1 million for the same period of 2003, and the expense ratio decreased to 28.3% in 2004 from 28.7% in 2003. This increase in acquisition costs and other underwriting expenses was due primarily to the 31.2% growth in net earned premiums. The decrease in the expense ratio is due primarily to an increase in ceding commissions earned and an increase in the ceding commission percentage earned under a quota share reinsurance agreement (see Premiums). This decrease was offset in part by the accelerated recognition of $27.7 million in catastrophe reinsurance expense which reduced net earned premiums. For the nine months ended September 30, 2004 and 2003, the Company ceded $106.9 million and $74.5 million, respectively, of net earned premiums and earned $50.6 million and $29.6 million, respectively, in ceding commission under a quota share reinsurance agreement.

     Other Operating Expenses: Other operating expenses increased $0.1 million to $6.1 million for the nine months ended September 30, 2004 from $6.0 million for the same period of 2003. The increase in the level of expenses is primarily due to the growth of the business, offset in part by reduced commissions paid on brokered personal lines business (see Other Income).

     Income Tax Expense: The Company’s effective tax rate for the nine months ended September 30, 2004 and 2003 was 28.2% and 30.8%, respectively. The effective rates differed from the 35% statutory rate principally due to investments in tax-exempt securities and the relative proportion of tax-exempt income to total income before tax.

Results of Operations (Three Months ended September 30, 2004 vs. September 30, 2003)

     Premiums: Premium information for the three months ended September 30, 2004 vs. September 30, 2003 for the Company’s business segments is as follows (in millions):

	Commercial Lines			Specialty Lines			Personal Lines			Total
2004 Gross Written Premiums	$	289.0		$	49.4		$	29.0		$	367.4
2003 Gross Written Premiums	$	224.8		$	41.4		$	20.2		$	286.4
Percentage Increase		28.6	%		19.3	%		43.6	%		28.3	%
2004 Gross Earned Premiums	$	209.7		$	44.0		$	27.5		$	281.2
2003 Gross Earned Premiums	$	154.4		$	36.0		$	21.4		$	211.8
Percentage Increase		35.8	%		22.2	%		28.5	%		32.8	%

The overall growth in gross written premiums is primarily attributable to the following:

• Further rating downgrades of certain major competitor property and casualty insurance companies have led to their diminished presence in the Company’s commercial and specialty lines business segments and continue to result in additional prospects and increased premium writings, most notably for the Company’s various commercial package and non-profit D&O product lines.

• The displacement of certain competitor property and casualty insurance companies and their independent agency relationships continues to result in new agency relationship opportunities for the Company. These

25

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)

relationship opportunities have resulted in additional policyholders and premium writings for the Company’s commercial and specialty lines segments.

• Continued expansion of marketing efforts relating to commercial lines and specialty lines products through the Company’s field organization and preferred agents.

• The insurance subsidiaries of Liberty American Insurance Group, Inc. (a subsidiary of the Company) have recently commenced writing a previously brokered homeowners product on a direct basis due to a recent termination of a brokering agreement. Gross written premiums from this homeowners product approximated $6.2 million for the three months ended September 30, 2004.

• In-force policy counts as of September 30, 2004 versus September 30, 2003 have increased 10.2%, 28.7% and 17.4% for the commercial lines, specialty lines and personal lines segments, respectively, primarily as a result of the factors discussed above.

• Realized weighted average rate increases on renewal business approximating 2.6%, 2.6%, and 8.3% for the commercial, specialty and personal lines segments, respectively.

This growth was offset in part as a result of Liberty American Insurance Group, Inc. suspending the acceptance of applications for new personal lines insurance policies the day prior to Hurricane Charley making landfall in Florida to restrict an increase in exposures during hurricane season. It is estimated that gross written premiums were reduced by approximately $5.0 million due to this restriction. The Company intends to resume underwriting new preferred homeowners business during the latter part of the fourth quarter of 2004.

The respective net written premium changes for commercial lines, specialty lines and personal lines segments for the three months ended September 30, 2004 vs. September 30, 2003 were (in millions):

	Commercial Lines			Specialty Lines			Personal Lines			Total
2004 Net Written Premiums	$	237.9		$	41.6		$	(13.8	)	$	265.7
2003 Net Written Premiums	$	163.6		$	30.5		$	6.3		$	200.4
Percentage Increase		45.4	%		36.4	%		-319.0	%		32.6	%
2004 Net Earned Premiums	$	165.8		$	35.8		$	(13.8	)	$	187.8
2003 Net Earned Premiums	$	112.1		$	26.5		$	8.1		$	146.7
Percentage Increase		47.9	%		35.1	%		-270.4	%		28.0	%

The differing percentage changes in net premiums versus gross premiums for the commercial lines, specialty lines and personal lines segments during the quarter results primarily from the following change in the Company’s reinsurance program:

• Effective April 1, 2003, the Company entered into a Quota Share reinsurance agreement covering substantially all of the Company’s lines of business. Pursuant to the Quota Share reinsurance agreement, the Company cedes 22% of its net written premiums and loss and loss adjustment expenses for policies effective April 1, 2003 through December 31, 2003 and 10% of its commercial and specialty lines net written premiums and loss and loss adjustment expenses for policies effective January 1, 2004 and thereafter. During the three months ended September 30, 2004 and 2003, the Company ceded $30.4 million and $55.0 million of net written premiums, respectively, and $30.7 million and $40.2 million of net earned premiums, respectively.

• Certain of the Company’s reinsurance contracts have provisions whereby the Company is entitled to a return profit commission based on the ultimate experience of the underlying business ceded to the contracts. Under the terms of these contracts, the Company accrued profit commissions of $4.6 million and $4.0 million for the three months ended September 30, 2004 and 2003, respectively. The profit commissions reduce ceded written and earned premiums and increase net written and earned premiums.

26

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)

• During the three months ended September 30, 2004 the Company experienced catastrophe losses attributable to Hurricanes Charley, Frances, Ivan and Jeanne. Due to these multiple hurricane events, the Company purchased additional catastrophe reinsurance coverages (which provide coverage from the inception date of the coverage through May 31, 2005) to supplement its original reinsurance programs. The estimated aggregate pre-tax cost of these additional catastrophe reinsurance coverages is $18.8 million. Additionally, these multiple hurricane events resulted in accelerating the recognition of $27.7 million (Commercial lines Segment ($2.6 million), Personal Lines Segment ($25.1 million)) of catastrophe reinsurance premium expense due to the utilization of certain of the catastrophe reinsurance coverages. Of this $27.7 million, $13.0 million was attributable to the additional reinsurance coverages referred to above. This acceleration of reinsurance premium expense increased reinsurance ceded written and earned premiums and reduced net written and earned premiums.

          Net Investment Income Net investment income approximated $10.9 million for the three months ended September 30, 2004 and $9.2 million for the same period of 2003. Total investments grew to $1,372.8 million at September 30, 2004 from $1,161.0 million at September 30, 2003. The growth in investment income is due to investing net cash flows provided from operating activities. The Company’s average duration of its fixed income portfolio approximated 4.0 years at September 30, 2004 and 2003, respectively. The Company’s taxable equivalent book yield on its fixed income holdings approximated 4.6% at September 30, 2004, compared to 5.0% at September 30, 2003. Net investment income was reduced by $1.3 million and $0.8 million for the three months ended September 30, 2004 and 2003, respectively, due to the interest credit on the Funds Held Account balance pursuant to the Company’s quota share reinsurance agreement (see Premiums).

          The total return, which includes the effects of both income and price returns on securities, of the Company’s fixed income portfolio was 2.91% and 0.58% for the three months ended September 30, 2004 and 2003, respectively, and was similar to the Lehman Brothers Intermediate Aggregate Bond Index (“the Index”) total return of 2.70% and 0.18% for the same periods, respectively. The Company expects some variation in its portfolio’s total return compared to the index because of the differing sector, security and duration composition of its portfolio compared to the index.

          Net Realized Investment Gain: Net realized investment gains were $0.3 million for the three months ended September 30, 2004 and $0.5 million for the same period in 2003. The Company realized net investment gains of $2.1 million and $3.9 million from the sale of fixed maturity and equity securities, respectively, for the three months ended September 30, 2004, and $3.5 million and $2.2 million in non-cash realized investment losses for fixed maturity and equity securities, respectively, as a result of the Company’s impairment evaluation.

The Company realized net investment gains of $0.3 million and $0.6 million from the sale of fixed maturity and equity securities, respectively, for the three months ended September 30, 2003, and $0.4 million in non-cash realized investment losses for fixed maturity investments as a result of the Company’s impairment evaluation.

          Other Income: Other income approximated $0.7 million for the three months ended September 30, 2004 and $2.0 million for the same period of 2003. Other income primarily consists of commissions earned on brokered personal lines business, and to a lesser extent brokered commercial lines business. The decrease in other income is due primarily to reduced commissions earned on brokered personal lines business due to termination of certain brokering agreements.

          Net Loss and Loss Adjustment Expenses: Net loss and loss adjustment expenses increased $68.4 million (86.1%) to $147.8 million for the three months ended September 30, 2004 from $79.4 million for the same period of 2003 and the loss ratio increased to 78.7% in 2004 from 54.1% in 2003. This increase in net loss and loss adjustment expenses and/or loss ratio was primarily due to:

• A 28.0% growth in net earned premiums

• Multiple hurricane events wherein:

27

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)

• $38.4 million of hurricane catastrophe losses were incurred; and

• The multiple hurricane events resulted in accelerating the recognition of $27.7 million (pre-tax) catastrophe reinsurance premium expense (which reduced net earned premiums) due to the utilization of certain of the catastrophe reinsurance coverages. The hurricane losses and associated accelerated catastrophe reinsurance premium expense contributed 31.8 percentage points to the combined ratio.

• Reserve actions taken during the three months ended September 30, 2004 wherein the estimated gross and net unpaid loss and loss adjustment expenses for accident years 1997 through 2002 were increased by $46.3 million and $43.1 million, respectively, due principally to continued case reserve development above expectations primarily across various professional liability products in the specialty lines segment and general liability and commercial automobile liability coverages in the commercial lines segment.

These increases to the loss and loss adjustment expenses and/or loss ratio were offset in part by:

• Reserve actions taken during the three months ended September 30, 2004 wherein:

• The estimated gross and net unpaid loss and loss adjustment expenses for accident year 2003 were decreased by $22.7 million and $18.0 million, respectively, due principally to continued better than expected claim frequency primarily for general liability and commercial automobile coverages in the commercial lines segment.

• The 2004 accident year ultimate loss ratio was decreased to recognize better than anticipated pricing and loss trends. This decrease in the 2004 accident year loss ratio resulted in a release of $34.9 million and $27.2 million of 2004 gross and net accident year reserves, respectively.

Additionally, during the three months ended September 30, 2004 and 2003, the Company ceded $30.7 million and $40.2 million of net earned premium, respectively, and $8.8 million and $21.3 million in net loss and loss adjustment expenses, respectively, pursuant to a quota share reinsurance agreement (see Premiums).

          Acquisition Costs and Other Underwriting Expenses: Acquisition costs and other underwriting expenses increased $15.4 million (37.1%) to $56.9 million for the three months ended September 30, 2004 from $41.5 million for the same period of 2003 and the expense ratio increased to 30.2% in 2004 from 28.3% in 2003. The increase was due primarily to the 28.0% growth in net earned premiums and, in part, due to: premium growth from the Company’s commercial automobile excess liability product which possesses higher acquisition costs relative to the Company’s other products; and the accelerated recognition of $27.7 million in catastrophe reinsurance expenses which reduced net earned premiums. This increase, and the increase in the expense ratio, was offset in part by increased ceding commissions earned and an increase in the ceding commission percentage earned under a quota share reinsurance agreement (see Premiums). For the three months ended September 30, 2004 and 2003 the Company ceded $30.7 million and $40.2 million, respectively, of net earned premium and earned $18.1 million and $16.3 million, respectively, in ceding commission.

          Other Operating Expenses: Other operating expenses decreased $1.0 million to $1.7 million for the three months ended September 30, 2004 from $2.7 million for the same period of 2003. The decrease is due primarily to decreased commissions paid on brokered personal lines business. (See Other Income)

          Income Tax Expense: The Company’s effective tax rate for the three months ended September 30, 2004 and 2003 was (68.2)% and 32.1%, respectively. The effective rates differed from the 35% statutory rate principally due to investments in tax-exempt securities and the relative proportion of tax-exempt income to total income before tax.

28

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)

Liquidity and Capital Resources

     For the nine months ended September 30, 2004, the Company’s investments experienced unrealized investment depreciation of $0.9 million, net of the related deferred tax benefit of $0.5 million. At September 30, 2004, the Company had total investments with a carrying value of $1,372.8 million, of which 91.1% consisted of investments in fixed maturity securities, including U.S. treasury securities and obligations of U.S. government corporations and agencies, obligations of states and political subdivisions, corporate debt securities, collateralized mortgage, mortgage pass-through and asset backed securities. The collateralized mortgage, mortgage pass-through, and asset backed securities consist of amortized securities possessing favorable pre-payment and/or extension risk profiles. The remaining 8.9% of the Company’s total investments consisted primarily of publicly traded common stock securities.

     During the three months ended September 30, 2004, the Company experienced catastrophe losses attributable to Hurricanes Charley, Frances, Ivan, and Jeanne. The catastrophe losses primarily impacted the Company’s personal lines segment and, to a lesser extent, its commercial lines segment. The gross catastrophe loss and loss adjustment expense estimates as a result of these hurricanes is $604.8 million for the personal lines segment and $40.2 million for the commercial lines segment. With some areas of Florida having been affected multiple times due to the hurricanes, loss and loss adjustment expense estimates are still evolving due, in part, to the difficulty in making any precise estimates at this time of future remediation costs. Under the Company’s catastrophe reinsurance programs in place at the time of these hurricane events, the Company had a $3.5 million pre-tax per occurrence loss retention for its personal lines catastrophe losses and a $7.0 million pre-tax per occurrence loss retention for its commercial lines catastrophe losses. The Company estimates its net aggregate retention losses for the four hurricane events is $38.4 million.

     The Company’s catastrophe reinsurance program consists of its open market (“om”) program which has been placed principally with large reinsurers that are rated at least “A” (“Excellent”) by A.M. Best, a 15% quota share reinsurance arrangement, and the Florida Hurricane Catastrophe Fund (“FHCF”). Certain of the Company’s reinsurers have agreed to be billed and make payments to the Company based upon expected catastrophe claims payments to be made by the Company in the near future. Although the Company believes that it will collect all of its reinsurance recoverables, there can be no assurance as to this. The Company believes it will have adequate liquidity to pay the estimated hurricane catastrophe losses noted above. The Company’s estimated total reinsurance recoverables, reinsurance recoverables on paid, catastrophe reinsurance billings and reinsurance collections with respect to its catastrophe reinsurance programs as of September 30, 2004 for the above mentioned hurricane events is summarized in the table below.

29

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)

(In Millions)

Hurricane:	Charley				Frances				Ivan				Jeanne				Total
	FHCF		OM		FHCF		OM		FHCF		OM		FHCF		OM		FHCF		OM
Personal Lines Segment:
Total Estimated Loss and LAE Recoverables	$	134.5	$	67.2	$	32.0	$	82.7	$	2.0	$	8.5	$	2.9	$	261.1	$	171.4	$	419.5
Recoverable on Catastrophe Loss and LAE Paid	$	88.0	$	52.5		—	$	13.8		—		—		—		—	$	88.0	$	66.3
Catastrophe Loss and LAE Billed to Reinsurers	$	65.6	$	59.8		—	$	16.5		—		—		—		—	$	65.6	$	76.3
Catastrophe Loss and LAE Collected from Reinsurers	$	23.9	$	58.5		—	$	11.4		—		—		—		—	$	23.9	$	69.9
Commercial Lines Segment:
Total Estimated Loss and LAE Recoverables		—	$	9.9		—	$	2.1		—		—		—	$	4.3		—	$	16.3
Recoverable on Catastrophe Loss and LAE Paid		—		—		—		—		—		—		—		—		—		—
Catastrophe Loss and LAE Billed to Reinsurers		—	$	7.9		—		—		—		—		—		—		—	$	7.9
Catastrophe Loss and LAE Collected from Reinsurers		—	$	4.6		—		—		—		—		—		—		—	$	4.6

     The Company produced net cash from operations of $257.7 million and $253.0 million, respectively, for the nine months ended September 30, 2004 and 2003. Sources of operating funds consist primarily of net premiums written and investment income. Funds are used primarily to pay claims and operating expenses and for the purchase of investments. The source of cash from operations for the nine months ended September 30, 2004 was primarily generated from strong premium growth during the current year due to increases in the number of policies written and, to a lesser extent, price increases realized on renewal business. Net loss and loss expense payments were $201.6 million and $148.7 million, respectively, for the nine months ended September 30, 2004 and 2003. Management believes that the Company has adequate liquidity to pay all claims and meet all other cash needs.

     Two of the Company’s insurance subsidiaries are members of the Federal Home Loan Bank of Pittsburgh (“FHLB”). A primary advantage of FHLB membership is the ability of members to access credit products from a reliable capital markets provider. The availability of any one member’s access to credit is based upon its FHLB eligible collateral. The insurance subsidiaries have utilized a portion of their borrowing capacity to purchase a diversified portfolio in investment grade floating rate securities. These purchases were funded by floating rate FHLB borrowings to achieve a positive spread between the rate of interest on these securities and borrowing rates. At September 30, 2004 the insurance subsidiaries’ unused borrowing capacity was $194.2 million. The remaining borrowing capacity will provide an immediately available line of credit. Borrowings aggregated $36.8 million at September 30, 2004, bear interest at adjusted LIBOR, mature twelve months or less from inception and are collateralized by $53.1 million of the Company’s fixed maturity securities. The weighted-average interest rate on borrowings outstanding as of September 30, 2004 was 1.93%.

     The NAIC’s risk-based capital method is designed to measure the acceptable amount of capital and surplus an insurer should have based on the inherent specific risks of each insurer. The adequacy of a company’s actual

30

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Continued)

capital and surplus is evaluated by a comparison to the risk-based capital results. Insurers failing to meet minimum risk-based capital requirements may be subject to scrutiny by the insurer’s domiciliary insurance department and ultimately rehabilitation or liquidation. Based on the standards currently adopted, the Company’s insurance subsidiaries capital and surplus is in excess of the prescribed risk-based capital requirements.

Forward-Looking Information

     Certain information included in this report and other statements or materials published or to be published by the Company are not historical facts but are forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological developments, new and existing products, expectations for market segment and growth, and similar matters. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the Company provides the following cautionary remarks regarding important factors which, among others, could cause the Company’s actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company’s forward-looking statements. The risks and uncertainties that may affect the operations, performance, development, results of the Company’s business, and the other matters referred to above include, but are not limited to: (i) changes in the business environment in which the Company operates, including inflation and interest rates; (ii) changes in taxes, governmental laws, and regulations; (iii) competitive product and pricing activity; (iv) difficulties of managing growth profitably; (v) claims development and the adequacy of our liability for unpaid loss and loss adjustment; (vi) severity of natural disasters and other catastrophe losses; (vii) adequacy of reinsurance coverage which may be obtained by the Company; (viii) ability and willingness of our reinsurers to pay; and (ix) future terrorist attacks.

31

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     The Company’s financial instruments are subject to the market risk of potential losses from adverse changes in market rates and prices. The primary market risks to the Company are equity price risk associated with investments in equity securities and interest rate risk associated with investments in fixed maturities. The Company has established, among other criteria, duration, asset quality and asset allocation guidelines for managing its investment portfolio market risk exposure. The Company’s investments are held for purposes other than trading and consist of diversified issuers and issues.

     The table below provides information about the Company’s financial instruments that are sensitive to changes in interest rates. For debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates. The information is presented in U.S. dollar equivalents.

	SEPTEMBER 30, 2004
	EXPECTED MATURITY DATES																					TOTAL
	(In thousands, except average interest rate)																					FAIR
	2004			2005			2006			2007			2008			Thereafter			TOTAL			VALUE
FIXED MATURITIES AVAILABLE FOR SALE:
Principal Amount	$	31,451		$	148,818		$	160,436		$	99,261		$	149,964		$	613,730		$	1,203,660		$	1,248,014
Book Value	$	30,244		$	150,567		$	162,676		$	101,220		$	152,183		$	633,856		$	1,230,746
Average Interest Rate		3.16	%		3.44	%		3.40	%		3.99	%		4.26	%		4.08	%		3.90	%		3.56	%
PREFERRED:
Principal Amount		—		$	1,000		$	3,000			—			—		$	2,125		$	6,125		$	6,341
Book Value		—		$	1,040		$	3,168			—			—		$	2,113		$	6,321			—
Average Interest Rate		—			6.84	%		6.40	%		—			—			6.26	%		6.43	%		6.41	%
SHORT-TERM INVESTMENTS:
Principal Amount	$	91,002			—			—			—			—			—		$	91,002		$	91,002
Book Value	$	91,002			—			—			—			—			—		$	91,002			—
Average Interest Rate		1.79	%		—			—			—			—			—			1.79	%		1.79	%
LOANS PAYABLE:
Principal Amount	$	15,543		$	21,238			—			—			—			—		$	36,781			—
Average Interest Rate		1.94	%		1.92	%		—			—			—			—			1.93	%		—

32

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES

Item 4. Controls and Procedures

     (a) Evaluation of Disclosure Controls and Procedures. The Company’s disclosure controls and procedures, as that term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are designed with the objective of providing reasonable assurance that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act, such as this report, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”). In designing and evaluating the Company’s disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, rather than absolute, assurance of achieving the desired control objectives.

     An evaluation was performed by management, with the participation of the Company’s chief executive officer (“CEO”) and chief financial officer (“CFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, the CEO and CFO have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

     (b) Changes in Internal Controls. There has been no change in the Company’s internal control over financial reporting during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting except that: During the most recent fiscal quarter, the Company formed a reinsurance contract subcommittee to review, discuss and make appropriate conclusions with respect to the documentation requirements and the accounting for the Company’s reinsurance contracts. This reinsurance contract subcommittee is comprised of a senior member from each of the Company’s accounting, claims, actuarial and underwriting departments. A reinsurance manager recently joined the Company, whose responsibilities include acting as chairperson of the reinsurance contract subcommittee.

33

PHILADELPHIA CONSOLIDATED HOLDING CORP. AND SUBSIDIARIES

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company’s purchases of its common stock during the third quarter of 2004 are shown in the following table:

						(c) Total		(d)
						Number of		Approximate
						Shares		Dollar Value of
						Purchased as		Shares That
						Part of		May Yet Be
						Publicly		Purchased
	(a) Total Number			(b) Average		Announced		Under the
	of Shares			Price Paid per		Plans or		Plans or
Period	Purchased			Share		Programs		Programs
July 1 – July 31		600	(1)	$	25.35		—		—
								$	24,700,000	(2)
August 1 – August 31		75	(1)	$	47.41		—		—
								$	24,700,000	(2)
September 1 – September 30		—	(1)	$	—		—		—
								$	24,700,000	(2)
Total		675

(1)	Such shares were issued under the Company’s Employee Stock Purchase Plan and were repurchased by the Company upon the Employee’s termination.
(2)	The Company’s total stock purchase authorization which was publicly announced in August 1998, amounts to $55.0 million, of which $30.3 million has been utilized.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

Item 5. Other information

Not applicable.

34

Item 6. Exhibits

Exhibits:

Exhibit No.	Description
10.1*	Gap Quota Share Reinsurance Contract effective as of April 1, 2004
10.2*	Casualty Excess of Loss Reinsurance contract effective January 1, 2004 (Preliminary Agreement). The participating reinsurers are ACE Tempest Re USA Inc., Allied World Assurance Company, American Re-Insurance Company and Liberty Mutual Insurance
10.3*	Casualty (Clash) Excess of Loss effective January 1, 2004
10.4*	Casualty Semi-Automatic Facultative Excess of Loss reinsurance binder with Berkley Insurance Company effective April 1, 2004
10.5*	Casualty Automatic Facultative certificate with B F Re Underwriters, LLC effective June 1, 2004. RE Philadelphia Insurance Companies certificate number 423004P1
10.6*	Florida Hurricane Catastrophe Fund Amended Reinsurance Contract effective June 1, 2004 (Liberty American Insurance Company)
10.7*	Florida Hurricane Catastrophe Fund Amended Reinsurance Contract effective June 1, 2004 (Mobile USA Insurance Company)

35

Exhibit No.	Description
10.8*	Excess Catastrophe Reinsurance Contract effective June 1, 2004 (Preliminary Agreement).
	The participating reinsurers on the $10.0 million excess of $10.0 million in coverage are ACE Tempest Reinsurance LTD., AXIS Specialty Limited (Bermuda), Everest Reinsurance Company, GE Frankona Ruckversicherungs AG, Folksamerica Reinsurance Company, Munchener Ruckversicherungs — Gesellschaft, PXRE Reinsurance, Renaissance Reinsurance Limited (Bermuda), Swiss Reinsurance America, Swiss Re Underwriting Agency Inc., XL Re Limited (Bermuda), Aspen Insurance UK LTD., Syndicate #0033, Syndicate #0623, Syndicate #2623 and Syndicate # 2003 at varying levels of participation.
	The participating reinsurers on the $20.0 million excess of $20 million in coverage are American Re Broker Market, AXIS Specialty Limited (Bermuda), Everest Reinsurance Company, Folksamerica Reinsurance Company, GE Frankona Ruckversicherungs , General Reinsurance Corporation, Munchener Ruckversicherungs - Gesellschaft, Partner Re (Bermuda), PXRE Reinsurance, Renaissance Reinsurance Limited (Bermuda), Swiss Reinsurance America, Swiss Re Underwriting Agency Inc., Transatlantic Reinsurance Co., Aspen Insurance UK LTD., Syndicate #0033, Syndicate #0623, Syndicate #2623, and Syndicate # 2003 and XL Re Limited at varying levels of participation.
	The participating reinsurers on the $25.0 million excess of $40.0 million in coverage are American Re Broker Market, Everest Reinsurance Company, Folksamerica Reinsurance Company, GE Frankona Ruckversicherungs , General Reinsurance Corporation, Hannover Re (Bermuda) Ltd., Munchener Ruckversicherungs - Gesellschaft, Partner Re (Bermuda), PXRE Reinsurance, Swiss Reinsurance America, Transatlantic Reinsurance Co., Aspen Insurance UK LTD., Syndicate #0033 and Syndicate # 2003 and XL Re Limited at varying levels of participation.
	The participating reinsurers on the $50.0 million excess of $65.0 million in coverage are American Re Broker Market, Folksamerica Reinsurance Company, GE Frankona Ruckversicherungs , Hannover Re (Bermuda) Ltd., Munchener Ruckversicherungs — Gesellschaft, PXRE Reinsurance, Swiss Reinsurance America, Swiss Re Underwriting Agency Inc., Tokio Millennium Re LTD, Transatlantic Reinsurance Co., Aspen Insurance UK LTD., Syndicate #0033 and Syndicate # 2003 and XL Re Limited at varying levels of participation.

36

Exhibit No.	Description
10.9*	Florida Only Excess Catastrophe Reinsurance Contract effective June 1, 2004 (Preliminary Agreement). The participating reinsurers on the $13.0 million excess of $7.0 million in coverage are Montpelier Reinsurance Ltd, Munchener Ruckversicherungs — Gesellschaft, Platinum Underwriters Re, PXRE Reinsurance, Sirius International Insurance Corp., Swiss Reinsurance America, Aspen Insurance UK LTD., Syndicate #2623, Syndicate #0566, Syndicate #0623, Syndicate #0780, Syndicate #0958, Syndicate #2001, Syndicate #2010 and Syndicate #2791 at varying levels of participation.
	The participating reinsurers on the $15.0 million excess of $20 million in coverage are American Re Broker Market, General Reinsurance Corporation, Montpelier Reinsurance Ltd , Munchener Ruckversicherungs — Gesellschaft, Platinum Underwriters Re, PXRE Reinsurance, Sirius International Insurance Corp., Swiss Reinsurance America, Aspen Insurance UK LTD., Syndicate #2623, Syndicate #0566, Syndicate #0623, Syndicate #0780, Syndicate #0958, Syndicate #2001, Syndicate #2010, Syndicate #2488 and Syndicate #2791 at varying levels of participation.
	The participating reinsurers on the $15.0 million excess of $35.0 million layer in coverage are American Re Broker Market, General Reinsurance Corporation, Hannover Re (Bermuda) Ltd, Montpelier Reinsurance Ltd, Munchener Ruckversicherungs — Gesellschaft, Platinum Underwriters Re, PXRE Reinsurance, Sirius International Insurance Corp., Swiss Re Underwriting Agency Inc., Aspen Insurance UK LTD., Syndicate #2623, Syndicate #0033, Syndicate #0566, Syndicate #0623, Syndicate #0780, Syndicate #2001 and Syndicate #2010 at varying levels of participation.
	The participating reinsurers on the $40.0 million excess of $50.0 million in coverage are American Re Broker Market, Hannover Re (Bermuda) Ltd., Montpelier Reinsurance Ltd., Munchener Ruckversicherungs — Gesellschaft, Platinum Underwriters Re, Sirius International Insurance Corp., Tokio Millennium Re LTD, Syndicate #0033, Syndicate #0566, Syndicate #0780, Syndicate #2001 Syndicate #2010, Syndicate #2488 and Syndicate #2791 at varying levels of participation.
10.10*	$50 million excess of $90 million Florida Only Excess Catastrophe Reinsurance Contract effective June 1, 2004 (Preliminary Agreement). The participating reinsurers are AXA Re, Hannover Re (Bermuda), Montpelier Reinsurance Ltd., Munchener Ruckversicherungs – Gesellschaft, Sirius International Insurance Corp., Swiss Re Underwriting Agency Inc., Tokio Millennium Re LTD, Syndicate #0033 and Syndicate #2791 at varying levels of participation.
10.11*	Underlying Excess Catastrophe Coverage effective July 1, 2004 (Preliminary Agreement). The participating reinsurers are AXA Re, Everest Reinsurance Company, Transatlantic Reinsurance Company, Syndicate #0033, Syndicate #0623, Syndicate #2623 and Syndicate # 2020 at varying levels of participation.
10.12*	Reinstatement Premium Protection Reinsurance Contract effective July 1, 2004 (Preliminary Agreement). The participating reinsurer is AXIS Specialty Limited.
10.13*	Underlying Excess Catastrophe and Reinstatement Premium Protection Reinsurance Contract effective July 1, 2004 (Preliminary Agreement). The participating reinsurer is Swiss Re Underwriting Agency Inc.

37

Exhibit No.	Description
10.14*	$50 million excess of $140 million Florida Only Catastrophe Excess Reinsurance Contract placement slip effective September 1, 2004. The participating reinsurers are Hannover Re (Bermuda) Ltd., Sirius International Insurance Corporation and Tokio Millennium Re LTD at varying levels of participation, in total equaling 50% of $50 million excess of $140 million Florida Only Catastrophe Excess Reinsurance coverage.
10.15*	65% Florida Only Third and Fourth Catastrophe Event Reinsurance Contract (Preliminary Agreement) effective September 1, 2004. The participating reinsurers are ACE Tempest Reinsurance Ltd, AXIS Specialty Limited, Syndicate #2791, Sirius International Insurance Corporation at varying levels of participation, in total equaling 65% of Florida Only Third and Fourth Event Catastrophe Reinsurance coverage.
10.16*	35% Florida Only Third and Fourth Catastrophe Event Reinsurance Contract (Preliminary Agreement) effective September 2, 2004. The participating reinsurers are Renaissance Reinsurance Ltd and DaVinci Reinsurance Ltd at varying levels of participation, in total equaling 35% of Florida Only Third and Fourth Event Catastrophe Reinsurance coverage.
10.17*	Third Catastrophe Event Reinsurance Contract placement slip effective September 3, 2004. The participating reinsurers are Syndicate #0623, Syndicate #2623, Syndicate #0033, Syndicate #0958, Syndicate #2791 and Catlin Ins. Co. Ltd at varying levels of participation, in total equaling 50% of Third Event Catastrophe Reinsurance coverage.
10.18*	Third Catastrophe Event Reinsurance Contract effective September 3, 2004 (Preliminary Agreement). The participating reinsurers are Renaissance Reinsurance Ltd and DaVinci Reinsurance Ltd, at varying levels of participation, in total equaling 50% of Third Event Catastrophe Reinsurance coverage.
10.19*	$50 million excess of $140 million Florida Only Catastrophe Excess Reinsurance Contract placement slip effective September 3, 2004. The participating reinsurer is Swiss Re Underwriting Agency Inc. equaling 50% of $50 million excess of $140 million Florida Only Catastrophe Excess Reinsurance coverage.
10.20*	$5 million excess of $190 million Florida Only Catastrophe Excess Reinsurance Contract placement slip effective September 10, 2004. The participating reinsurer is Hannover Re (Bermuda) Ltd.
10.21*	$45.0 million excess of $195 million Florida Only Catastrophe Excess Reinsurance Contract placement slip effective September 10, 2004. The participating reinsurers are American Re Broker Market, ACE Tempest Reinsurance LTD., AXIS Specialty Limited, Catlin Insurance Company LTD., Montpelier Reinsurance Ltd., Partner Re, Syndicate #0033, Syndicate #2003, Syndicate #2020, Syndicate #2791, Syndicate #2987 and Sirius International Insurance Corporation at varying levels of participation.
10.22*	$6.5 million excess of $3.5 million Florida Only Fifth Event Catastrophe Reinsurance placement slip effective September 24, 2004. The participating reinsurers are Syndicate #0557, Syndicate #0510, Syndicate #0570, Syndicate #2147, Syndicate #0780, Syndicate #2003, Syndicate #2010, Syndicate #4444, Syndicate #2987, Syndicate #0033, Syndicate #0958, Syndicate #2791, Syndicate #2001 and Syndicate #2020 at varying levels of participation.
31.1*	Certification of the Company’s chief executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

38

Exhibit No.	Description
31.2*	Certification of the Company’s chief financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of the Company’s chief executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of the Company’s chief financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Filed herewith.

39

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PHILADELPHIA CONSOLIDATED HOLDING CORP.
	Registrant
Date November 8, 2004		James J. Maguire, Jr.
		James J. Maguire, Jr.
		President and Chief Executive Officer
		(Principal Executive Officer)
Date November 8, 2004		Craig P. Keller
		Craig P. Keller
		Executive Vice President, Secretary, Treasurer
		and Chief Financial Officer (Principal
		Financial and Accounting Officer)

40

EX-10.1

                                                                    EXHIBIT 10.1

                                       GAP
                              QUOTA SHARE CONTRACT

                                     BETWEEN

                         PHILADELPHIA INSURANCE COMPANY
                    PHILADELPHIA INDEMNITY INSURANCE COMPANY
                                     ("PIC")

                                       AND

                          CUMIS INSURANCE SOCIETY, INC,
                                    ("Cumis")

                            EFFECTIVE: APRIL 1, 2004

IN CONSIDERATION OF THE MUTUAL PROMISES AND OTHER GOOD AND VALUABLE
CONSIDERATION, PIC and Cumis agree as follows:

ARTICLE I. DEFINITIONS

Unless the context clearly requires otherwise:

A.    "Allocated Loss Expense" means costs and expenses incurred by PIC on its
      Net Retained Line and allocable to a specific claim or loss that are
      incurred by PIC in the investigation, appraisal, adjustment, settlement,
      litigation, defense or appeal of a specific claim, including court costs
      and costs of supersedeas and appeal bonds expense, including a pro rata
      share of salaries and expenses of PIC employees and expenses of PIC
      officers who have been temporarily diverted from their normal and
      customary duties and assigned to the field adjustment of losses covered by
      this Contract, interest accrued after award or judgment and pre-judgment
      interest awarded against the insured, legal expenses and costs incurred by
      PIC in connection with coverage questions and legal actions connected
      therewith, and legal costs and expenses associated with Extra-contractual
      Obligations and Loss in Excess of Certificate Limits.

B.    "Certificate" or "Certificates" means either (i) a Deficiency Waiver
      Contract issued by a lender with an effective date during the Term of this
      Contract and insured under policies issued by PIC known either as
      Guarantee Asset Protection ("GAP") or Members Choice GAP (both called "GAP
      Policies") or (ii) a certificate of insurance issued by PIC with effective
      date for insurance coverage commencing during the Term of this Contract
      evidencing coverage under GAP Policies issued by PIC,

C.    "Contract Year" means each separate twelve (12) month period from April 1,
      2004 or any period of less than twelve (12) months subsequent thereto
      resulting from termination of this Contract.

D.    "Coverage territory" means all states of the United States of America.

[TOWERS PERRIN REINSURANCE LOGO]



E.    "Extra-contractual Obligations" means one hundred percent (100.00%) of any
      punitive, exemplary, compensatory or consequential damages for which PIC
      is liable, other than Loss in Excess of Certificate Limits as a result of
      a demand, claim or action by its insured, its insured's assignee or a
      third party claimant, which demand, claim or action alleges gross
      negligence, negligence, fraud, bad faith or other tortious conduct on the
      part of PIC in investigating, adjusting, defending, settling or otherwise
      handling a claim under a Certificate. An Extra-contractual Obligation
      shall be deemed to have occurred on the same date as the Loss covered or
      alleged to be covered under a Certificate. Notwithstanding anything stated
      herein, this Contract shall not apply to any Extra-contractual obligation
      incurred by PIC as a result of any fraudulent and/or criminal act directed
      against PIC by any officers or directors of PIC 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. PIC shall be indemnified in
      accordance with this Article to the extent permitted by applicable law.
      Indemnification by Cumis for Extra-contractual Obligations will be
      considered primary and any Errors and Omissions policy purchased by PIC
      will be considered excess and inure solely to the benefit of PIC.

F.    "Gross Net Premium" means direct premium written less refunds and returns
      (but not dividends) on Certificates less premiums paid or payable by PIC
      for all other facultative reinsurance coverage applicable to Certificates.

G.    "Loss" means the amount of Loss or liability paid by PIC to or on behalf
      of its insured to a claimant(s) under a Certificate.

H.    "Loss in Excess of Certificate Limits" means one hundred percent (100%) of
      any amount for which PIC is liable in excess of its Certificate limits,
      but otherwise within the terms of its Certificate as a result of a demand,
      claim or action by its insured or its insured's assignee or other third
      party to recover damages the insured is legally obligated to pay to a
      third party claimant because of PIC's alleged or actual gross negligence,
      negligence, fraud, bad faith or other tortious conduct on the part of PIC
      in investigating, adjusting, defending, settling or otherwise handling a
      claim including but not limited to rejecting a settlement within policy
      limits, in discharging its duty to defend or prepare the defense in the
      trial of an action against its insured, or in discharging its duty to
      prepare or prosecute an appeal consequent upon such an action.
      Indemnification by Cumis for Loss in Excess of Certificate Limits will be
      considered primary and any Errors and Omissions policy purchased by PIC
      will be considered excess and inure solely to the benefit of PIC.

I.    "Net Loss" means that amount of Loss, Extra Contractual Obligations, and
      Loss in Excess of Certificate Limits that PIC has paid or is obligated to
      pay on its Net Retained Line.

J.    "Net Retained Line" means that portion of any Net Loss and Allocated Loss
      Expense that PIC has retained net for its own account after application of
      all facultative reinsurance and after deduction of all net salvage and
      other recoveries actually

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      made. All subrogation, recoveries, or payments recovered or received
      subsequent to a Loss settlement under this Contract shall be applied as if
      recovered or received prior to payment or settlement, and all necessary
      adjustments shall be made by the parties to this Contract. Nothing in this
      definition, however, shall be construed to mean that Net Loss is not
      recoverable from Cumis until the ultimate Net Loss of PIC has been
      absolutely ascertained.

ARTICLE II. COVERAGE

A.    Net Loss. Cumis shall be liable to and will indemnify PIC, for one hundred
      percent (100%) of PIC's Net Loss on each loss, each coverage, each
      Certificate, and

B.    Allocated Loss Expense. Cumis shall also be liable to and will reimburse
      PIC, in addition to Cumis's obligation to reimburse PIC for Net Loss as
      set forth above, for one hundred percent (100%) of all Allocated Loss
      Expense arising in connection with claims arising from Certificates.

ARTICLE III. EXCLUSIONS

A.    The exclusions of this Contract shall be identical with those of PIC's
      Certificates and the master policies under which the Certificates are
      issued

B.    Any Net Loss and Allocated Loss Expense arising from Certificates issued
      with a coverage period effective inception date not during the Term of
      this Contract is not covered by this Contract.

C.    Notwithstanding any other provision of this Contract, Cumis shall have no
      obligation or liability for any loss, expense, damage, fees, fine, penalty
      or other amount that arises from (i) the acts, errors, omissions, or
      conduct of PIC that arises or results from the general conduct or
      procedures ("procedures") of PIC that are as issued by PIC contrary to or
      inconsistent with applicable statutes, regulations, insurance department
      bulletins and attorney general opinions applicable to the claims function
      and claims practices ("claims practices rules") applied in general or as
      those procedures are or were applied to a specific claim or claims or (ii)
      the failure of PIC to follow the advice and counsel of Cumis provided
      under Article X.

ARTICLE IV. PREMIUM

A.    Premium. PIC shall cede to Cumis one hundred percent (100%) of the Gross
      Net Premium arising from the Certificates including that developed by
      endorsement or audit on each Certificate less any premiums paid or payable
      for facultative reinsurance that inures to the benefit of this Contract.

B.    Premium Adjustment. If any alteration is made in the terms of any
      Certificate whereby the amount of the premium payable in respect thereof
      is affected, the premium shall be adjusted and any difference credited to
      or charged against the Cumis as the case may warrant. Upon cancellation of
      any Certificate, PIC shall be entitled to the proportionate return of
      premium.

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C.    Cancellation Fees. PIC and CUMIS will share equally in all cancellation
      fees when permitted by law.

ARTICLE V. CEDING COMMISSION

A.    Ceding Commission. Cumis shall allow PIC in the monthly accounts a ceding
      commission of Nineteen and six-tenths percent (19.6%) percent of Gross Net
      Premium ceded to Cumis on the Certificates. On return and refund premiums,
      PIC shall return and refund commission at the rate originally allowed
      thereon.

ARTICLE VI. TERM AND TERMINATION

A.    Commencement. This Contract incepts 12:01 A.M. Standard Time, April 1,
      2004 and is subject to termination at any month's end upon at least one
      hundred twenty (120) days prior written notice by either party.

B.    Termination. Upon termination of this Contract, coverage under this
      Contract will remain in effect for all Certificates to which this Contract
      attached including those which are in-force on the termination date until
      their natural expiration. However, should any Certificate to which this
      Contract applies be extended, continued or renewed due to regulatory, or
      other legal restrictions, this Contract shall automatically provide
      extended coverage until those Certificates expire or are actually
      terminated by PIC.

C.    Run-Off. If coverage under this Contract shall expire while a Loss covered
      hereunder is in progress, subject to the other conditions of this
      Contract, Cumis shall indemnify PIC as if the entire Loss had occurred
      during the time this Contract is in force provided the Loss covered
      hereunder started before the time of coverage expiration.

ARTICLE VII. ACCOUNTS AND REPORTS

A.    Accounts. PIC shall throughout the term of this Contract and thereafter,
      so long as either party hereto shall request until all liability on the
      Certificates has expired, report monthly as of the end of each month and
      in addition, as of the end of each calendar year the following as the same
      pertain to activity on Certificates for and from inception through to the
      end of each applicable month:

      1.    Gross Net Premium written

      2.    Gross Net Premium ceded;

      3.    Gross Net earned premium

      4.    Gross Net earned premium ceded

      5.    Gross Unearned premium reserve;

      6.    Gross Unearned premium ceded;

      7.    Gross Net Loss and Allocated Loss Expense paid less applicable
            salvage, subrogation, and other recoveries made;

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      8.    Ceded Net Loss and Allocated Loss Expense paid less applicable
            salvage, subrogation, and other recoveries made;

      9.    Gross reserves for Net Loss and Allocated Loss Expense outstanding;

      10.   Ceded reserves for Net Loss and Allocated Loss Expense outstanding;

      11.   Ceded Premium received by PIC payable to Cumis;

      12.   Ceding Commission due PIC;

      13.   Claims Fund balance after settlements made in accordance with
            Article XIII (D);

      14.   Net cash balance due PIC/Cumis (11-12)

B.    Monthly Reports. Reports shall be submitted by PIC to Cumis within
      forty-five (45) days of the end of each month for which the activity
      report is rendered with exception to the report as submitted in accordance
      with Article XII (H). The net balance due as reflected by each report
      shall be payable by the debtor party to the creditor party, without demand
      or presentation, within sixty (60) days of the end of the month for which
      the report is submitted. A positive amount is a balance due Cumis; a
      negative balance is an amount due PIC.

C.    Set-Off. All amounts due either PIC or Cumis, whether by reason of
      premium, commission, Net Loss, or Allocated Loss Expense, or otherwise,
      under this Contract shall be subject to the right of recoupment and offset
      and upon the exercise of the same, only the net balance shall be due. All
      claims for such amounts whether or not fixed in amount at the time of the
      insolvency of any party to this Contract, arising from coverage placed in
      effect under this Contract prior to the insolvency of any party to this
      Contract shall be deemed pre-liquidation debts and subject to this
      Article.

D.    Reports. PIC shall timely provide Cumis with reports and statistics with
      respect to the Certificates as reasonably requested by Cumis including,
      without limitation, within forty-five (45) days of the end of each
      quarter, full, separate, and complete detailed Certificate and claims
      bordereau and reports on formats acceptable to PIC and Cumis and such
      other information as may be required by Cumis for completion of their NAIC
      annual statements.

ARTICLE VIII. CURRENCY AND TAXES

A.    Currency. Whenever the word "Dollars" or the "$" sign appears in this
      Contract, they shall be construed to mean United States Dollars and all
      transactions under this Contract shall be in United States Dollars.
      Amounts paid or received by PIC in any other currency shall be converted
      to United States Dollars at the rate of exchange at the date such
      transaction is entered on the books of PIC.

B.    Apportionment. In the event of PIC being involved in a Loss requiring
      payment in two currencies, the amount recoverable under this Contract
      shall be apportioned to the two currencies in the same proportion as the
      amount of Loss in each currency bears to the total amount of Loss paid by
      PIC. For the purposes of this Contract, where PIC should receive premium
      or pay Loss in currencies other than United States currency, those
      premiums and Loss shall be converted into United States

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      Dollars at the actual rates of exchange at which these premiums and Losses
      are entered on PIC's books.

C.    Federal Excise Tax (Applicable to any reinsurer, excepting Underwriters at
      Lloyd's London and other Reinsurers exempt from Federal Excise Tax, who
      are domiciled outside the United States of America.) Cumis has agreed to
      allow for the purpose of paying the Federal Excise Tax the applicable
      percentage of the premium payable hereon (as imposed under Section 4371 of
      the Internal Revenue Code) to the extent such premium is subject to the
      Federal Excise Tax. In the event of any return of premium becoming due
      hereunder, Cumis shall deduct the applicable percentage from the return
      premium payable hereon and PIC or its agent should take steps to recover
      the tax from the United States Government.

D.    Taxes. In consideration of the terms under which this Contract is issued,
      PIC undertakes not to claim any deduction of the premium hereon when
      making Canadian Tax returns or when making tax returns, other than Income
      or Profits Tax returns, to any State or Territory of the United States of
      America or to the District of Columbia.

ARTICLE IX. OTHER COVERAGE.

A.    Inuring Coverage. In calculating the amount of liability under this
      Contract, only Net Loss and Allocated Loss Expense in respect of that
      portion of any risk in excess of collectible inuring other insurance or
      facultative reinsurance shall be included.

B.    Collectibility. The amount of Cumis's liability under this Contract in
      respect of any Net Loss and Allocated Loss Expense shall include losses
      incurred by PIC by reason of the inability of PIC to apply or collect any
      other coverage from any insurer or reinsurer, whether specific or general,
      that may have become due from them, whether that inability arises from
      insolvency or otherwise.

ARTICLE X. LOSS NOTICE AND SETTLEMENT

A.    Loss Notice. PIC shall report all Losses to Cumis by monthly bordereau.

B.    Loss Settlement. All claims and Loss shall be investigated, adjusted, and
      settled by PIC or its designee which settlements, judgments or compromises
      of claims or Loss will be finally binding upon Cumis without undue
      interference of Cumis provided that in the event of a possible claim
      denial for a reason outside of mutually agreed parameters reduced to
      writing by PIC and Cumis, PIC shall first seek the advice and counsel of
      Cumis before denying a claim in whole or in part.

C.    Original Conditions. Cumis' liability to PIC, subject to the exclusions
      and the terms and conditions of this Contract, shall attach simultaneously
      with that of PIC and shall be subject in all respects to the same risks,
      terms, conditions, interpretations, waivers and to the same modifications,
      alterations and cancellations as the respective insurances (or
      reinsurances) of PIC, the true intent of this Contract being

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      that Cumis shall, in every case to which this Contract applies, follow the
      settlements and the fortunes of PIC with respect to the Certificates.

D.    Right To Associate. When so requested in writing, PIC shall afford Cumis
      or its representatives an opportunity to be associated with PIC, at the
      expense of Cumis, in the defense of any claim, suit or proceeding
      involving this reinsurance, and PIC and Cumis shall cooperate in every
      respect in the defense of such claim, suit or proceeding.

E.    Errors and Omissions. Inadvertent delays, errors or omissions made by PIC
      in connection with this Contract shall not relieve Cumis from any
      liability which would have attached had such delay, error or omission not
      occurred, provided always that such delay, error or omission shall be
      rectified as soon as possible after discovery by PIC's Home Office.

F.    Subrogation and Recoveries. All salvages, recoveries, payments and
      reversals or reductions of verdicts or judgments (net of the cost of
      obtaining such salvage, recovery, payment or reversal or reduction of a
      verdict or judgment) whether recovered, received or obtained prior or
      subsequent to a loss settlement under this Contract, including amounts
      recoverable under other reinsurance, shall be applied as if recovered,
      received or obtained prior to the aforesaid settlement and shall be
      deducted from the actual losses sustained to arrive at the amount of the
      Net Loss. Nothing in this Article shall be construed to mean losses are
      not recoverable until the Net Loss to the PIC finally has been
      ascertained.

      Cumis shall be subrogated, as respects any loss for which Cumis shall
      actually pay or become liable, but only to the extent of the amount of
      payment by or the amount of liability to Cumis, to all the rights of PIC
      against any person or other entity who may be legally responsible for
      damages as a result of said loss. Should PIC elect not to enforce such
      rights, Cumis is hereby authorized and empowered to bring any appropriate
      action in the name of PIC or its policyholders, or otherwise to enforce
      such rights. Cumis shall promptly remit to PIC the amount of any judgment
      awarded in such an action in excess of the amount of payment by, or the
      amount of liability to, Cumis hereunder.

ARTICLE XI. ACCESS TO RECORDS AND THIRD PARTY BENEFICIARY

A.    Access To Records. Cumis, so long as liability under the Certificates has
      not expired and for five years thereafter, and as frequently as Cumis
      deems reasonably necessary, upon reasonable notice may visit, inspect,
      examine, audit, and verify, at the offices of PIC, any of the policies,
      Certificates, claim files, accounts, files, documents, books, reports,
      work papers, and other records belonging to or in the possession or
      control of PIC relating to the Certificates and to make copies thereof and
      extracts therefrom.

B.    Third Party Beneficiary. Except as expressly provided for in the Article
      entitled Insolvency, the provisions of this Contract are intended solely
      for the benefit of PIC and Cumis. Nothing in this Contract shall in any
      manner create or be construed to

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      create any obligations to or establish any rights against any party to
      this Contract in favor of any other persons not party to this Contract.

ARTICLE XII. Insolvency

A.    Reinsurance Payable. In the event of the declared insolvency of PIC and
      the appointment of a liquidator, receiver, conservator or statutory
      successor, this reinsurance shall be payable immediately upon demand, with
      reasonable provision for verification, directly to PIC or to its
      liquidator, receiver, conservator or statutory successor on the basis of
      the liability of PIC as a result of claims allowed against PIC by any
      court of competent jurisdiction or any liquidator, receiver, conservator,
      or statutory successor having authority to allow such claims without
      diminution because of the insolvency of PIC or because the liquidator,
      receiver, conservator or statutory successor of PIC has failed to pay all
      or a portion of any claim. Payments by Cumis as above set forth shall be
      made directly to PIC or to its conservator, liquidator, or statutory
      successor, except where the contract of insurance or reinsurance
      specifically provides another payee of such reinsurance or except as
      provided by applicable law and regulation (such as subsection (a) of
      section 4118 of the New York Insurance laws) in the event of the
      insolvency of PIC.

B.    Notice of Claim. Every liquidator, receiver, conservator, statutory
      successor of PIC or guaranty fund or association shall give written notice
      to Cumis of the pendency of a claim involving PIC indicating the
      Certificate, which claim would involve a possible liability on the part of
      Cumis to PIC or to its liquidator, receiver, conservator or statutory
      successor, within a reasonable amount of time after the claim is filed in
      the conservation, liquidation, receivership or other proceeding.

C.    Investigation. During the pendency of any claim, Cumis may investigate the
      same and interpose, at its own expense, in the proceeding where that claim
      is to be adjudicated, any defense or defenses that it may deem available
      to its Certificate holder, or to any liquidator, receiver, conservator,
      statutory successor of PIC or guaranty fund or association.

D.    Expenses. The expense thus incurred by Cumis shall be chargeable, subject
      to the approval of the Court, against PIC as part of the expense of
      conservation or liquidation to the extent of a pro rata share of the
      benefit which may accrue to PIC as a result of the defense undertaken by
      Cumis. Where two or more reinsurers are involved in the same claim and a
      majority in interest elect to interpose defense to the claim, the expense
      shall be apportioned in accordance with the terms of this Contract as
      though such expense had been incurred by PIC.

ARTICLE XIII. CLAIMS FUND

A.    Establishment. PIC and Cumis hereby establish a Claims Fund to facilitate
      the administration of the payment of claims.

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B.    Initial Funding. To initially fund the Claims Fund, Cumis shall deposit by
      the first of the month following execution of this Contract with PIC an
      amount equal to $250,000..

C.    Minimum Amount. After the initial funding following execution of this
      Contract, the Minimum Amount of the Claims Fund shall be the lesser of
      $500,000 or an amount equal to three times the average claims payments on
      the Certificates in the preceding two months provided that notwithstanding
      the above, for the first twelve (12) months of the Term of this Contract,
      the Minimum Amount shall be not less than $250,000.

D.    Claims Fund Settlement. Within 7 business days of the end of each month,
      PIC shall send a monthly report to Cumis listing all Losses paid and
      amounts drawn out of the Claims Fund, for the benefit of Cumis net of any
      Interest earned on the Claims Fund balance during the month. Within 15
      days of the end of the month for which said report is submitted, Cumis
      shall reimburse the Claims Fund in an amount equal to the net balance
      submitted by PIC to reestablish the balance in the Claims Fund to be equal
      to the Minimum Amount.

E.    Interest. The Claims Fund shall be deposited in a bank account insured by
      the Federal Deposit Insurance Corporation. The money in the Claims Fund
      shall be swept into an overnight money market fund consistent with the
      other operating funds of PIC. The interest earned on the Claims Fund will
      accrue to the benefit of the Claims Fund.

F.    Termination. The Claims Fund shall be terminated and the balance thereof
      remitted to Cumis after the termination of this Contract once the ceded
      outstanding reserves, including Incurred But Not Reported loss and loss
      adjustment expense attributable thereto, as reasonably determined by PIC,
      for Net Loss and Allocated Loss Expense are less than $75,000.

G.    Funds Withheld. To the extent required, the amount of the Claims Fund
      shall be deemed as "funds drawn" under Article XIII (C) of this Contract.
      The Assets in the Claims Fund shall at all times be considered having been
      paid to Cumis and having been returned by Cumis to the Claims Fund

ARTICLE XIV. SECURITY AND UNAUTHORIZED REINSURANCE

A.    Security. For reasons of PIC's financial security and condition, if Cumis
      is not licensed or otherwise qualified as an insurer or reinsurer in
      PIC's' state of domicile, or if Cumis's A.M Best rating is downgraded
      below "A -(Stable)", Cumis will secure, at the inception hereof and within
      thirty (30) days after the end of each calendar quarter (but no later than
      December 31 of each year as respects the fourth quarter), its share of
      "Obligations" under this Contract in a manner, form and amount acceptable
      to PIC and to applicable regulatory authorities by a letter of credit or
      trust fund meeting at least the standards for credit for reinsurance of
      Pennsylvania.

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B.    Obligations. The "Obligations" referred to herein shall mean the then
      current (as of the end of each calendar quarter) sum of:

      1.    The amount of ceded unearned premium for which Cumis is responsible;

      2.    The amount of paid Net Losses and Allocated Loss Expenses paid by
            PIC but not yet recovered from Cumis;

      3.    The amount of ceded reserves for Net Losses reported and
            outstanding, as well as for reserves for Allocated Loss Expenses and
            Incurred But Not Reported loss and loss adjustment expense
            attributable thereto, for which Cumis is responsible; and

      4.    The amount of return and refund premiums for which Cumis is
            responsible.

C.    Right To Draw. Subject to paragraph E below, PIC or its successors in
      interest may draw, at any time and from time to time, without diminution
      or restriction because of the insolvency of either PIC or Cumis, upon the
      established letter of credit, trust fund or subsequent cash deposit.

D.    Purpose of Draw. Any draw under paragraph C shall be for one or more of
      the following purposes where Cumis's entire Obligations or part thereof,
      under this Contract remain unliquidated and undischarged at least thirty
      (30) days prior to the stated expiration date or at the time PIC learns of
      the possible jeopardy to the security represented by the letter of credit
      or trust fund:

      1.    To make payment to and reimburse PIC for Cumis's share of paid Net
            Loss and Allocated Loss Expense paid by PIC under its Certificates
            covered under this Contract due to PIC but unpaid by Cumis;

      2.    To make payments to Cumis of any amounts held thereby that exceed
            the amount required to fund Cumis' Obligations under this Contract
            provided that if a trust fund is applicable, only the excess of one
            hundred two (102%) percent of the amount required to fund Cumis'
            Obligations may be released.

      3.    To make payments to PIC of any other amounts PIC claims are due
            under this Contract from Cumis including but not limited to Cumis'
            share of premium refunds and returns; and

      4.    To obtain a cash deposit of the entire amount of the remaining
            balance under the established letter of credit or established trust
            fund in the event that PIC:

            a)    has received notice of non-renewal or expiration of the letter
                  of credit of trust fund;

            b)    has not received assurances satisfactory to PIC of any
                  required increase in the amount of the letter of credit or
                  trust fund or its replacement at least thirty (30) days before
                  any termination date;

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            c)    has been made aware that others may attempt to attach or
                  otherwise place in jeopardy the security represented by the
                  letter of credit or trust fund; or

            d)    has concluded that the trustee is such that the security
                  represented by the letter of credit or trust fund may be in
                  jeopardy.

E.    Use of Funds Drawn. If PIC draws on the letter of credit or trust fund to
      obtain a cash deposit, PIC shall hold the amount of the cash deposit so
      obtained in the name of PIC in any solvent United States Bank or Trust
      Company that is a member of the Federal Reserve System and insured by the
      Federal Deposit Insurance Corporation in trust solely to secure the
      Obligations referred to above and for the use and purposes enumerated
      above and to return any balance thereof to Cumis:

      1.    upon the complete and final liquidation and discharge of all of
            Cumis' Obligations to PIC under this Contract; or

      2.    in the event Cumis subsequently provides alternate or replacement
            security consistent with the terms hereof and acceptable to PIC.

F.    Quarterly Statement. PIC will prepare and forward at least quarterly to
      Cumis a statement for the purposes of this Article, showing Cumis' share
      of Obligations as set forth above. If Cumis' share thereof exceeds the
      then existing balance of the security provided, Cumis shall, within
      fifteen (15) days of receipt of PIC's statement, but never later than
      December 31 of any year, increase the amount of the letter of credit or
      trust fund or the cash deposit to the required amount of Cumis's
      Obligations set forth in PIC's statement.

G.    Trust Fund Excess. Subject to applicable legal restraints with respect to
      trust funds, if Cumis' share thereof is less than the then existing
      balance of the trust account or cash deposit as provided for above, PIC
      will release the excess thereof to Cumis upon Cumis' written request.

H.    Trust Fund Assets. The assets deposited in any trust fund shall be valued
      according to their current fair market value and shall consist only of
      cash (US legal tender), certificates of deposit issued by a United States
      Bank and payable in cash, and investments of the types permitted as
      admitted assets under the applicable law of Pennsylvania and approved by
      PIC. Investments issued by the parent, subsidiary, or affiliate of either
      PIC or Cumis shall not be eligible investments. All assets so deposited
      shall be accompanied by all necessary assignments, endorsements in blank,
      or transfer of legal title to the trustee in order PIC may negotiate any
      such assets without the requirement of consent or signature from reinsurer
      or any other entity.

I.    Cash Settlements. All settlements of account between PIC and Cumis shall
      be made in cash or its equivalent.

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J.    Successors In Interest. PIC's "successors in interest" shall include those
      by operation of law, including without limitation, any liquidator,
      rehabilitator, receiver, or conservator.

K.    Other Actions. Cumis will take any other reasonable steps that may be
      required for PIC to take credit on its statutory financial statements for
      the reinsurance provided by this Contract.

ARTICLE XV. SERVICE OF SUIT

(This Article only applies to a reinsurer who is domiciled outside of the United
States and/or unauthorized in any state, territory or district of the United
States having jurisdiction over PIC and its reserves. Furthermore, this Service
of Suit Article will not be read to conflict with or override the obligations of
the parties to arbitrate their disputes as provided for in the Arbitration
Article. This Article is intended as an aid to compelling arbitration or
enforcing such arbitration or arbitral award, not as an alternative to the
Arbitration Article for resolving disputes arising out of this Contract.)

A.    Submission To Jurisdiction. In support of the Arbitration Article, in the
      event of a dispute arising out of or in connection with this Contract, or
      if Cumis fails to pay any amount claimed to be due under this Contract, at
      the request of PIC, Cumis will submit to the jurisdiction of any court of
      competent jurisdiction within the Commonwealth of Pennsylvania or the
      State of New York, comply with all requirements necessary to that court's
      jurisdiction, and all matters arising under this Contract shall be
      determined in accordance with the law and practice of that court and
      jurisdiction.

B.    Service of Process. Service of process of suit in any suit may be made
      upon the firm of Pepper Hamilton LLP, Philadelphia, Pennsylvania,
      ("Firm"), and in any suit instituted, Cumis will abide by the final
      decision of that court or any appellate court in the event of an appeal.

C.    Acceptance. The Firm named above is hereby expressly authorized and
      directed by Cumis as its true and lawful attorney to accept service of
      process of suit on behalf of Cumis in any suit by PIC and, upon the
      request of PIC, to give a written undertaking to PIC to enter into and to
      enter a general appearance upon behalf of Cumis in the event a suit shall
      be instituted.

D.    Statutory Agent. Pursuant to any statute of any state, territory or
      district of the United States of America which makes provision therefore,
      Cumis hereby designate 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 their true and lawful attorney
      upon whom may be served any lawful process in any action, suit or
      proceeding instituted by or on behalf of PIC or any beneficiary hereunder
      arising out of this Contract and hereby designate the agent for service of
      process as the firm to whom the said officer is authorized to mail such
      process or a true copy thereof.

ARTICLE XVI. ARBITRATION

A.    Condition Precedent. As a condition precedent to any cause of action, any
      and all disputes between PIC and Cumis arising out of, relating to, or
      concerning this

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      Contract, whether sounding in contract or tort and whether arising during
      or after termination of this Contract, shall be submitted to the decision
      of a board of arbitration composed of two arbitrators and an umpire
      ("Board") meeting at a site in Philadelphia, Pennsylvania. The arbitration
      shall be conducted under the Pennsylvania Arbitration Act or Federal
      Arbitration Act, as applicable, and shall proceed as set forth in the
      following paragraphs:

B.    Submission to Arbitration. A notice requesting arbitration, or any other
      notice made in connection therewith, shall be in writing and shall be sent
      certified or registered mail, return receipt requested to the affected
      parties. The notice requesting arbitration shall state in particulars all
      issues to be resolved in the view of the claimant, shall appoint the
      arbitrator selected by the claimant and shall set a tentative date for the
      hearing, which date shall be no sooner than ninety (90) days and no later
      than one hundred fifty (150) days from the date that the notice requesting
      arbitration is mailed. Within thirty (30) days of receipt of claimant's
      notice, the respondent shall notify claimant of any additional issues to
      be resolved in the arbitration and of the name of its appointed
      arbitrator.

C.    Arbitration Board Membership. Unless otherwise mutually agreed, the
      members of the Board shall be impartial and disinterested and shall be
      active or retired lawyers with at least ten years of experience in
      insurance and reinsurance, or active or retired officers of
      property-casualty insurance companies, reinsurance companies, or Lloyds
      Underwriters. PIC and Cumis as aforesaid shall each appoint an arbitrator
      and the two (2) arbitrators shall choose an umpire before instituting the
      hearing. If the respondent fails to appoint its arbitrator within thirty
      (30) days after having received claimant's written request for
      arbitration, the claimant is authorized to and shall appoint the second
      arbitrator. If the two arbitrators fail to agree upon the appointment of
      an umpire within thirty (30) days after notification of the appointment of
      the second arbitrator, within ten (10) days thereof, the two (2)
      arbitrators shall request ARIAS U.S. to assist in the appointment of an
      umpire for the arbitration with the qualifications set forth above in this
      Article. If enlisting the aid of ARIAS U. S. fails to result in the naming
      of an umpire, either party may apply to the court named below to appoint
      an umpire with the above required qualifications. The umpire shall
      promptly notify in writing all parties to the arbitration of his selection
      and of the scheduled date for the hearing. Upon resignation or death of
      any member of the Board, a replacement shall be appointed in the same
      fashion as the resigning or deceased member was appointed.

D.    Submission of Briefs. The claimant and respondent shall each submit
      initial briefs to the Board outlining the issues in dispute and the basis,
      authority and reasons for their respective positions within thirty (30)
      days of the date of notice of appointment of the umpire. The claimant and
      the respondent may submit reply briefs to the Board within ten (10) days
      after filing of the initial brief(s). Initial and reply briefs may be
      amended by the submitting party at any time, but not later than ten (10)
      days prior to the date of commencement of the arbitration hearing.
      Reasonable responses shall be allowed at the arbitration hearing to new
      material contained in any amendments filed to the briefs but not
      previously responded to.

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E.    Arbitration Hearing and Award. The Board shall make a decision and award
      with regard to this Contract, the original intentions of the parties to
      the extent reasonably ascertainable, and the custom and usage of the
      property and casualty insurance and reinsurance business which decision
      and award shall be in writing and shall state the factual and legal basis
      for the decision and award. The decision and award shall be based upon a
      hearing in which evidence shall be allowed and which the formal rules of
      evidence shall not strictly apply but in which cross examination and
      rebuttal shall be allowed. At its own election or at the request of the
      Board, either party may submit a post-hearing brief for consideration of
      the Board within twenty (20) days of the close of the hearing. The Board
      shall make its decision and award within thirty (30) days following the
      close of the hearing or the submission of post-hearing briefs, whichever
      is later, unless the parties consent to an extension. Every decision by
      the Board shall be by a majority of the members of the Board and each
      decision and award by the majority of the members of the Board shall be
      final and binding upon all parties to the proceeding. Either party may
      apply to the United States District Court for the Eastern District of
      Pennsylvania for an order confirming any decision and the award; a
      judgment of that Court shall thereupon be entered on any decision or
      award. If such an order is issued, the attorneys' fees of the party so
      applying and court costs will be paid by the party against whom
      confirmation is sought. The Board may award interest at a rate of ten
      (10%) percent simple interest per annum calculated from the date the Board
      determines that any amounts due the prevailing party should have been paid
      to the prevailing party.

F.    Arbitration Expense. Each party shall bear the expense of the one
      arbitrator appointed by it and shall jointly and equally bear with the
      other party the expense of any stenographer requested, and of the umpire.
      The remaining costs of the arbitration proceedings shall be finally
      allocated by the Board.

G.    Evidence. Subject to customary and recognized legal rules of privilege,
      each party participating in the arbitration shall have the obligation to
      produce those documents and as witnesses to the arbitration those of its
      employees as any participating party reasonably requests providing always
      that the same witnesses and documents be obtainable and relevant to the
      issues before the arbitration and not be unduly burdensome or excessive.
      The parties may mutually agree as to pre-hearing discovery prior to the
      arbitration hearing and in the absence of agreement, upon the request of
      any party, pre-hearing discovery may be conducted as the umpire shall
      determine in his/her sole discretion to be in the interest of fairness,
      full disclosure, and a prompt hearing, decision and award by the Board.
      The umpire shall be the final judge of the procedures of the Board, the
      conduct of the arbitration, of the rules of evidence, the rules of
      privilege and production and of excessiveness and relevancy of any
      witnesses and documents upon the petition of any participating party. To
      the extent permitted by law, the Board and the umpire shall have the
      authority to issue subpoenas and other orders to enforce their decisions.

H.    Equitable Relief. Nothing herein shall be construed to prevent any
      participating party from applying to a federal district court of competent
      jurisdiction to issue a restraining order or other equitable relief to
      maintain the "status quo" of the parties participating in the arbitration
      pending the decision and award by the Board or to prevent any

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      party from incurring irreparable harm or damage at any time prior to the
      decision and award of the Board. The Board shall also have the authority
      to issue interim decisions or awards in the interest of fairness, full
      disclosure, and a prompt and orderly hearing and decision and award by the
      Board.

ARTICLE XVII. INTERMEDIARY

A.    Towers Perrin Reinsurance 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 PIC or Cumis
      through Towers Perrin Reinsurance, One Stamford Plaza, 263 Tresser
      Boulevard, Stamford, CT 06901-3226.

B.    Payments by PIC to the Intermediary shall be deemed to constitute payment
      to Cumis. Payments by Cumis to the Intermediary shall be deemed to
      constitute payment to PIC only to the extent that such payments are
      actually received by PIC.

ARTICLE XVIII. ADMINISTRATION PROCEDURES

A.    Inasmuch as insurance premiums ceded to Cumis under this Contract shall be
      collected directly by an affiliate of Cumis ("CMIA") pursuant to the
      Agency and Marketing Agreement dated March 5, 2001, it shall be the
      obligation of Cumis to cause CMIA to provide all necessary premium
      information to PIC in order that PIC can make the reports required by
      Article VII of this Contract.

B.    To the extent that Cumis should receive any premium directly from CMIA,
      Cumis shall remit the ceding commission allowed and due to PIC thereon in
      the time required under this Contract.

ARTICLE XIX. OTHER TERMS AND CONDITIONS

A.    Utmost Good Faith. This Contract is entered into with the expectation that
      it correctly, adequately and appropriately describes the intent and
      agreement of the parties. The principles of honorable engagement and
      utmost good faith, traditional to reinsurance, will be adhered to in the
      performance of this Contract, will govern the parties' rights and
      obligations under the Contract, and will be the fundamental basis for
      resolving any dispute that may arise between the parties.

B.    Waiver. The failure of PIC or Cumis to insist on strict compliance with
      this Contract or to exercise any right or remedy shall not constitute a
      waiver of any rights contained in this Contract nor estop the parties from
      thereafter demanding full and complete compliance nor prevent the parties
      from exercising any remedy.

C.    Severability. If any provisions of this Contract should be invalid under
      applicable laws, the latter shall control but only to the extent of the
      conflict without affecting the remaining provisions of this Contract.

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D.    Headings. The headings preceding the text of the Articles and paragraphs
      of this Contract are intended and inserted solely for the convenience of
      reference and shall not affect the meaning, interpretation, construction
      or effect of this Contract.

E.    Assignment. This Contract shall be binding upon and inure to the benefit
      of PIC and Cumis and their respective successors and assigns provided,
      however, that this Contract may not be assigned by either party without
      the prior written consent of the other party which consent may be withheld
      by either party in its sole unfettered discretion.

F.    Governing Law. This Contract shall be governed as to performance,
      administration, and interpretation by the laws of the Wisconsin, exclusive
      of its rules with respect to conflicts of law.

G.    Negotiated Contract. This Contract has been negotiated by the parties and
      the fact that the initial and other drafts shall have been prepared by
      either party or an intermediary shall not give rise to any presumption for
      or against any party to this Contract or be used in any form in the
      construction or interpretation of this Contract or any of its provisions.

H.    Entire Contract. This written Contract and any agreed amendments made
      thereto, and the underwriting information provided for the formation of
      the Contract and in connection with the acceptance of risk, including
      letters of intent and /or other such clarification, if any, shall
      constitute the entire agreement between the parties with respect to the
      Certificates covered hereunder. Any change or modification of this
      Contract shall be null and void unless made by amendment to the Contract
      and signed by both parties.

I.    Agency. As PIC consists of two insurers, the first named insurer shall be
      the agent of the other companies as to all matters pertaining to this
      Contract. Performance of the respective obligations of each party under
      this Contract shall be rendered solely to the other party; however, in the
      instance of insolvency of the PIC, the liability of the Reinsurers shall
      be modified to the extent set forth in the article entitled INSOLVENCY.

J.    Territory. The territorial limits of this Contract shall be identical with
      those of PIC's Certificates.

K.    Notices. Wherever written notice is required under this Contract, it shall
      be in writing and either delivered personally or, sent through the
      Intermediary by certified mail, return receipt requested to the addresses
      indicated below:

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      1. To PIC:

               PHILADELPHIA INSURANCE COMPANY
               PHILADELPHIA INDEMNITY INSURANCE COMPANY
               One Bala Plaza, Suite 100
               Bala Cynwyd, PA 19004
               ATTN: Douglas Gaudet
               FAX: 866-685-7697

      2. To Cumis:

               CUMIS INSURANCE SOCIETY, INC.
               5910 Mineral Point Road
               Madison, WI  53705
               ATTN: Richard A. Fischer
               FAX: 608-236-7084

L.    Privacy Awareness. PIC and Cumis are aware of and in compliance with their
      responsibilities and obligations under:

      1.    The Gramm-Leach-Bliley Act of 1999 (the "Act") and applicable
            Federal and state laws and regulations implementing the Act. PIC and
            Cumis will only use non-public personal information as permitted by
            law; and

      2.    The applicable provisions of the Health Insurance Portability and
            Accountability Act ("HIPAA") and the related requirements of any
            regulations promulgated thereunder including without limitation the
            federal privacy regulations as contained in 45 CFR Part 160 and 164
            (the "Federal Privacy Regulations"). PIC and Cumis will only use
            protected health information as permitted by law.

M.    Non-Disclosure. To the extent required or prohibited by applicable law or
      regulation, Cumis shall not disclose any (a) non-public personal
      information or (b) protected health information (as defined in 45 CFR
      164.501) it receives from PIC to anyone other than:

      1.    Cumis, Cumis' affiliates, legal counsel, auditors, consultants,
            regulators, rating agencies and any other persons or entities to
            whom such disclosure is required to effect, administer, or enforce a
            reinsurance contract; or any retrocessional reinsurance contract
            applicable to the losses that are the subject of this Contract, or

      2.    Persons or entities to whom disclosure is required by applicable law
            or regulation.

N.    Confidentiality. The information, data statements, representations and
      other materials provided by either party to this Contract (hereinafter
      "Disclosing Party") to the other party (the "Receiving Party") arising
      from consideration and participation in

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      this Contract whether contained in the reinsurance submission, this
      Contract, or in materials or discussions arising from or related to this
      Contract, may contain confidential or proprietary information as expressly
      indicated by the Disclosing Party in writing from time to time
      ("Confidential Information") to the Receiving Party")

      1.    This Confidential Information is intended for the sole use of the
            parties to this Contract (and their retrocessionaires, respective
            auditors and legal counsel) as may be necessary in analyzing and/or
            accepting a participation in and/or executing their respective
            responsibilities under or related to this Contract.

      2.    Disclosing or using Confidential Information disclosed under this
            Contract for any purpose beyond (i) the scope of this Contract, (ii)
            the reasonable extent necessary to perform rights and
            responsibilities expressly provided for under this Contract, (iii)
            the reasonable extent necessary to administer, report to and effect
            recoveries from a retrocessional reinsurer or (iv) persons with a
            need to know the information and who are obligated to maintain the
            confidentiality of the Confidential Information or who have agreed
            in writing to maintain the confidentiality of the Confidential
            Information is expressly forbidden without the prior written consent
            of the Disclosing Party.

      3.    Copying, duplicating, disclosing, or using Confidential Information
            for any purpose beyond this expressed purpose is forbidden without
            the prior written consent of the Disclosing Party.

O.    Third Party Demand. Should either party receive a third party demand
      pursuant to subpoena, summons, or court or governmental order, to disclose
      Confidential Information that has been provided by the other party the
      Receiving Party shall make commercially reasonable efforts to notify the
      other party promptly upon receipt of the demand and prior to disclosure of
      the Confidential Information and provide the Disclosing Party a reasonable
      opportunity to object to the disclosure. If such notice is provided, the
      Receiving Party may after the passage of five (5) business days after
      providing notice, proceed to disclose the Confidential Information as
      necessary to satisfy such a demand without violating this Contract. If the
      Disclosing Party objects to the release of the Confidential Information,
      the Receiving Party will comply with the reasonable requests of the
      Receiving Party in connection with the Disclosing Party's efforts to
      resist release of the Confidential Information. The Disclosing Party shall
      bear the cost of resisting the release of the Confidential Information.

P.    Non-Public Personal Information. "Non-Public Personal Information" shall
      for the purpose of this Contract mean financial or health information that
      personally identifies an individual, including claimants under
      Certificates reinsured under this Contract, and which information is not
      otherwise available to the public.

ARTICLE XX. TERRORISM RECOVERY - TERRORISM RISK INSURANCE ACT OF 2002

A.    As respects the Insured Losses of the PIC for each Program Year, to the
      extent PIC's total reinsurance recoverables for Insured Losses, when
      combined with the

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      compensation the PIC receives under the Act exceeds the aggregate amount
      of Insured Losses paid by PIC, less any other recoveries or
      reimbursements, (the "Excess Recovery"), a share of the Excess Recovery
      shall be allocated to PIC and Cumis. PIC's share of the Excess Recovery
      shall be deemed to be an amount equal to the proportion that PIC's Insured
      Losses bear to the Insurer's total Insured Losses for each Program Year.
      Cumis' share of the Excess Recovery shall be deemed to be an amount equal
      to the proportion that Cumis' payment of Insured Losses under this
      Contract bears to PIC's total collected reinsurance recoverables for
      Insured Losses. PIC shall provide Cumis with all necessary data respecting
      the transactions covered under this Article.

B.    The method set forth herein for determining an Excess Recovery is intended
      to be consistent with the United States Treasury Department's construction
      and application of Section 103 (g)(2) of the Act. To the extent it is
      inconsistent, it shall be amended to conform with such construction and
      application, nevertheless PIC shall be the sole judge as to the allocation
      of TRIA Recoveries to this or to other reinsurance Contracts.

C.    "Act" as used herein shall mean the Terrorism Risk Insurance Act of 2002
      and any subsequent amendment thereof or any regulations promulgated
      thereunder. "PIC" shall have the same meaning as "Insurer" under the Act
      and "Insured Losses", and "Program Year" shall follow the definitions as
      provided in the Act.

IN WITNESS WHEREOF, PIC and Cumis have executed this Contract, by their
duly-authorized representatives on the date indicated below.

PHILADELPHIA INSURANCE COMPANY

By: ____James J. Maguire___

Title: President and CEO          Date: __9/9/2004

PHILADELPHIA INDEMNITY INSURANCE COMPANY

By: __James J. Maguire__

Title: _President and CEO          Date: ___9/9/2004_

CUMIS INSURANCE SOCIETY, INC

By: __Roger Yard___

Title: _Vice President and Chief Actuary          Date: ______9/15/2004

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EX-10.2

                                                                    EXHIBIT 10.2

                         PHILADELPHIA INSURANCE COMPANY
                            BALA CYNWYD, PENNSYLVANIA
                    PHILADELPHIA INDEMNITY INSURANCE COMPANY
                            BALA CYNWYD, PENNSYLVANIA
                          MOBILE USA INSURANCE COMPANY
                             PINELLAS PARK, FLORIDA
                       LIBERTY AMERICAN INSURANCE COMPANY
                             PINELLAS PARK, FLORIDA
        AND ANY ADDITIONAL COMPANY ESTABLISHED OR ACQUIRED BY THE COMPANY

                             CASUALTY EXCESS OF LOSS
                              REINSURANCE CONTRACT

                                   PREPARED BY

                                 WILLIS RE INC.

                                                                   [WILLIS LOGO]



                         PHILADELPHIA INSURANCE COMPANY
                            BALA CYNWYD, PENNSYLVANIA
                    PHILADELPHIA INDEMNITY INSURANCE COMPANY
                            BALA CYNWYD, PENNSYLVANIA
                          MOBILE USA INSURANCE COMPANY
                             PINELLAS PARK, FLORIDA
                       LIBERTY AMERICAN INSURANCE COMPANY
                             PINELLAS PARK, FLORIDA
        AND ANY ADDITIONAL COMPANY ESTABLISHED OR ACQUIRED BY THE COMPANY

                             CASUALTY EXCESS OF LOSS
                              REINSURANCE CONTRACT



                                             CONTRACT
REINSURERS                                PARTICIPATION
- ----------                                -------------
                                          
ACE Tempest Re USA, Inc.                     20.00%

Allied World Assurance Company               25.00%

American Re-Insurance Company                30.00%

Liberty Mutual Insurance Company             25.00%

TOTAL                                       100.00%


                                                                   [WILLIS LOGO]



                                TABLE OF CONTENTS



ARTICLE                                                                         PAGE
- -------                                                                         ----

                                                                           
I         BUSINESS COVERED                                                       1
II        TERM                                                                   2
III       DEFINITIONS                                                            2
                  Ultimate Net Loss                                              2
                  Policy or Policies                                             3
                  Gross Net Earned Premium Income                                3
IV        LOSS IN EXCESS OF POLICY LIMITS                                        3
V         EXTRA CONTRACTUAL OBLIGATIONS                                          4
VI        TERRITORY                                                              4
VII       EXCLUSIONS                                                             4
VIII      ADDITIONAL PROVISIONS                                                  6
IX        AMOUNT OF COVERAGE AND RETENTION                                       7
X         PREMIUM                                                                7
XI        NOTICE OF LOSS AND LOSS SETTLEMENTS                                    8
XII       AGENCY AGREEMENT                                                       8
XIII      ERRORS AND OMISSIONS                                                   8
XIV       OFFSET                                                                 9
XV        CURRENCY                                                               9
XVI       TAXES                                                                  9
XVII      FEDERAL EXCISE TAX                                                     9
XVIII     UNAUTHORIZED REINSURANCE                                              10
XIX       NET RETAINED LINES                                                    11
XX        THIRD PARTY RIGHTS                                                    12
XXI       SEVERABILITY                                                          12
XXII      GOVERNING LAW                                                         12
XXIII     ACCESS TO RECORDS                                                     12
XXIV      INSOLVENCY                                                            12
XXV       ARBITRATION                                                           13
XXVI      CONFIDENTIALITY                                                       14
XXVII     SERVICE OF SUIT                                                       14
XXVIII    TERRORISM RISK INSURANCE ACT OF 2002                                  15
XXIX      INTERMEDIARY                                                          16
          Nuclear Incident Exclusion Clause - Liability - Reinsurance - U.S.A.
          Nuclear Incident Exclusion Clause - Liability - Reinsurance - Canada
          Terrorism Exclusion Endorsement (Reinsurance)


                                                                   [WILLIS LOGO]



                             CASUALTY EXCESS OF LOSS
                              REINSURANCE CONTRACT
                                (the "Contract")

                                     between

                         PHILADELPHIA INSURANCE COMPANY
                            BALA CYNWYD, PENNSYLVANIA
                    PHILADELPHIA INDEMNITY INSURANCE COMPANY
                            BALA CYNWYD, PENNSYLVANIA
                          MOBILE USA INSURANCE COMPANY
                             PINELLAS PARK, FLORIDA
                       LIBERTY AMERICAN INSURANCE COMPANY
                             PINELLAS PARK, FLORIDA
        AND ANY ADDITIONAL COMPANY ESTABLISHED OR ACQUIRED BY THE COMPANY
                                 (the "Company")

                                       and

                     THE SUBSCRIBING REINSURER EXECUTING THE
                       INTERESTS AND LIABILITIES AGREEMENT
                            ATTACHED TO THIS CONTRACT
                                (the "Reinsurer")

                                    ARTICLE I

BUSINESS COVERED

This Contract is to indemnify the Company in respect of the net excess liability
as a result of any loss or losses, which may occur during the term of this
Contract under any Policies in force at the effective time and date hereof or
issued or renewed after that time and date by or on behalf of the Company and
classified by the Company as Casualty, Fidelity, Professional Liability and/or
Fiduciary Liability. It is understood and agreed, as respects Policies on a
claims-made or losses-discovered basis, any extended reporting period coverages
provided thereunder shall be reinsured hereunder, provided the date of loss is
during the term of this Contract.

With respect to business classified by the Company as Professional Liability and
written out of the Company's Specialty Lines Division, the following product
lines of business, as defined by the Company, shall be covered under the scope
of this Contract:

      Directors and Officers Liability for For-Profit and Not-For-Profit risks
      Miscellaneous Errors and Omissions Liability
      Lawyers Professional Liability
      Accountants Professional Liability

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                                     Page 1


      Dentists Professional Liability
      Insurance Agents Professional Liability
      Miscellaneous Medical Professional Liability
      Employment Practices Liability

Furthermore, it is agreed that the Company may add other Professional Liability
product lines of business to the scope of this Contract with prior approval of
the Reinsurer.

                                   ARTICLE II

TERM

The term of this Contract shall be from 12:01 a.m., Eastern Standard Time,
January 1, 2004, to 12:01 a.m., Eastern Standard Time, January 1, 2005.

The Reinsurer shall cease to be liable for Loss Occurrences after the time and
date of expiration of this Contract but shall remain liable for Ultimate Net
Loss incurred by the Company with respect to Loss Occurrences under the
Company's Policies with the date of loss prior to the termination date of this
Contract.

The Company shall have the option to elect run-off coverage for Policies in
force at the expiration of this Contract. If the Company chooses to run off
liability, the Reinsurer shall continue to be liable for Ultimate Net Loss
incurred by the Company under all Policies in force at the time and date of
expiration until each Policy's next anniversary, renewal or expiration, but in
no event shall the Reinsurer's liability continue for more than 12 months after
the expiration date plus odd time, not to exceed a total of 18 months. The
premium for the run-off coverage shall be the Contract rate applied to the
unearned premium for the subject Policies as of December 31, 2004. The run-off
coverage shall be subject to a maximum recoverable limit equal to 200% of the
associated ceded earned premium.

                                   ARTICLE III

DEFINITIONS

A.    Ultimate Net Loss

      "Ultimate Net Loss," as used in this Contract, shall mean the actual loss
      paid by the Company or for which the Company becomes liable to pay, such
      loss shall include 100% of any Loss in Excess of Policy Limits as defined
      in the LOSS IN EXCESS OF POLICY LIMITS ARTICLE, 100% of any Extra
      Contractual Obligations as defined in the EXTRA CONTRACTUAL OBLIGATIONS
      ARTICLE, ex-gratia payments subject to prior approval, expenses of
      litigation and interest, claim-specific declaratory judgment expenses, and
      all other loss expense of the Company including subrogation, salvage, and
      recovery expenses (office expenses and salaries of officials and employees
      not classified as loss adjusters are not chargeable as expenses for
      purposes of this paragraph), but salvages and all recoveries, including
      recoveries under all reinsurances, which inure to the benefit of this
      Contract (whether recovered or not), shall be first deducted from such
      loss to arrive at the amount of liability attaching hereunder.

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                                     Page 2




      The phrase "ex-gratia payments" shall mean payments made as an
      accommodation by the Company in settlement of a claim for which no
      coverage exists under the Policy reinsured hereunder, subject to the prior
      approval of the Reinsurer.

      The phrase "claim-specific declaratory judgment expenses," as used in this
      Contract will mean all expenses incurred by the Company in connection with
      declaratory judgment actions brought to determine the Company's defense
      and/or indemnification obligations that are allocable to specific Policies
      and claims subject to this Contract. Declaratory judgment expenses will be
      deemed to have been incurred by the Company on the date of the original
      loss (if any) giving rise to the declaratory judgment action.

      All salvages, recoveries or payments recovered or received subsequent to
      loss settlements hereunder shall be applied as if recovered or received
      prior to the aforesaid settlement, and all necessary adjustments shall be
      made by the parties hereto.

      For purposes of this definition, the phrase "becomes liable to pay" shall
      mean the existence of a judgment, which the Company does not intend to
      appeal, or a release has been obtained by the Company, or the Company has
      accepted a proof of loss.

      Nothing in this clause shall be construed to mean that losses are not
      recoverable hereunder until the Company's Ultimate Net Loss has been
      ascertained.

B.    Policy or Policies

      "Policy" or "Policies," as used in this Contract, shall mean any binder,
      policy, or contract of insurance or reinsurance issued, accepted or held
      covered provisionally or otherwise, including any extended reporting
      periods, by or on behalf of the Company.

C.    Gross Net Earned Premium Income

      "Gross Net Earned Premium Income," as used in this Contract, shall mean
      gross earned premium income during the term of this Contract on business
      the subject of this Contract less earned premium income paid for
      reinsurances, recoveries under which would inure to the benefit of this
      Contract.

                                   ARTICLE IV

LOSS IN EXCESS OF POLICY LIMITS

This Contract shall protect the Company, within the limits hereof, in connection
with the Ultimate Net Loss in excess of the limit of its original Policy, such
loss in excess of the limit having been incurred because of failure by it to
settle within the Policy limit or by reason of alleged or actual negligence,
criminal act or 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 action.

For the purpose of this Article, the word "loss" shall mean any amounts for
which the Company would have been contractually liable to pay had it not been
for the limit of the original Policy. However, this Article shall not apply
where the loss has been incurred due to fraud by a member

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                                     Page 3




of the Board of Directors or a corporate officer 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.

                                    ARTICLE V

EXTRA CONTRACTUAL OBLIGATIONS

This Contract shall protect the Company within the limits hereof, where the
Ultimate Net Loss includes any Extra Contractual Obligations. The term "Extra
Contractual Obligations" is defined as those liabilities not covered under any
other provision of this Contract and which arise from the handling of any claim
on business covered hereunder, such liabilities arising because of, but not
limited to, the following: failure by the Company to settle within the Policy
limit, or by reason of alleged or actual negligence, criminal act or 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 action.

The date on which any Extra Contractual Obligation is incurred by the Company
shall be deemed, in all circumstances, to be the date of the original disaster
and/or casualty.

However, this Article shall not apply where the loss has been incurred due to
fraud by a member of the Board of Directors or a corporate officer 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.

                                   ARTICLE VI

TERRITORY

This Contract shall cover wherever the Company's original Policies cover.

                                   ARTICLE VII

EXCLUSIONS

This Contract does not cover and specifically excludes:

A.    Policies with per claim or per occurrence limits of $1,000,000 and less.

      When the Company writes a primary Policy and an umbrella Policy for the
      same Insured, and the sum of the per claim or per occurrence limits of the
      two Policies is greater than $1,000,000, this exclusion shall not apply to
      either Policy.

B.    Pools, Associations or Syndicates, except losses from Assigned Risk Plans
      or similar plans are not excluded.

C.    Nuclear Incident pursuant to the "Nuclear Incident Exclusion Clause -
      Liability - Reinsurance - U.S.A." attached hereto.

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D.    Nuclear Incident pursuant to the "Nuclear Incident Exclusion Clause -
      Liability - Reinsurance - Canada" attached hereto.

E.    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
      guarantee fund, insolvency fund, plan, pool, association, fund or other
      arrangement, howsoever denominated, established or governed, which
      provides for any assessment of or payment or assumption by the Company of
      part 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.

F.    Financial Guarantee or Insolvency, when written as such.

      However, the liability of the Company under any bond covering losses due
      to negligence of any person or failure of any person to faithfully perform
      his duty or failure to account for and pay over money or other property in
      his custody shall not be considered Financial Guarantee or Insolvency.

      Notwithstanding the foregoing, no claim is to attach hereto in respect of
      any loss or losses arising as a result of:

      1.    The insolvency of any financial institution at which trust moneys
            are deposited or insolvency of any person, firm or company, or

      2.    The fall in the market value of investments unless such loss is the
            direct result of a) a dishonest, fraudulent, criminal or negligent
            act on the part of the bonded person or b) a dishonest, fraudulent
            or criminal act on the part of any other person or persons or c)
            unless such loss is solely created by a physical damage loss to
            property other than where such physical damage loss could have been
            recovered from a third party but for the insolvency of such third
            party.

      The above shall not apply as respects claims made under Specialty Lines
      Division Policies issued by the Company.

G.    Pollution liability to the extent excluded in the Company's original
      Policies. However, this exclusion shall not apply:

      1.    When a judicial entity having legal jurisdiction invalidates the
            Company's Pollution exclusion, thereby obligating the Company for
            liability when such liability for Pollution was intended to be
            excluded by the Company's exclusion.

      2.    In respect of any Policy written in a state whose insurance
            regulatory authorities have prohibited the Company from including a
            Pollution liability exclusion in its Policies.

H.    Fidelity business, except when written in conjunction with a Director's
      and Officers' Liability Policy.

I.    Business classified by the Company as Primary Rental Liability and
      Supplemental Liability.

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                                     Page 5




J.    Liability assumed by the Company under any form of treaty reinsurance;
      however, group intra-company reinsurance (if applicable), local agency
      reinsurance accepted in the normal course of business and/or Policies
      written by another carrier at the Company's request and reinsured 100% by
      the Company, as well as Policies written for the captive of the Company's
      insured, will not be excluded hereunder.

K.    Terrorism pursuant to the "Terrorism Exclusion Endorsement (Reinsurance)"
      attached hereto.

L.    Any losses arising out of tobacco or tobacco products, when written as
      such.

M.    Any losses arising out of latex or latex products, when written as such.

N.    New and renewal business classified by the Company as Nursing Home or
      Assisted Living General Liability or Professional Liability. However, this
      exclusion shall not apply if the Company is required to offer renewal to
      any insured(s) by the applicable regulatory authority(ies).

                                  ARTICLE VIII

ADDITIONAL PROVISIONS

A.    The Company will include, as part of their original Policies, a Mold
      exclusion for business classified as Architects and Engineers, Property
      Managers and Real Estate, as determined by the Company. However, this
      provision will not apply wherever the Company's exclusion has not been
      filed and approved.

B.    In respect of any new Policies classified by the Company as Public
      Directors and Officers Liability insurance for insured companies with a
      market capitalization at the time of binding that is more than
      $200,000,000 shall be submitted to the Reinsurer for acceptance into the
      Contract.

C.    Business classified by the Company as Specialty Lines Excess shall be
      limited to a maximum of 3.0% of the total Gross Net Earned Premium Income
      subject to this Contract. Any Policies that are specially accepted in
      accordance with paragraph B, above, shall not be subject to this
      condition.

D.    Business classified by the Company as First Party Cyber-Liability, when
      written as such and in conjunction with Miscellaneous Professional
      Liability Policies, shall be subject to a sub-limit in the Company's
      original Policies of $1,000,000 or so deemed.

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                                     Page 6



E.    New and renewal Policies classified by the Company as Miscellaneous
      Professional Liability shall contain a sub-limit of $1,000,000 for
      Copyright, Patent and Trademark coverages, when written as such or so
      deemed. However this provision will not apply whenever the Company is not
      permitted to do so by the applicable regulatory authority(ies).

                                   ARTICLE IX

AMOUNT OF COVERAGE AND RETENTION

A.    With respect to all business covered other than as in paragraph B below,
      the Reinsurer will be liable for $10,000,000 of Ultimate Net Loss in
      respect of each Loss Occurrence, each Insured, in excess of the Company's
      retention of $1,000,000 Ultimate Net Loss, each Loss Occurrence, each
      Insured.

B.    When the Company writes an umbrella Policy, other than umbrella business
      written through McGowan and Associates, Rocky River, Ohio, the Reinsurer
      will be liable for $9,000,000 of Ultimate Net Loss in respect of each Loss
      Occurrence, each Insured, in excess of the Company's retention of
      $2,000,000 Ultimate Net Loss, each Loss Occurrence, each Insured, where
      the Ultimate Net Loss is inclusive of any primary Policy written by the
      Company.

C.    However, in no event will the Reinsurer be liable for more than
      $120,000,000 in the aggregate for the term of this Contract.

D.    The term "Loss Occurrence" and the term "Insured" as used herein shall
      have the same meaning as in the Company's Policies. However, in the event
      of any ambiguity or dispute relating to these terms, the Company shall be
      the sole judge of what constitutes one Loss Occurrence and one Insured.

                                    ARTICLE X

PREMIUM

The premium to be paid by the Company to the Reinsurer for reinsurance provided
by this Contract shall be calculated by applying a rate of 7.50% to the Gross
Net Earned Premium Income accounted for by the Company during the term of this
Contract on all business the subject matter hereof, subject to a minimum premium
of $35,000,000.

The Company shall pay to the Reinsurer an annual deposit premium of $44,171,948
payable in quarterly installments of $11,042,987 due April 1; July 1; and
October 1, 2004; and January 1, 2005.

The Company will pay an additional premium equal to 25% of ceded losses between
$30,000,000 and $60,000,000. Such premium will be deducted at the time of the
loss payment to the Company by the Reinsurer.

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                                     Page 7




Within 90 days following the expiration of this Contract, the Company shall
render to the Reinsurer a statement of premium due in accordance with the first
paragraph of this Article. An adjustment of premium shall thereupon be made in
accordance with the statement submitted by the Company.

                                   ARTICLE XI

NOTICE OF LOSS AND LOSS SETTLEMENTS

The Company will advise the Reinsurer promptly of all claims which in the
opinion of the Company may involve the Reinsurer and of all subsequent
developments on these claims which may materially affect the position of the
Reinsurer, such advices to include any claim for which the reserve is 50% or
more of the Company's retention.

The Reinsurer agrees to abide by the loss settlements of the Company provided
that retroactive extension of Policy terms or coverages made voluntarily by the
Company and not in response to court decisions (whether such court decision is
against the Company or other companies affording the same or similar coverages)
will not be covered under this Contract.

When so requested, the Company will afford the Reinsurer an opportunity to be
associated with the Company, at the expense of the Reinsurer, in the defense of
any claim or suit or proceeding involving this reinsurance, and the Company will
cooperate in every respect in the defense of such claim, suit or proceeding.

The Reinsurer will pay its share of loss settlements within 15 days upon receipt
and verification of proof of loss from the Company.

                                   ARTICLE XII

AGENCY AGREEMENT

If more than one reinsured company is named as a party to this Contract, the
first named company will 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 XIII

ERRORS AND OMISSIONS

Any inadvertent delay, omission or error shall not be held to relieve either
party hereto from any liability, which would attach to it hereunder, if such
delay, omission or error had not been made, providing such delay, omission or
error is rectified upon discovery.

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                                     Page 8




                                   ARTICLE XIV

OFFSET

The Company and the Reinsurer, each at its option, may offset any balance or
balances, whether on account of premiums, claims and losses, loss expenses or
salvages due from one party to the other under this Contract; provided, however,
that in the event of the insolvency of a party hereto, offsets shall only be
allowed in accordance with applicable statutes and regulations.

                                   ARTICLE XV

CURRENCY

Whenever the word "Dollars" or the "$" sign appears in this Contract, they shall
be construed to mean United States Dollars and all transactions under this
Contract shall be in United States Dollars. Amounts paid or received by the
Company in any other currency shall be converted to United States Dollars at the
rate of exchange at the date such transaction is entered on the books of the
Company.

                                  ARTICLE XVI

TAXES

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, the District of Columbia or Canada.

                                  ARTICLE XVII

FEDERAL EXCISE TAX

(Applicable to those Reinsurers, excepting Underwriters at Lloyd's London and
other Reinsurers exempt from Federal Excise Tax, who are domiciled outside the
United States of America.)

The Reinsurer has agreed to allow, for the purpose of paying the Federal Excise
Tax, the applicable percentage of the premium payable hereon (as imposed under
Section 4371 of the Internal Revenue Code) to the extent such premium is subject
to the Federal Excise Tax.

In the event of any return of premium becoming due hereunder, the Reinsurer will
deduct the applicable percentage from the return premium payable hereon, and the
Company or its agent should take steps to recover the tax from the United States
Government.

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                                     Page 9




                                  ARTICLE XVIII

UNAUTHORIZED REINSURANCE

(Applies only to a Reinsurer who does not qualify for full credit with any
insurance regulatory authority having jurisdiction over the Company's reserves.)

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.

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 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 be
automatically extended for one year from its date of expiration or any future
expiration date unless 30 days (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.

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:

(a)   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;

(b)   to make refund of any sum which is in excess of the actual amount required
      to pay the Reinsurer's Obligations under this Contract;

(c)   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;

(d)   to pay the Reinsurer's share of any other amounts the Company claims are
      due under this Contract.

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                                     Page 10




In the event the amount drawn by the Company on any Letter of Credit is in
excess of the actual amount required for (a) or (c) or, in the case of (d), 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.

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.

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:

(a)   If the statement shows that the Reinsurer's Obligations exceed the balance
      of credit as of the statement date, the Reinsurer shall, within 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.

(b)   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 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 XIX

NET RETAINED LINES

This Contract applies only to that portion of any insurances or reinsurances
covered by this Contract, which the Company retains net for its own account and,
in calculating the amount of any loss hereunder and also in computing the amount
in excess of which this Contract attaches, only loss or losses in respect of
that portion of any insurances or reinsurances which the Company retains net for
its own account shall be included.

The Company reserves the right to maintain reinsurance agreement(s) in respect
of its net retention under this Contract, and recoveries under said
reinsurance(s) shall be entirely disregarded in determining the Ultimate Net
Loss hereunder.

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 reinsurers, whether specific or general, any amounts
which may have become due from them whether such inability arises from the
insolvency of such other reinsurers or otherwise.

                                                                   [WILLIS LOGO]

                                     Page 11




                                   ARTICLE XX

THIRD PARTY RIGHTS

This Contract is solely between the Company and the Reinsurer, and in no
instance shall any other party have any rights under this Contract except as
expressly provided otherwise in the INSOLVENCY ARTICLE.

                                   ARTICLE XXI

SEVERABILITY

If any provision of this Contract should be invalid under applicable laws, the
latter shall control but only to the extent of the conflict without affecting
the remaining provisions of this Contract.

                                  ARTICLE XXII

GOVERNING LAW

This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Pennsylvania, exclusive of the rules
with respect to conflicts of law, except as to rules with respect to credit for
reinsurance, in which case the applicable rules of all states shall apply.

                                  ARTICLE XXIII

ACCESS TO RECORDS

The Company shall place at the disposal of the Reinsurer at all reasonable
times, and the Reinsurer shall have the right to inspect through its designated
representatives, all books, records and papers of the Company in connection with
any reinsurance hereunder or claims in connection herewith. Rights of access to
records shall survive the termination or expiration of this Contract.

                                  ARTICLE XXIV

INSOLVENCY

In the event of the insolvency of the Company, 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

                                                                   [WILLIS LOGO]

                                     Page 12




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.

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 insolvent Company.

In the event of the insolvency of the Company, the reinsurance under this
Contract shall be payable directly by the Reinsurer to the Company or to its
liquidator, receiver, conservator or statutory successor, except as provided by
Section 4118(a) of the New York Insurance Law or except (a) where this Contract
specifically provides another payee of such reinsurance in the event of the
insolvency of the Company or (b) 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.

Should the Company go into liquidation or should a receiver be appointed, all
amounts due either Company or Reinsurer under this or any other agreement,
whether by reason of premium, losses or otherwise under this Contract, shall be
subject to the right of offset at any time and from time to time and, upon the
exercise of the same, only the net balance shall be due.

In the event of the insolvency of any company or companies included in the
designation of "Company," this clause will apply only to the insolvent company
or companies.

                                   ARTICLE XXV

ARBITRATION

As a condition precedent to any right of action hereunder, any irreconcilable
dispute between the parties to this Contract will be submitted for decision to a
board of arbitration composed of two arbitrators and an umpire meeting in Bala
Cynwyd, Pennsylvania.

Arbitration shall be initiated by the delivery of a written notice of demand for
arbitration by one party to the other within a reasonable time after the dispute
has arisen.

The members of the board of arbitration shall be active or former, disinterested
officials of insurance or reinsurance companies or Underwriters at Lloyd's,
London, not under the control or management of either party to this Contract.
Each party shall appoint its arbitrator, and the two arbitrators shall choose an
umpire before instituting the hearing. If the respondent fails to appoint its
arbitrator within 4 weeks after being requested to do so by the claimant, the
latter shall also appoint the second arbitrator.

If the two arbitrators are unable to agree upon the umpire within 30 days of
their appointment, the umpire shall be selected by a judge of any court of
competent jurisdiction.

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                                     Page 13




The claimant shall submit its initial brief within 45 days from appointment of
the umpire. The respondent shall submit its brief within 45 days thereafter, and
the claimant may submit a reply brief within 30 days after filing of the
respondent's brief.

The board shall make its decision with regard to the custom and usage of the
insurance and reinsurance business. The board shall issue its decision in
writing based upon a hearing in which evidence may be introduced without
following strict rules of evidence but in which cross-examination and rebuttal
shall be allowed. The board shall make its decision within 60 days following the
termination of the hearings unless the parties consent to an extension. The
majority decision of the board shall be final and binding upon all parties to
the proceeding. Judgment may be entered upon the award of the board in any court
having jurisdiction.

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 clause, and
communications shall be made by the Company to each of the reinsurers
constituting the one party provided, however, that nothing therein 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 under the
terms of this Contract from several to joint.

Each party shall bear the expense of its own arbitrator and shall jointly and
equally bear with the other party the expense of the umpire. The remaining costs
of the arbitration proceedings shall be allocated by the board.

                                  ARTICLE XXVI

CONFIDENTIALITY

The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly communicate, disclose or divulge to any third
party, any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company's books, records and
papers. The restrictions, as outlined in this Article, shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, parent company, retrocessionaires, potential
retrocessionaires, legal counsel, arbitrators involved in any arbitration
procedures under this Contract or disclosures required upon subpoena or other
duly-issued order of a court or other governmental agency or regulatory
authority.

                                  ARTICLE XXVII

SERVICE OF SUIT

(This Article only applies to reinsurers domiciled outside of the United States
and/or unauthorized in any state, territory, or district of the United States
having jurisdiction over the Company).

It is agreed that, in the event of the failure of the Reinsurer hereon to pay
any amount claimed to be due hereunder, the Reinsurer hereon, 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

                                                                   [WILLIS LOGO]

                                     Page 14




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.

It is further agreed that service of process in such suit may be made upon
Mendes and Mount, 750 Seventh Avenue, New York, New York 10019, and that in any
suit instituted the Reinsurer will abide by the final decision of such court or
of any appellate court in the event of an appeal.

The above-named are authorized and directed to accept service of process on
behalf of the Reinsurer in any such suit and/or upon the request of the Company
to give a written undertaking to the Company that they will enter a general
appearance upon the Reinsurer's behalf in the event such a suit shall be
instituted.

Further, pursuant to any statute of any state, territory or district of the
United States which makes provision therefor, the Reinsurer hereon hereby
designates 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 of
reinsurance and hereby designates the above-named as the person to whom the said
officer is authorized to mail such process or a true copy thereof.

                                 ARTICLE XXVIII

TERRORISM RISK INSURANCE ACT OF 2002

A.    Any financial assistance the Company receives under the Terrorism Risk
      Insurance Act of 2002 ("TRIA") shall apply as follows:

      1.    Except as provided in subparagraph 2 below, any such financial
            assistance shall inure solely to the benefit of the Company and
            shall be entirely disregarded in applying all of the provisions of
            this Contract.

      2.    If losses occurring hereunder result in recoveries made by the
            Company both under this Contract and under TRIA, and such
            recoveries, together with any other reinsurance recoveries made by
            the Company applicable to said losses, exceed the amount permitted
            by TRIA, any amount in excess thereof shall reduce the Ultimate Net
            Loss subject to this Contract for the losses to which the TRIA
            financial assistance applies.

B.    Nothing herein shall be construed to mean that losses under this Contract
      are not recoverable until the Company has received financial assistance
      under TRIA.

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                                     Page 15




                                  ARTICLE XXIX

INTERMEDIARY

Willis Re Inc., 1835 Market Street, Suite 2700, Philadelphia, Pennsylvania
19103, is hereby recognized as the intermediary negotiating this Contract and
through whom all communications relating thereto shall be transmitted to the
Company or the Reinsurer. However, all communications concerning accounts, claim
information, funds and inquiries related thereto shall be transmitted to the
Company or the Reinsurer through Willis Re Inc., 5420 Millstream Road, Suite
200, P.O. Box 3000, McLeansville, North Carolina, 27301-3000. Payments by the
Company to Willis Re Inc. shall be deemed to constitute payment to the Reinsurer
and payments by the Reinsurer to Willis Re Inc. 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 Reinsured by its duly authorized representative has
executed this Agreement as of the date specified below:

Signed this ___________________ day of ___________________________, 2004.

PHILADELPHIA INSURANCE COMPANY
PHILADELPHIA INDEMNITY INSURANCE COMPANY
MOBILE USA INSURANCE COMPANY
LIBERTY AMERICAN INSURANCE COMPANY

By _________________________________________
                                                                   [WILLIS LOGO]

                                     Page 16



      NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - U.S.A.

(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.

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.

                                                                   [WILLIS LOGO]

                                  Page 1 of 2


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 damages 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
                    threat.

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 of 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                                                        [WILLIS LOGO]

                           Page 2 of 2



      NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - CANADA

1.    This Agreement does not cover any loss or liability accruing to the
      Reinsured 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 his clause
      it is agreed that for all purposes of this Agreement all the original
      liability contracts of the Reinsured, whether new, renewal or replacement,
      of the following classes, namely,

      Personal Liability.
      Farmers' Liability.
      Storekeepers' Liability.

      which become effective on or after 31st December 1984, shall be deemed to
      include, from their inception dates and thereafter, the following
      provision:

      Limited Exclusion Provision.

      This Policy does not apply to bodily injury or property damage with
      respect to which the Insured is also insured under a contract of nuclear
      energy liability insurance (whether the Insured is unnamed in such
      contract and whether or not it is legally enforceable by the Insured)
      issued by the Nuclear Insurance Association of Canada or any other group
      or pool of insurers or would be an Insured under any such policy but for
      its termination upon exhaustion of its limits of liability.

      With respect to property, loss of use of such property shall be deemed to
      be property damage.

3.    Without in any way restricting the operation of paragraph 1 of this clause
      it is agreed that for all purposes of this Agreement all the original
      liability contracts of the Company, whether new, renewal or replacement,
      of any class whatsoever (other than Personal Liability, Farmers'
      Liability, Storekeepers' Liability or Automobile Liability contracts),
      which become effective on or after 31st December 1984, shall be deemed to
      include, from their inception dates and thereafter, the following
      provision:

      Broad Exclusion Provision.

      It is agreed that this Policy does not apply:

      (a)   to liability imposed by or arising under The Nuclear Liability Act;
            nor

      (b)   to bodily injury or property damage with respect to which an Insured
            under this Policy is also insured under a contract of nuclear energy
            liability insurance (whether the Insured is unnamed in such contract
            and whether or not it is legally enforceable by the Insured) issued
            by the Nuclear Insurance Association of Canada or any other insurer
            or group or pool of insurers or would be an Insured under any such
            policy but for its termination upon exhaustion of its limit of
            liability; nor

      (c)   to bodily injury or property damage resulting directly or indirectly
            from the nuclear energy hazard arising from:

            (i)   the ownership, maintenance, operation or use of a nuclear
                  facility by or on behalf of an Insured;

            (ii)  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; and

            (iii) the possession, consumption, use, handling, disposal or
                  transportation of fissionable substances or of other
                  radioactive material (except radioactive isotopes, away from a
                  nuclear facility, which have reached the final stage of
                  fabrication so as to be usable for any scientific, medical,
                  agricultural, commercial or industrial purpose) used,
                  distributed, handled or sold by an Insured.

                                                                   [WILLIS LOGO]


As used in this Policy:

1.    The term "nuclear energy hazard" means the radioactive, toxic, explosive
      or other hazardous properties of radioactive material;

2.    The term "radioactive material" means uranium, thorium, plutonium,
      neptunium, their respective derivatives and compounds, radioactive
      isotopes of other elements and any other substances that the Atomic Energy
      Control Board may, by regulation, designate as being prescribed substances
      capable of releasing atomic energy, or as being requisite for the
      production, use or application of atomic energy;

3.    The term "nuclear facility" means:

      (a)   any apparatus designed or used to sustain nuclear fission in a
            self-supporting chain reaction or to contain a critical mass of
            plutonium, thorium and uranium or any one or more of them;

      (b)   any equipment or device designed or used for (i) separating the
            isotopes of plutonium, thorium and uranium or any one or more of
            them, (ii) processing or utilizing spent fuel, or (iii) handling,
            processing or packaging waste;

      (c)   any equipment or device used for the processing, fabricating or
            alloying of plutonium, thorium or uranium enriched in the isotope
            uranium 233 or in the isotope uranium 235, or any one or more of
            them 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 radioactive material; and
            includes the site on which any of the foregoing is located, together
            with all operations conducted thereon and all premises used for such
            operations.

4.    The term "fissionable substance" means any prescribed substance that is,
      or from which can be obtained, a substance capable of releasing atomic
      energy by nuclear fission.

5.    With respect to property, loss of use of such property shall be deemed to
      be property damage.

N.M.A. 1979a
01/04/96

                                                                   [WILLIS LOGO]


                  TERRORISM EXCLUSION ENDORSEMENT (REINSURANCE)

Notwithstanding any provision to the contrary within this reinsurance or any
endorsement thereto it is agreed that this reinsurance excludes loss, damage,
cost or expense of whatsoever nature directly or indirectly caused by, resulting
from or in connection with any act of terrorism regardless of any other cause or
event contributing concurrently or in any other sequence to the loss.

For the purpose of this endorsement an act of terrorism means an act, including
but not limited to the use of force or violence and/or the threat thereof, of
any person or group(s) of persons, whether acting alone or on behalf of or in
connection with any organization(s) or government(s), committed for political,
religious, ideological or similar purposes including the intention to influence
any government and/or to put the public, or any section of the public, in fear.

This endorsement also excludes loss, damage, cost or expense of whatsoever
nature directly or indirectly caused by, resulting from or in connection with
any action taken in controlling, preventing, suppressing or in any way relating
to any act of terrorism.

If the Reinsurers allege that by reason of this exclusion, any loss, damage,
cost or expense is not covered by this reinsurance the burden of proving the
contrary shall be upon the Reassured.

In the event any portion of this endorsement is found to be invalid or
unenforceable, the remainder shall remain in full force and effect.

Notwithstanding the above, this terrorism exclusion shall only apply to
liability losses arising directly from the following classes of business, when
written as such.



Class of Business                                                                                 Coverage
- -----------------                                                                                 --------
                                                                                               
Airports (Including Any Related Services or Operations)                                           CGL/UMB
Amusement Parks                                                                                   CGL/UMB
Animal Feed Mills                                                                                 CGL/UMB
Bridges and Tunnels                                                                               CGL/UMB
Buildings in which U.S. Government is Owner or Largest Tenant                                     CGL/UMB
Chemical Manufacturing, Wholesale or Storage                                                      CGL/UMB
Convention Centers                                                                                CGL/UMB
Concert Halls > OR = 1,000 person capacity                                                        CGL/UMB
Dams                                                                                              CGL/UMB
Drug Manufacturing                                                                                CGL/UMB
Electrical Generating Facilities                                                                  CGL/UMB
Explosives - Manufacture, Distribution or Storage                                                 CGL/UMB
Mass Transit Systems - Subways, Railways, etc.                                                    CGL/UMB
Oil & Gas Pipelines                                                                               CGL/UMB
Oil Refineries & Storage Tank Farms                                                               CGL/UMB
Pesticides, Herbicides, Insecticides - Manufacture                                                CGL/UMB
Ports (Including Any Related Services or Operations)                                              CGL/UMB
Security Services                                                                                 CGL/UMB
Stadiums and Sports Arenas                                                                        CGL/UMB
Telecommunications Services - Telephone, Radio, TV, Internet                                      CGL/UMB
Water & Sewage Treatment Plants                                                                   CGL/UMB


However, the maximum liability to the Reinsurer for all Terrorism losses during
the term of this Contract shall be limited to $10,000,000.

EX-10.3

                                                                    EXHIBIT 10.3

                             CASUALTY EXCESS OF LOSS
                              REINSURANCE AGREEMENT
                                 NO.TC1573A,B,C

                           EFFECTIVE: January 1, 2004

                                     between
                 PHILADELPHIA CONSOLIDATED HOLDING CORPORATION'S
                           following member Companies:
                    PHILADELPHIA INDEMNITY INSURANCE COMPANY
                         PHILADELPHIA INSURANCE COMPANY
                        both of Bala Cynwyd, Pennsylvania

                                       and

                      SWISS REINSURANCE AMERICA CORPORATION
                                Armonk, New York



          CASUALTY EXCESS OF LOSS REINSURANCE AGREEMENT NO. TC1573A,B,C



ARTICLE                 CONTENTS                                  PAGE
- -------                 --------                                  ----
                                                            
                        PREAMBLE                                   1

I                       BUSINESS COVERED                           1

II                      EFFECTIVE DATE AND TERMINATION             2

III                     TERRITORY                                  2

IV                      LIMIT AND RETENTION                        3

V                       WARRANTY                                   4

VI                      REINSTATEMENT                              4

VII                     ULTIMATE NET LOSS                          5

VIII                    LOSS IN EXCESS OF POLICY LIMITS            6

IX                      EXTRA CONTRACTUAL OBLIGATIONS              6

X                       EXCLUSIONS                                 7

XI                      SPECIAL ACCEPTANCE                        11

XII                     LOSS OCCURRENCE                           11

XIII                    REINSURANCE PREMIUM                       13

XIV                     REPORTS AND REMITTANCES                   13

XV                      CLAIMS                                    15

XVI                     SALVAGE AND SUBROGATION                   16

XVII                    TERRORISM EXCESS RECOVERY                 16

XVIII                   ACCESS TO RECORDS                         17

XIX                     TAXES                                     18

XX                      CURRENCY                                  18

XXI                     OFFSET                                    18

XXII                    ERRORS OR OMISSIONS                       18

XXIII                   DISPUTE RESOLUTION                        19

XXIV                    INSOLVENCY                                20

XXV                     SPECIAL TERMINATION                       21

XXVI                    AMENDMENTS                                22

                        SIGNATURES                                23


ATTACHMENTS:      POLLUTION LIABILITY EXCLUSION CLAUSE - REINSURANCE
                  INSOLVENCY FUNDS EXCLUSION CLAUSE
                  NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY -
                    REINSURANCE  - U.S.A.
                  NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY -
                    REINSURANCE - CANADA
                  NUCLEAR INCIDENT EXCLUSION CLAUSE -
                    REINSURANCE - NO. 4
                  PHARMACEUTICAL / MEDICAL COMPANY EXCLUSION LISTING



                             CASUALTY EXCESS OF LOSS
                              REINSURANCE AGREEMENT
                                 NO. TC1573A,B,C
                  (hereinafter referred to as the "Agreement")

                                     between
                 PHILADELPHIA CONSOLIDATED HOLDING CORPORATION'S
                           following member Companies:
                    PHILADELPHIA INDEMNITY INSURANCE COMPANY
                         PHILADELPHIA INSURANCE COMPANY
                        both of Bala Cynwyd, Pennsylvania
                   (hereinafter referred to as the "Company")

                                       and

                      SWISS REINSURANCE AMERICA CORPORATION
                                Armonk, New York
                  (hereinafter referred to as the "Reinsurer")

ARTICLE I - BUSINESS COVERED

A.    The Reinsurer shall indemnify the Company on an excess of loss basis in
      respect of the Company's Ultimate Net Loss paid by the Company as a result
      of losses occurring during the term of this Agreement, for Policies in
      force as of January 1, 2004, and new and renewal Policies becoming
      effective on or after said date, subject to the terms and conditions
      contained herein.

B.    This Agreement is solely between the Company and the Reinsurer, and
      nothing contained in this Agreement shall create any obligations or
      establish any rights against the Reinsurer in favor of any person or
      entity not a party hereto.

C.    The performance of obligations by both parties under this Agreement shall
      be in accordance with a fiduciary standard of good faith and fair dealing.

D.    The term "Policies" shall mean each of the Company's binders, policies and
      contracts of insurance on the business covered hereunder.

E.    Under this Agreement, the indemnity for reinsured loss applies only to the
      following Classes of Insurance, except as excluded under Article X-
      Exclusions of this Agreement.



CLASSES OF INSURANCE

      1.    Automobile Liability:

            Bodily Injury Liability, Property Damage Liability, Medical
            Payments, Uninsured Motorists, Underinsured Motorists and No-Fault
            Coverage.

      2.    Liability Other Than Automobile:

            Bodily Injury Liability, Property Damage Liability, Personal and
            Advertising Injury Liability, and Medical Payments Coverage when
            written as part of a Commercial or Personal Package Policy or on a
            monoline basis. However, Advertising Injury Liability shall only
            apply to this Agreement when written as part of a Commercial Package
            Policy or a Commercial General Liability Coverage Form.

      3.    Commercial Umbrella Liability.

      4.    Professional Liability:

            Director's and Officers Liability for For Profit and Not for Profit
            risks, Miscellaneous Errors and Omissions Liability, Lawyers
            Professional Liability, Accountants Professional Liability, Dentists
            Professional Liability, Insurance Agents Professional Liability,
            Miscellaneous Professional Liability, Employment Practices
            Liability.

ARTICLE II - EFFECTIVE DATE AND TERMINATION

A.    This Agreement shall apply to losses occurring within the period
      commencing 12:01 a.m., Eastern Standard Time, January 1, 2004, and ending
      12:01 a.m., Eastern Standard Time, January 1, 2005.

B.    During the running of such notice as stipulated in Paragraph A. above, the
      Reinsurer shall participate in business coming within the terms of this
      Agreement until the date of termination of this Agreement.

C.    Upon termination of this Agreement, the Reinsurer shall be liable for
      losses occurring prior to the date of termination; however, the Reinsurer
      shall have no liability for losses occurring subsequent to the termination
      of this Agreement.

ARTICLE III - TERRITORY

This Agreement applies to Policies issued by the Company within the United
States of America, its territories and possessions, and Canada and shall apply
to losses covered hereunder wherever occurring.



ARTICLE IV - LIMIT AND RETENTION

A.    The limits and retentions provided under this Agreement are set forth in
      the following Parts I, II and III:

      Part I - First Excess of Loss (Accounting Code No. TC1573A)

      The Company shall retain the first $2,000,000 of Ultimate Net Loss as
      respects any one Loss Occurrence. The Reinsurer shall then be liable for
      the amount by which the Company's Ultimate Net Loss exceeds the Company's
      retention of $2,000,000, but the liability of the Reinsurer shall never
      exceed $3,000,000 with respect to any one Loss Occurrence. However, in no
      event shall the liability of the Reinsurer arising out of Act(s) of
      Terrorism exceed $3,000,000 during the term of this Agreement.

      Part II - Second Excess of Loss (Accounting Code No TC1573B)

      The Company shall retain the first $5,000,000 of Ultimate Net Loss as
      respects any one Loss Occurrence. The Reinsurer shall then be liable for
      the amount by which the Company's Ultimate Net Loss exceeds the Company's
      retention of $5,000,000, but the liability of the Reinsurer shall never
      exceed $5,000,000 with respect to any one Loss Occurrence. However, in no
      event shall the liability of the Reinsurer arising out of Act(s) of
      Terrorism exceed $5,000,000 during the term of this Agreement.

      Part III - Third Excess of Loss (Accounting Code No. TC1573C)

      The Company shall retain the first $10,000,000 of Ultimate Net Loss as
      respects any one Loss Occurrence. The Reinsurer shall then be liable for
      the amount by which the Company's Ultimate Net Loss exceeds the Company's
      retention of $10,000,000, but the liability of the Reinsurer shall never
      exceed $10,000,000 with respect to any one Loss Occurrence. However, in no
      event shall the liability of the Reinsurer arising out of Act(s) of
      Terrorism exceed $10,000,000 during the term of this Agreement.

B.    The Company's retention and the Reinsurer's limit of liability for each
      Loss Occurrence, set forth in Parts I, II and III above, shall apply
      irrespective of the number of Policies affected or number of hazards in
      one Policy and regardless of the number of Classes of Insurance involved.

C.    Reinsurance of the Company's retention, set forth above, shall not be
      deducted in arriving at the Company's Ultimate Net Loss herein.

D.    An "Act of Terrorism" for purposes of this Agreement shall mean:

      1.    Any actual or threatened violent act or act harmful to human life,
            tangible or intangible property or infrastructure directed towards
            or having the effect of (a) influencing or protesting against any de
            jure or de facto government or policy thereof, (b)



            intimidating, coercing or putting in fear a civilian population or
            section thereof for the purpose of establishing or advancing a
            specific ideological, religious or political system of thought,
            perpetrated by a specific individual or group directly or indirectly
            through agents acting on behalf of said individual or group or (c)
            retaliating against any country for direct or vicarious support by
            that country of any other government or political system.

      2.    Any act declared pursuant to the Terrorism Risk Insurance Act of
            2002 shall also be considered an "Act of Terrorism" for purposes of
            this Agreement.

ARTICLE V - WARRANTY

A.    It is deemed that inuring Casualty Excess of Loss Reinsurance for limits
      greater than $1,000,000 per occurrence/per claim and inuring Corporate
      Errors and Omissions Insurance coverages that are in effect at the
      inception of this agreement shall be maintained without change during the
      term of this agreement.

B.    It is further warranted that Policies subject to this Agreement with
      inuring coverage as deemed above, shall not exceed a combined limit for
      both the Primary Policy and Umbrella Policy of $11,000,000 per occurrence.

C.    It is also warranted that there are no known or reported losses as of
      March 23, 2004 for the business covered hereunder.

ARTICLE VI - REINSTATEMENT

A.    Each claim hereunder reduces the amount of indemnity from the time of
      occurrence of the loss by the sum paid, but any amount so exhausted is
      hereby reinstated from the time the Loss Occurrence commences hereon.

B.    For each amount so reinstated the Company agrees to pay an additional
      premium calculated at pro rata of the annual premium hereon, being pro
      rata only as to the fraction of the limit of liability of this Agreement
      (i.e., the fraction of $3,000,000 as respects Part I and $5,000,000 as
      respects Part II and $10,000,000 as respects Part III) so reinstated and
      100% as to the term.



C.    Nevertheless, the Reinsurer's liability hereunder shall never exceed
      $3,000,000 as respects Part I and $5,000,000 as respects Part II and
      $10,000,000 as respects Part III in respect of any one Loss Occurrence and
      shall be further limited in all during the term of this Agreement to
      $6,000,000 as respects Part I and $10,000,000 as respects Part II and
      $20,000,000 as respects Part III.

ARTICLE VII - ULTIMATE NET LOSS

A.    The term "Ultimate Net Loss" shall mean the actual sum paid by the Company
      in settlement of losses or liability including interest accrued prior to
      judgment after making deductions for all recoveries, including
      subrogation, salvages, and claims upon other reinsurances, whether
      collectible or not, which inure to the benefit of the Reinsurer under this
      Agreement, and shall include Loss Adjustment Expenses incurred by the
      Company; provided, however, that in the event of the insolvency of the
      Company, Ultimate Net Loss shall mean the amount of loss and Loss
      Adjustment Expenses for which the Company is liable, and payment by the
      Reinsurer shall be made to the liquidator, receiver, conservator or
      statutory successor of the Company in accordance with the provisions of
      Article XXIV- Insolvency of this Agreement.

B.    The term "Ultimate Net Loss" shall include 90% of Loss In Excess of Policy
      Limits and 90% of Extra Contractual Obligations, as defined herein, but
      only as respects business covered under this Agreement.

C.    The term "Loss Adjustment Expenses" shall mean all expenses incurred by
      the Company in connection with the investigation, settlement, defense or
      litigation, including court costs and post-judgment interest, of any claim
      or loss covered by the Policies reinsured under this Agreement, and shall
      include Declaratory Judgment Expenses. However, the term "Loss Adjustment
      Expenses" shall not include the salaries and expenses of Company
      employees, office expenses and other overhead expenses.

D.    The term "Declaratory Judgment Expenses" shall mean all legal expenses,
      incurred in the representation of the Company in litigation brought to
      determine the Company's defense and/or indemnification obligations, that
      are allocable to any specific claim or loss applicable to Policies subject
      to this Agreement. In addition, the Company shall promptly notify the
      Reinsurer of any Declaratory Judgment Expenses subject to this Agreement.

E.    All recoveries, salvages or payments recovered or received subsequent to a
      loss settlement under this Agreement shall be applied as if recovered or
      received prior to the aforesaid settlement and all necessary adjustments
      to the loss settlement shall be made by the parties hereto.



F.    Nothing in this Article shall be construed to mean that losses are not
      recoverable hereunder until the Ultimate Net Loss of the Company has been
      ascertained.

ARTICLE VIII - LOSS IN EXCESS OF POLICY LIMITS

A.    "Loss in Excess of Policy Limits" is defined as loss in excess of the
      limit of the original Policy, such loss in excess of the limit having been
      incurred because of failure by the Company to settle within the Policy
      limit or by reason of 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 in the preparation or
      prosecution of an appeal consequent upon such action.

B.    However, this Article shall not apply where the loss has been incurred due
      to fraud by a member of the Board of Directors or a corporate officer 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.    For the purposes of this Article, the word "loss" shall mean any amounts
      which the Company would have been contractually liable to pay had it not
      been for the limit of the original Policy.

D.    With respect to coverage provided under this Article, recoveries from any
      insurance or reinsurance other than this Agreement shall be deducted to
      arrive at the amount of the Company's Ultimate Net Loss.

ARTICLE IX - EXTRA CONTRACTUAL OBLIGATIONS

A.    "Extra Contractual Obligations" are defined as those liabilities not
      covered under any other provision of this Agreement and which arise from
      the handling of any claim on business covered hereunder, such liabilities
      arising because of, but not limited to, the following: failure by the
      Company to settle within the Policy limit, or by reason of 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 in the preparation or prosecution of an appeal consequent
      upon such action.

B.    The date on which an Extra Contractual Obligation is incurred by the
      Company shall be deemed, in all circumstances, to be the date of the
      original accident, casualty, disaster or loss occurrence.



C.    However, coverage hereunder as respects Extra Contractual Obligations
      shall not apply where the loss has been incurred due to the fraud of a
      member of the Board of Directors or a corporate officer 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.

D.    Recoveries, collectibles or retention from any other form of insurance or
      reinsurance including deductibles or self-insured retention which protect
      the Company against Extra Contractual Obligations shall inure to the
      benefit of the Reinsurer and shall be deducted from the total amount of
      Extra Contractual Obligations for purposes of determining the loss
      hereunder.

ARTICLE X- EXCLUSIONS

THIS AGREEMENT DOES NOT COVER:

A.    THE FOLLOWING GENERAL CATEGORIES

      1.    Ex-gratia payments.

      2.    Risks subject to a deductible or a self-insured retention excess of
            $25,000.

      3.    Loss or damage caused directly or indirectly by: (a) enemy attack by
            armed forces including action taken by military, naval or air forces
            in resisting an actual or an immediately impending enemy attack; (b)
            invasion; (c) insurrection; (d) rebellion; (e) revolution; (f)
            intervention; (g) civil war; and (h) usurped power.

      4.    Reinsurance assumed by the Company.

      5.    Business derived from any Pool, Association, including Joint
            Underwriting Association, Syndicate, Exchange, Plan, Fund or other
            facility directly as a member, subscriber or participant, or
            indirectly by way of reinsurance or assessments; provided this
            exclusion shall not apply to Automobile or Workers Compensation
            assigned risks which may be currently or subsequently covered
            hereunder.

      6.    Pollution Liability as per the attached Pollution Liability
            Exclusion Clause - Reinsurance.

      7.    Insolvency Funds as per the attached Insolvency Funds Exclusion
            Clause.

      8.    Nuclear Incident Exclusion Clauses which are attached and made part
            of this Agreement:



            a.    Nuclear Incident Exclusion Clause - Liability - Reinsurance -
                  U.S.A.

            b.    Nuclear Incident Exclusion Clause - Liability - Reinsurance -
                  Canada.

            c.    Nuclear Incident Exclusion Clause - Reinsurance - No. 4.

      9.    Any actual or alleged liability whatsoever for any claim or claims
            in respect of loss or losses, directly or indirectly arising out of,
            resulting from, or in consequence of asbestos, in whatever form or
            quantity.

      10.   Any liability, loss, cost or expense of whatsoever nature directly
            or indirectly caused by, contributed to by, resulting from, arising
            out of or in connection with the use or release, or threat thereof,
            of any nuclear weapon or device or chemical or biological agent,
            regardless of any other cause or event contributing concurrently or
            in any other sequence to the loss.

B.    THE FOLLOWING INSURANCE COVERAGES

      1.    Fiduciary Liability.

      2.    Fidelity and Surety.

      3.    Credit and Financial Guarantee.

      4.    Securities and Exchange Liability.

      5.    Retroactive coverage.

      6.    Personal Excess or Umbrella Liability.

      7.    Medical Malpractice for Doctors, Physicians, Surgeons, Nurses,
            Hospitals and Clinics.

      8.    Advertisers,' Broadcasters' and Telecasters' Liability as respects
            Personal Injury Liability except as provided under Commercial
            Package Policies or Commercial General Liability Coverage Forms.

      9.    Liquor Law Liability except Host Liquor Law Liability.

      10.   Kidnap, Extortion and Ransom Liability.

      11.   Boiler and Machinery Insurance.

      12.   Protection and Indemnity (Ocean Marine).

      13.   Workers Compensation and Employers Liability Insurance.

      14.   Business classified by the Company as Primary Rental Liability and
            Supplemental Liability.



      15.   New and Renewal business classified by the Company as Nursing Home
            or Assisted Living General Liability or Professional Liability.
            However, this exclusion shall not apply if the Company is required
            by the applicable regulatory authority(ies) to renew any insured(s)
            policy.

C.    THE FOLLOWING RISKS AS RESPECTS AUTOMOBILE LIABILITY AND AUTOMOBILE
      COLLISION

      1.    Vehicles used in or while in practice or preparation for, a
            prearranged racing, speed, exhibition or demolition contest.

      2.    All vehicles classified as "Public Automobiles" except church buses,
            social service agency automobiles, van pools and vehicles used for
            the transportation of employees.

      3.    Fire, police, emergency or municipal vehicles.

      4.    Motorcycles.

      5.    The rental or leasing of vehicles to others.

      6.    Logging trucks.

      7.    Vehicles regularly used to haul property of others and operating
            beyond a 200 mile radius.

      8.    Newspaper delivery trucks.

      9.    Vehicles engaged in the transportation or distribution of fireworks,
            fuses, explosives, ammunitions, natural or artificial fuel, gas, or
            liquefied petroleum gases or gasoline.

D.    THE FOLLOWING AS RESPECTS LIABILITY OTHER THAN AUTOMOBILE

      1.    Risks involving known exposure to the following substances:

            a.    dioxin.

            b.    polychlorinated biphenols.

      2.    Liability as respects Products and Completed Operations:

            a.    The manufacture, labeling or re-labeling, importation or
                  wholesale distribution of:

                  (i)   Drugs or pharmaceuticals.

                  (ii)  Cosmetics.

                  (iii) Herbicides, insecticides or pesticides.

                  (iv)  Petrochemical or electrical equipment used for heating,
                        lighting or cooking.

                  (v)   Industrial or toxic chemicals.

                  (vi)  Valves, gaskets or seals of a hydraulic, petrochemical
                        or high pressure nature.

                  (vii) Medical supplies.

                  (viii) Heavy machinery and equipment.

                  (ix)  Power tools.



                  (x)   Medical equipment used for diagnostic or life sustaining
                        purposes.

            b.    The manufacture or importing of motorized or self-propelled
                  vehicles and equipment.

            c.    The manufacturing, importing, packing, canning, bottling or
                  processing of foodstuffs.

            d.    The blending, mixing, processing or importing of animal feed.

            e.    The manufacture, sale, distribution, handling, servicing or
                  maintenance of aircraft, aerospacecraft, missiles, satellites
                  or any component or components thereof.

      3.    Ownership, operation or use of vessels exceeding 50 feet in length.

      4.    All railway operations except sidetrack agreements.

      5.    Amusement parks, carnivals or circuses.

      6.    Public assembly exposure in excess of 5,000.

      7.    Gas, electric and water utility companies.

      8.    Subaqueous operations.

      9.    Mining.

      10.   Blasting operations.

      11.   Demolition of buildings or structures in excess of two stories.

      12.   Shoring, underpinning or moving of buildings or structures.

      13.   Manufacture, sale, rental, lease, erection or repair of scaffolds.

      14.   Construction of bridges, tunnels or dams.

      15.   a.    Manufacturers or importers of fireworks, fuses, or any
                  substance, as defined and noted below, intended for use as an
                  explosive.

            b.    Loading of fireworks, fuses, or any explosive substance
                  defined below into containers for use as explosive objects,
                  propellant charges or detonation devices and the storage
                  thereof.

            c.    Manufacturers or importers of any product in which fireworks,
                  fuses, or any explosive substance defined below is an
                  ingredient.

            d.    Handling, storage, transportation or use of fireworks, fuses,
                  or any explosive substance defined below.



                  NOTE: An explosive substance is defined as any substance
                  manufactured for the express purpose of exploding as
                  differentiated from commodities used industrially and which
                  are only incidentally explosive.

      16.   Manufacture, production, refining, storage, wholesale distribution
            or transportation of natural or artificial fuel, gas, butane,
            propane or liquefied petroleum gases or gasoline.

      17.   Onshore and offshore gas and oil drilling operations.

      18.   Ownership, maintenance or use of any airport or aircraft, including
            fueling, or any device or machine intended for and/or aiding in the
            achievement of atmospheric flight, projection or orbit.

      19.   Municipalities.

      20.   Liability as respects companies identified in the attached
            Pharmaceutical / Medical Company Exclusion Listing, including all
            affiliates and subsidiaries thereof.

E.    Those exclusions set forth under Items 5. and 16. of Section D. shall not
      apply if the exposure is incidental to the regular operations of the
      insured covered hereunder. An exposure shall be considered incidental if
      it comprises 15% or less of the insured's exposure base.

F.    In the event the Company is inadvertently bound on any risk which is
      excluded under this Agreement and identified below, the reinsurance
      provided under this Agreement shall apply to such risk until discovery by
      the Company within its Home Office of the existence of such risk and for
      30 days thereafter, and shall then cease unless within the 30 day period,
      the Company has received from the Reinsurer written notice of its approval
      of such risk:

      1.    As respects Automobile Liability And Collision:

            Items 2. through 9. of Section C.

      2.    As respects Liability Other Than Automobile:

            Items 2. through 19. of Section D.

ARTICLE XI - SPECIAL ACCEPTANCE

Policies which are beyond the terms, conditions or limitations of this Agreement
may be submitted to the Reinsurer for special acceptance hereunder; and such
Policies, if accepted in writing by the Reinsurer, shall be subject to all of
the terms, conditions and limitations of this Agreement, except as modified by
the special acceptance. Premiums and losses derived from any special acceptance
shall be included with other data for rating purposes under this Agreement.



ARTICLE XII - LOSS OCCURRENCE

The term "Loss Occurrence" shall mean any accident or occurrence or series of
accidents or occurrences arising out of any one event and happening within the
term and scope of this Agreement. Without limiting the generality of the
foregoing, the term "Loss Occurrence" shall be held to include:

A.    As respects Products Bodily Injury and Products Property Damage Liability,
      injuries to all persons and all damage to property of others occurring
      during a Policy Period and proceeding from or traceable to the same
      causative agency shall be deemed to arise out of one Loss Occurrence, and
      the date of such Loss Occurrence shall be deemed to be the commencing date
      of the Policy Period. For the purpose of this provision, each annual
      period of a Policy which continues in force for more than one year shall
      be deemed to be a separate Policy Period.

B.    As respects Bodily Injury Liability (other than Automobile and Products),
      said term shall also be understood to mean, as regards each original
      assured, injuries to one or more than one person resulting from infection,
      contagion, poisoning, or contamination proceeding from or traceable to the
      same causative agency.

C.    As respects Property Damage Liability (other than Automobile and
      Products), said term shall also, subject to Provisions 1. and 2. below, be
      understood to mean loss or losses caused by a series of operations,
      events, or occurrences arising out of operations at one specific site and
      which cannot be attributed to any single one of such operations, events or
      occurrences, but rather to the cumulative effect of the same. In assessing
      each and every Loss Occurrence within the foregoing definition, it is
      understood and agreed that:

      1.    the series of operations, events or occurrences shall not extend
            over a period longer than 12 consecutive months; and

      2.    the Company may elect the date on which the period of not exceeding
            12 consecutive months shall be deemed to have commenced.

      Inthe event that the series of operations, events or occurrences extend
      over a period longer than 12 consecutive months, then each consecutive
      period of 12 months, the first of which commences on the date elected
      under 2. above, shall form the basis of claim under this Agreement.

D.    As respects those Policies of the Company which provide aggregate limits
      of liability, the total of all individual losses occurring during any one
      Policy year which proceed from or are traceable to the same causative
      agency.



ARTICLE XIII - REINSURANCE PREMIUM

A.    The Company shall pay to the Reinsurer a premium for the reinsurance
      provided under the First, Second and Third Excess of Loss Layers at the
      rates set forth in Paragraph B. below. Such rates shall be applied to the
      Company's Subject Earned Premium for the term of this Agreement.

B.    A deposit premium for each layer set forth below, shall be payable by the
      Company to the Reinsurer in four equal installments each due January 1,
      April 1, July 1 and October 1. Within 60 days after the termination of
      this Agreement, the Company shall render a statement to the Reinsurer
      showing the actual reinsurance premiums due hereunder. If such premium
      calculations differ from the deposit previously paid, the debtor party
      shall pay the outstanding balance within 60 days after the termination of
      this Agreement. However, in no event shall the adjusted premium be less
      than the minimum premium for each layer, set forth below.



                                Minimum     Deposit      Quarterly
                       Rate     Premium     Premium       Deposit
                       ----     -------     -------       -------
                                             
First Excess Layer     .056%    $279,104   $279,104      $ 69,776

Second Excess Layer    .068%    $338,912   $338,912      $ 84,728

Third Excess Layer     .131%    $652,904   $652,904      $163,226


C.    The term "Subject Earned Premium" as used herein is equal to the sum of
      the Net Premiums Written on the business covered hereunder during the
      period under consideration, plus the unearned premium reserve as respects
      premiums in force at the beginning of such period, less the unearned
      premium reserve as respects premiums in force at the end of the period,
      said unearned premium is to be calculated on an actual daily basis or in
      accordance with the Company's methodology, as agreed.

D.    The term "Net Premiums Written" shall mean gross premiums written less
      returns, allowances and reinsurances which inure to the benefit of the
      Reinsurer.

ARTICLE XIV - REPORTS AND REMITTANCES

A.    The Company shall furnish the Reinsurer with all necessary data respecting
      premiums and losses for as long as one of the parties hereto has a claim
      against the other arising from this Agreement.

B.    All checks and supporting documentation shall be sent via wire transfer to
      the Reinsurer through one of the options set forth below:



      a.    WIRE TRANSFER

            (i)   All wires should be sent to:

                        The Bank of New York
                        1 Wall Street
                        New York, NY 10286
                        Account Name: Swiss Reinsurance America Corporation
                        Account Number: 8900489197
                        ABA Number: 021000018 (SWIFT: IRVTUS3N)

            (ii)  All supporting documentation should be sent to:

                        Swiss Reinsurance America Corporation
                        Accounting Department
                        175 King Street
                        Armonk, NY 10504

      b.    LOCK BOX

            Both checks and supporting documentation shall be sent to:

            Swiss Reinsurance America Corporation
            P.O. Box 7247-7281
            Philadelphia, PA 19170-7281

C.    Premium Bordereau as respects each Policy covered under this Agreement -
      Within 30 days after the close of each calendar quarter, the Company shall
      submit a premium bordereau to the Reinsurer segregated by underwriting
      year, the following information as respects each Policy covered under this
      Agreement:

      1.    Name of Insured,

      2.    Policy Number,

      3.    Effective and Expiration Dates,

      4.    Line of Business.

D.    Payment by the Reinsurer of its portion of loss and Loss Adjustment
      Expenses paid by the Company shall be made by the Reinsurer to the Company
      within 15 days after proof of payment is received by the Reinsurer.



ARTICLE XV - CLAIMS

A.    The Company shall promptly notify the Reinsurer of each claim which may
      involve the reinsurance provided hereunder and of all subsequent
      developments relating thereto, stating the amount claimed and estimate of
      the Company's Ultimate Net Loss and Loss Adjustment Expenses.
      Notwithstanding the provisions set forth in any other Article herein,
      prompt notification of loss shall be considered a condition precedent to
      liability under this Agreement.

B.    The Company shall advise the Reinsurer of all claims which:

      1.    Are reserved by the Company for an amount in excess of 50% of its
            retention;

      2.    Originate from fatal injuries;

      3.    Originate from the following kinds of bodily injury:

            a.    Brain injuries resulting in impairment of physical function;

            b.    Spinal injuries resulting in a partial or total paralysis of
                  upper or lower extremities;

            c.    Amputation or permanent loss of use of upper or lower
                  extremities;

            d.    Severe burn injuries;

            e.    Loss of sight in one or both eyes;

            f.    All other injuries likely to result in a permanent disability
                  rate of 50% or more.

C.    The Company shall have the responsibility to investigate, defend or
      negotiate settlements of all claims and lawsuits related to Policies
      written by the Company and reinsured under this Agreement. The Reinsurer,
      at its own expense, may associate with the Company in the defense or
      control of any claim, suit or other proceeding which involves or is likely
      to involve the reinsurance provided under this Agreement, and the Company
      shall cooperate in every respect in the defense of any such claim, suit or
      proceeding.



ARTICLE XVI - SALVAGE AND SUBROGATION

A.    In the event of the payment of any indemnity by the Reinsurer under this
      Agreement, the Reinsurer shall be subrogated, to the extent of such
      payment, to all of the rights of the Company against any person or entity
      legally responsible for damages of the loss. The Company agrees to enforce
      such rights; but, in case the Company refuses or neglects to do so, the
      Reinsurer is hereby authorized and empowered to bring any appropriate
      action in the name of the Company or their policyholders or otherwise to
      enforce such rights.

B.    From any amount recovered by subrogation, salvage or other means, there
      shall first be deducted the expenses incurred in effecting the recovery.
      The balance shall then be used to reimburse the excess carriers in the
      inverse order to that in which their respective liabilities attached,
      before being used to reimburse the Company for its primary loss.

ARTICLE XVII - TERRORISM EXCESS RECOVERY

A.    For purposes of this Article:

      1.    "Act" shall mean the Terrorism Risk Insurance Act of 2002, any
            amendments thereto and any regulations promulgated thereunder.

      2.    "Affiliate," "Insured Losses," and "Program Year" shall have the
            meanings provided in the Act.

      3.    "Company" shall include the Company and all affiliates.

B.    This reinsurance shall not apply to any fines, civil penalties or
      surcharges assessed pursuant to the Act.

C.    To the extent that the Company allocates Insured Losses and/or federal
      assistance under the Act among affiliates, claims, contracts or otherwise
      in any manner which impacts the reinsurance provided hereunder, the
      Company shall apply a reasonable allocation method acceptable to the
      Reinsurer.

D.    To the extent that an Insured Loss is otherwise payable hereunder, the
      reinsurance provided by this Agreement shall apply only to the portion of
      liability, loss, cost and/or expense retained by the Company net of any
      federal assistance pursuant to the Act. For each Program Year, the
      liability of the Reinsurer for Insured Losses under this Agreement shall
      be reduced by the ratio that the financial assistance under the Act
      allocated to Policies subject to this Agreement bears to the Company's
      total Insured Losses subject to this Agreement. If the Company does not
      make such allocation, the liability of the Reinsurer for Insured Losses in
      any Program Year under this Agreement shall be reduced by the ratio that
      the financial assistance available to the Company under the Act for that
      Program



      Year bears to the Company's total Insured Losses for the same Program
      Year.

E.    The parties recognize that, for any Program Year, the Reinsurer may
      without waiver of the foregoing Paragraphs make payments for Insured
      Losses which, together with available financial assistance under the Act
      and the Company retentions and/or deductibles hereunder, exceed the
      Company's Insured Losses. In such event, the Reinsurer's proportional
      share of all such excess recovery (hereafter "Reinsurer's Excess Share")
      shall inure to the benefit of the Reinsurer. All excess recovery described
      in this Paragraph shall be allocated to the Reinsurer and the Company in
      proportion to the respective liability of each for Insured Losses, net of
      federal assistance under the Act, salvage, subrogation and other similar
      recoveries, as applicable.

F.    In the event of a Reinsurer's Excess Share, the Company shall:

      1.    Promptly pay the Reinsurer's Excess Share to the Reinsurer; or

      2.    Upon request of the Reinsurer at any time and at the Reinsurer's
            sole discretion, instead assign to the Reinsurer its rights to
            recover directly from the federal government any portion of
            Reinsurer's Excess Share not already paid to the Reinsurer. The
            Company shall cooperate with and assist the Reinsurer, at its own
            expense, to the extent reasonably necessary for the Reinsurer to
            exercise those rights. If the Reinsurer is unable, for any reason,
            to exercise any right assigned to it by the Company pursuant to this
            Article, the Company shall pay the Reinsurer's Excess Share to the
            Reinsurer as if no assignment had taken place to the extent that the
            Company has not been deemed to have forfeited the right to financial
            assistance under the Act by virtue of the attempted assignment.

G.    In the event of an Insured Loss, the Company shall provide the Reinsurer
      with a monthly report detailing claim settlement activities and financial
      assistance under the Act. Calculations for each Program Year shall
      continue to be made until the settlement of all Insured Losses covered
      hereunder.

ARTICLE XVIII - ACCESS TO RECORDS

The Reinsurer or its duly authorized representatives shall have the right to
examine, at the offices of the Company at a reasonable time, during the currency
of this Agreement or anytime thereafter, all books and records of the Company
relating to business which is the subject of this Agreement.



ARTICLE XIX - TAXES

The Company shall be liable for all taxes on premiums paid to the Reinsurer
under this Agreement, except income or profit taxes of the Reinsurer, and shall
indemnify and hold the Reinsurer harmless for any such taxes which the Reinsurer
may become obligated to pay to any local, state or federal taxing authority.

ARTICLE XX - CURRENCY

Wherever the word "dollars" or the "$" symbol is used in this Agreement, it
shall mean dollars of the United States of America, excepting in those cases
where the Policy is issued by the Company in Canadian dollars, in which case it
shall mean dollars of Canada. In the event the Company is involved in a loss
requiring payment in United States and Canadian currency, the Company's
retention and the limit of liability of the Reinsurer shall be apportioned
between the two currencies in the same proportion as the amount of net loss in
each currency bears to the total amount of net loss paid by the Company. For the
purposes of this Agreement, where the Company receives premiums or pays losses
in currencies other than United States or Canadian currency, such premiums and
losses shall be converted into United States dollars at the actual rates of
exchange at which the premiums and losses are entered in the Company's books.

ARTICLE XXI - OFFSET

Each party to this Agreement together with their successors or assigns shall
have and may exercise, at any time, the right to offset any balance or balances
due the other (or, if more than one, any other). Such offset may include
balances due under this Agreement and any other agreements heretofore or
hereafter entered into between the parties regardless of whether such balances
arise from premiums, losses or otherwise, and regardless of capacity of any
party, whether as assuming insurer and/or ceding insurer, under the various
agreements involved, provided however, that in the event of insolvency of a
party hereto, offsets shall only be allowed in accordance with the provisions of
Section 7427 of the Insurance Law of the State of New York to the extent such
statute or any other applicable law, statute or regulation governing such offset
shall apply.

ARTICLE XXII - ERRORS OR OMISSIONS

Errors or omissions of an administrative nature on the part of the Company shall
not invalidate the reinsurance under this Agreement, provided such errors or
omissions are corrected promptly after discovery



thereof; but the liability of the Reinsurer under this Agreement or any
exhibits, addenda, or endorsements attached hereto shall in no event exceed the
limits specified herein nor be extended to cover any risks, perils, lines of
business or classes of insurance generally or specifically excluded herein.

ARTICLE XXIII - DISPUTE RESOLUTION

Part I - Choice Of Law And Forum

Any dispute arising under this Agreement shall be resolved in the State of
Pennsylvania, and the laws of the State of Pennsylvania shall govern the
interpretation and application of this Agreement.

Part II - Mediation

If a dispute between the Company and the Reinsurer, arising out of the
provisions of this Agreement or concerning its interpretation or validity and
whether arising before or after termination of this Agreement has not been
settled through negotiation, both parties agree to try in good faith to settle
such dispute by nonbinding mediation, before resorting to arbitration.

Part III - Arbitration

A.    Resolution of Disputes - As a condition precedent to any right of action
      arising hereunder, any dispute not resolved by mediation between the
      Company and the Reinsurer arising out of the provisions of this Agreement
      or concerning its interpretation or validity, whether arising before or
      after termination of this Agreement, shall be submitted to arbitration in
      the manner hereinafter set forth.

B.    Composition of Panel - Unless the parties agree upon a single arbitrator
      within 15 days after the receipt of a notice of intention to arbitrate,
      all disputes shall be submitted to an arbitration panel composed of two
      arbitrators and an umpire chosen in accordance with Paragraph C. hereof.

C.    Appointment of Arbitrators - The members of the arbitration panel shall be
      chosen from persons knowledgeable in the insurance and reinsurance
      business. Unless a single arbitrator is agreed upon, the party requesting
      arbitration (hereinafter referred to as the "claimant") shall appoint an
      arbitrator and give written notice thereof by certified mail, to the other
      party (hereinafter referred to as the "respondent") together with its
      notice of intention to arbitrate. Within 30 days after receiving such
      notice, the respondent shall also appoint an arbitrator and notify the
      claimant thereof by certified mail. Before instituting a hearing, the two
      arbitrators so appointed shall choose an umpire. If, within 20 days after
      the appointment of the arbitrator chosen by the respondent, the


      two arbitrators fail to agree upon the appointment of an umpire, each of
      them shall nominate three individuals to serve as umpire, of whom the
      other shall decline two and the umpire shall be chosen from the remaining
      two by drawing lots. The name of the individual first drawn shall be the
      umpire.

D.    Failure of Party to Appoint an Arbitrator - If the respondent fails to
      appoint an arbitrator within 30 days after receiving a notice of intention
      to arbitrate, the claimant's arbitrator shall appoint an arbitrator on
      behalf of the respondent, such arbitrator shall then, together with the
      claimant's arbitrator, choose an umpire as provided in Paragraph C. of
      Part III of this Article.

E.    Submission of Dispute to Panel - Unless otherwise extended by the
      arbitration panel or agreed to by the parties, each party shall submit its
      case to the panel within 30 days after the selection of the umpire.

F.    Procedure Governing Arbitration - All proceedings before the panel shall
      be informal and the panel shall not be bound by the formal rules of
      evidence. The panel shall have the power to fix all procedural rules
      relating to the arbitration proceeding. In reaching any decision, the
      panel shall give due consideration to the customs and usages of the
      insurance and reinsurance business.

G.    Arbitration Award - The arbitration panel shall render its decision within
      60 days after termination of the proceeding, which decision shall be in
      writing, stating the reasons therefor. The decision of the majority of the
      panel shall be final and binding on the parties to the proceeding.

H.    Cost of Arbitration - Unless otherwise allocated by the panel, each party
      shall bear the expense of its own arbitrator and shall jointly and equally
      bear with the other parties the expense of the umpire and the arbitration.

ARTICLE XXIV- INSOLVENCY

A.    In the event of insolvency of the Company, the reinsurance provided by
      this Agreement shall be payable by the Reinsurer on the basis of the
      liability of the Company as respects Policies covered hereunder, without
      diminution because of such insolvency, directly to the Company or its
      liquidator, receiver, conservator or statutory successor except as
      provided in Sections 4118(a)(1)(A) and 1114(c) of the New York Insurance
      Law.



B.    The Reinsurer shall be given written notice of the pendency of each claim
      or loss which may involve the reinsurance provided by this Agreement
      within a reasonable time after such claim or loss is filed in the
      insolvency proceedings. The Reinsurer shall have the right to investigate
      each such claim or loss and interpose, at its own expense, in the
      proceedings where the claim or loss is to be adjudicated, any defense
      which it may deem available to the Company, its liquidator, receiver,
      conservator or statutory successor. The expense thus incurred by the
      Reinsurer shall be chargeable, subject to court approval, against the
      insolvent Company as part of the expense of liquidation to the extent of a
      proportionate share of the benefit which may accrue to the Company solely
      as a result of the defense undertaken by the Reinsurer.

C.    In addition to the offset provisions set forth in Article XXI- Offset, any
      debts or credits, liquidated or unliquidated, in favor of or against
      either party on the date of the receivership or liquidation order (except
      where the obligation was purchased by or transferred to be used as an
      offset) are deemed mutual debts or credits and shall be set off with the
      balance only to be allowed or paid. Although such claim on the part of
      either party against the other may be unliquidated or undetermined in
      amount on the date of the entry of the receivership or liquidation order,
      such claim will be regarded as being in existence as of such date and any
      claims then in existence and held by the other party may be offset against
      it.

D.    Nothing contained in this Article is intended to change the relationship
      or status of the parties to this Agreement or to enlarge upon the rights
      or obligations of either party hereunder except as provided herein.

ARTICLE XXV - SPECIAL TERMINATION

A.    Notwithstanding the termination provisions set forth in Article
      II-Effective Date and Termination, this Agreement shall be:

      1.    Terminated automatically and simultaneously upon the happening of
            any of the following events:

            a.    Entry of an order of liquidation, rehabilitation, receivership
                  or conservatorship with respect to the Company or the
                  Reinsurer by any court or regulatory authority;

            b.    Assignment of this Agreement by either party;

            c.    General reinsurance of any portion of the Company's business
                  it retains net for its own account, as determined under the
                  provisions of this Agreement without prior consent of the
                  Reinsurer.



      2.    Terminated by either party giving not less than 30 days prior
            written notice to the other party upon the happening of the
            following event:

                  Any transfer of control of either party by change in ownership
                  or otherwise.

      3.    Terminated by the Reinsurer by giving not less than 30 days prior
            written notice to the Company upon the happening of the following
            event:

                  Failure of the Company to remit premiums in accordance with
                  the provisions set forth in this Agreement.

      4.    Terminated in accordance with the provisions set forth in this
            Paragraph, upon the discovery of the following event:

                  A reduction of 50% or more of the Company's policyholders
                  surplus during any calendar year. Such reduction shall be
                  determined by calculating the difference between the Company's
                  prior year annual statement and each subsequent quarterly
                  statutory statement within such current calendar year.

            Asrespects the event set forth in this Paragraph A.4., the Company
            shall be obligated to notify the Reinsurer in writing within 30 days
            after the filing of its quarterly statement. Upon receipt of such
            notification the Reinsurer shall have the right to terminate this
            Agreement, by giving not less than 30 days notice of its intention
            to do so.

B.    Any notice of termination pursuant to the provisions set forth in
      Paragraphs A.2., A.3. and A.4. above shall be sent by certified mail,
      return receipt requested. Such notice period shall commence upon the other
      party's receipt of the notice of termination.

C.    In the event of termination, as provided under the provisions of this
      Article, the Reinsurer shall not be liable for losses occurring subsequent
      to the date of termination.

ARTICLE XXVI - AMENDMENTS

This Agreement may be amended by mutual consent of the parties expressed in an
addendum; and such addendum, when executed by both parties, shall be deemed to
be an integral part of this Agreement and binding on the parties hereto.



IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate, by their duly authorized representatives as of the following
dates:

In Bala Cynwyd, Pennsylvania, this       day of      , 2004.

ATTEST:                           PHILADELPHIA CONSOLIDATED HOLDING
                                     CORPORATION'S
                                  following member Companies:
                                  PHILADELPHIA INDEMNITY INSURANCE
                                     COMPANY
                                  PHILADELPHIA INSURANCE COMPANY

Douglas Goudet                    Christpher Maguire
- ------------------------          ----------------------------------------------

And in Armonk, New York, this     day of                   , 2004.

ATTEST:                           SWISS REINSURANCE AMERICA CORPORATION

Peter Thomson                      Bruno P. Bauer
- ------------------------          ----------------------------------------------
  Member of Management                    Member of Senior Management



                          SUPPLEMENT TO THE ATTACHMENTS

         DEFINITION OF IDENTIFICATION TERMS USED WITHIN THE ATTACHMENTS

A.    Wherever the term "Company" or "Reinsured" or "Reassured" or whatever
      other term is used to designate the reinsured company or companies within
      the various attachments to the reinsurance agreement, the term shall be
      understood to mean Company or Reinsured or Reassured or whatever other
      term is used in the attached reinsurance agreement to designate the
      reinsured company or companies.

B.    Wherever the term "Agreement" or "Contract" or "Policy" or whatever other
      term is used to designate the attached reinsurance agreement within the
      various attachments to the reinsurance agreement, the term shall be
      understood to mean Agreement or Contract or Policy or whatever other term
      is used to designate the attached reinsurance agreement.

C.    Wherever the term "Reinsurer" or "Reinsurers" or "Underwriters" or
      whatever other term is used to designate the reinsurer or reinsurers in
      the various attachments to the reinsurance agreement, the term shall be
      understood to mean Reinsurer or Reinsurers or Underwriters or whatever
      other term is used to designate the reinsuring company or companies.



               POLLUTION LIABILITY EXCLUSION CLAUSE - REINSURANCE

      This Reinsurance excludes:

      (1)   Any loss occurrence arising out of the actual, alleged or threatened
            discharge, dispersal, release or escape of pollutants:

            a)    At or from premises owned, rented or occupied by an original
                  assured; or

            b)    At or from any site or location used for the handling,
                  storage, disposal, processing or treatment of waste; or

            c)    Which are at any time transported, handled, stored, treated,
                  disposed of, or processed as waste; or

            d)    At or from any site or location on which any original assured
                  is performing operations:

                  (i)     If the pollutants are brought on or to the site or
                          location in connection with such operations; or

                  (ii)    If the operations are to test for, monitor, clean up,
                          remove, contain, treat, detoxify or neutralize the
                          pollutants.

      (2)   Any liability, loss, cost or expense arising out of any governmental
            direction or request to test for, monitor, clean up, remove,
            contain, treat, detoxify or neutralize pollutants.

"Pollutants" means any solid, liquid, gaseous or thermal irritant or
contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and
waste. Waste includes materials to be recycled, reconditioned or reclaimed.

Subparagraphs a) and d)(i) of paragraph (1) of this exclusion do not apply to
loss occurrences caused by heat, smoke or fumes from a hostile fire. As used
herein, "hostile fire" means one which becomes uncontrollable or breaks out from
where it was intended to be.

"Original assured" as used herein means all insureds as defined in the policy
issued by the Company.



                        INSOLVENCY FUNDS EXCLUSION CLAUSE

This Agreement excludes 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 or from reimbursement of any
person for any such liability. "Insolvency fund" includes any guaranty fund,
insolvency fund, plan, pool, association, fund or other arrangement, howsoever
denominated, established or governed, which provides for any assessment of or
payment or assumption by any person 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.

      NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - U.S.A.

      N.M.A. 1590

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. in 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 Liabilities 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 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.

      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 other than the tailings or wastes produced by the
            extraction or concentration of uranium or thorium from any ore
            processed for its source material content 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" INCLUDES ALL FORMS OF RADIOACTIVE CONTAMINATION OF
            PROPERTY; "property damage" 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 operations 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 BOLD TYPE 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.

      NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - CANADA

      N.M.A. 1979

1.    This Agreement does not cover any loss or liability accruing to the
      Company 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 agreed that for all purposes of this Agreement all the
      original liability contracts of the Company, whether new, renewal or
      replacement, of the following classes, namely,

            Personal Liability
            Farmers' Liability
            Storekeepers' Liability



      which become effective on or after 31st December 1984, shall be deemed to
      include, from their inception dates and thereafter, the following
      provision:

      Limited Exclusion Provision -

      This Policy does not apply to bodily injury or property damage with
      respect to which the Insured is also insured under a contract of nuclear
      energy liability insurance (whether the Insured is unnamed in such
      contract and whether or not it is legally enforceable by the Insured)
      issued by the Nuclear Insurance Association of Canada or any other group
      or pool of insurers or would be an Insured under any such policy but for
      its termination upon exhaustion of its limits of liability.

      With respect to property, loss of use of such property shall be deemed to
      be property damage.

3.    Without in any way restricting the operation of Paragraph 1. of this
      Clause, it is agreed that for all purposes of this Agreement all the
      original liability contracts of the Company, whether new, renewal or
      replacement, of any class whatsoever (other than Personal Liability,
      Farmers' Liability, Storekeepers' Liability or Automobile Liability
      contracts), which become effective on or after 31st December 1984, shall
      be deemed to include, from their inception dates and thereafter, the
      following provision:



      Broad Exclusion Provision -

      It is agreed that this Policy does not apply:

      (a)   to liability imposed by or arising under the Nuclear Liability Act;
            nor

      (b)   to bodily injury or property damage with respect to which an Insured
            under this Policy is also insured under a contract of nuclear energy
            liability insurance (whether the Insured is unnamed in such contract
            and whether or not it is legally enforceable by the Insured) issued
            by the Nuclear Association of Canada or any other insurer or group
            or pool of insurers or would be an Insured under any such policy but
            for its termination upon exhaustion of its limit of liability; nor

      (c)   to bodily injury or property damage resulting directly or indirectly
            from the nuclear energy hazard arising from:

            (i)   the ownership, maintenance, operation or use of a nuclear
                  facility by or on behalf of an Insured;

            (ii)  the furnishing of an Insured of services, materials, parts or
                  equipment in connection with the planning, construction,
                  maintenance, operation or use of any nuclear facility; and

            (iii) the possession, consumption, use, handling, disposal or
                  transportation of fissionable substances, or of other
                  radioactive material (except radioactive isotopes, away from a
                  nuclear facility, which have reached the final stage of
                  fabrication so as to be usable for any scientific, medical,
                  agricultural, commercial or industrial purpose) used,
                  distributed, handled or sold by an Insured.

      As used in this Policy:

      (1)   The term "nuclear energy hazard" means the radioactive, toxic,
            explosive, or other hazardous properties of radioactive material;

      (2)   The term "radioactive material" means uranium, thorium, plutonium,
            neptunium, their respective derivatives and compounds, radioactive
            isotopes of other elements and any other substances that the Atomic
            Energy Control Board may, by regulation, designate as being
            prescribed substances capable of releasing atomic energy, or as
            being requisite for the production, use or application of atomic
            energy;



      (3)   The term "nuclear facility" means:

            (a)   any apparatus designed or used to sustain nuclear fission in a
                  self-supporting chain reaction or to contain a critical mass
                  of plutonium, thorium and uranium or any one or more of them;

            (b)   any equipment or device designed or used for (i) separating
                  the isotopes of plutonium, thorium and uranium or any one or
                  more of them, (ii) processing or utilizing spent fuel, or
                  (iii) handling, processing or packaging waste;

            (c)   any equipment or device used for the processing, fabricating
                  or alloying of plutonium, thorium or uranium enriched in the
                  isotope uranium 233 or in the isotope uranium 235, or any one
                  or more of them 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 radioactive
                  material;

            and includes the site on which any of the foregoing is located,
            together with all operations conducted thereon and all premises used
            for such operations.

      (4)   The term "fissionable substance" means any prescribed substance that
            is, or from which can be obtained, a substance capable of releasing
            atomic energy by nuclear fission.

      (5)   With respect to property, loss of use of such property shall be
            deemed to be property damage.



             NUCLEAR INCIDENT EXCLUSION CLAUSE - REINSURANCE - NO. 4

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 operations of Nuclear Incident
      Exclusion Clauses, - Liability, - Physical Damage, - Boiler and Machinery
      and paragraph 1. of this Clause, it is understood and agreed that for all
      purposes of the reinsurance assumed by the Reinsurer from the Reinsured,
      all original insurance policies or contracts of the Reinsured (new,
      renewal and replacement) shall be deemed to include the applicable
      existing Nuclear Clause and/or Nuclear Exclusion Clause(s) in effect at
      the time and any subsequent revisions thereto as agreed upon and approved
      by the Insurance Industry and/or a qualified Advisory or Rating Bureau.



               PHARMACEUTICAL / MEDICAL COMPANY EXCLUSION LISTING

                                                  
ABBOTT LABORATORIES                                  NOVARTIS
AKZO NOBEL                                           NOVO NORDISK
ALLERGAN                                             OTSUKA PHARMACEUTICAL
ALPHARMA                                             PFIZER
ALTANA AG                                            PIERRE FABRE
AMGEN                                                PROCTER & GAMBLE
ASTRAZENECA                                          PURDUE FREDERICK / PRA HOLDING
AVENTIS                                              ROCHE
BARR LABORATORIES                                    SANKYO
BAXTER INTERNATIONAL                                 SANOFI-SYNTHELABO
BAYER                                                SCHERING AG
BEAUFOUR IPSEN                                       SCHERING-PLOUGH
BECTON, DICKINSON AND COMPANY                        SCHWARZ PHARMA
BIOGEN                                               SERONO
BOEHRINGER INGELHEIM KG                              SHIONOGI
BOSTON SCIENTIFIC CORPORATION                        SHIRE PHARMACEUTICALS
BRISTOL-MYERS SQUIBB                                 SMITH & NEPHEW
CELLTECH (former MEDEVA)                             SOLVAY
CHIRON                                               ST. JUDE MEDICAL
CHUGAI PHARMACEUTICAL                                STRYKER
CSL (including ZLB Behring [former ZLB and Aventis
Behring]                                             SUMITOMO PHARMACEUTICALS
                                                     / SUMITOMO CHEMICAL
DAIICHI PHARMACEUTICAL                               SYNTHES-STRATEC
DAINIPPON PHARMACEUTICAL                             TAKEDA CHEMICAL INDUSTRIES
EDWARDS LIFESCIENCES                                 TANABE
EISAI                                                TAP PHARMACEUTICAL PRODUCTS
ELAN                                                 TEVA PHARMACEUTICAL
FOREST LABORATORIES                                  UCB
GENENTECH                                            WATSON PHARMACEUTICAL
GLAXOSMITHKLINE                                      WYETH
GUIDANT                                              YAMANOUCHI PHARMACEUTICAL /
                                                     FUJISAWA PHARMACEUTICAL
HOSPIRA                                              ZIMMER
IVAX
JOHNSON & JOHNSON
KING PHARMACEUTICALS
KYOWA HAKKO KOGYO
LABORATOIRE FOURNIER
LABORATOIRE SERVIER
LILLY (ELI)
MEDTRONIC
MERCK & CO
MERCK KGAA
MINNESOTA MINING & MANUFACTURING
MITSUBISHI PHARMACEUTICAL
MYLAN LABORATORIES



GROUP PM CASUALTY/2004 APRIL 30

EX-10.4

                                                                    EXHIBIT 10.4

                                                                   [WILLIS LOGO]

                               REINSURANCE BINDER

PER YOUR AUTHORIZATION, PLEASE BIND REINSURANCE AS FOLLOWS:

DATE:                  April 5, 2004

REINSURED:             Philadelphia Consolidated Holding Corp.
                       Philadelphia Insurance Company

NAME INSURED:          Community Association Risk Purchasing Group Program

LOCATION:              Bala Cynwyd, Pennsylvania

POLICY NUMBER:         TBD

POLICY PERIOD:         April 1, 2004 - April 1, 2005

REINSURANCE PERIOD:    April 1, 2004 - April 1, 2005

TYPE OF INSURANCE:     UMBRELLA LIABILITY

COMPANY POLICY LIMITS: $15,000,000 Each Occurrence / Aggregate
                       Where Applicable
                       Excess Scheduled Underlying



COMPANY RETENTION
NET &/OR TREATY:

LAYER A)                       100% of First
                               $10,000,000 / $11,000,000  (See Note)
                               Each Occurrence / Aggregate
                               Where Applicable
                               Excess Scheduled Underlying

LAYER B)                       0% of
                               $4,000,000 / $5,000,000  (See Note)
                               Each Occurrence / Aggregate
                               Where Applicable
                               Excess of
                               $10,000,000 / $11,000,000
                               Each Occurrence / Aggregate

                               Excess Scheduled Underlying

REINSURANCE LIMIT(S):

LAYER B)                       100% of
                               $4,000,000 / $5,000,000  (See Note)
                               Each Occurrence / Aggregate
                               Where Applicable
                               Excess of
                               $10,000,000 / $11,000,000
                               Each Occurrence / Aggregate

                               Excess Scheduled Underlying

NOTE:

For consideration of the program limits covered hereunder, the following
Reinsurance Limits apply:

(a)   As respects for which the Company issues both the Primary and Umbrella
      Policy, The Company limits shall be $10,000,000 and the Reinsurance
      hereunder will be $5,000,000.

(b)   As respects for which the Company issues only the Umbrella Policy, The
      Company limits shall be $11,000,000 and the Reinsurance hereunder will be
      $4,000,000.



ESTIMATED
REINSURANCE PREMIUM:   $2,462,751 Gross / $1,785,494 Net

For consideration of the program covered hereunder, the Company shall pay the
Reinsurer the following Reinsurance Premium:

      Condo

      (a)  $4.00 Gross / $2.90 Net For $5,000,000 Excess $10,000,000

      (b)  $3.20 Gross / $2.32 Net For $4,000,000 Excess $11,000,000


      Number of Condo Units estimated at 504,295.

      Single Family Dwelling (SFD)

      (a) $2.00 Gross / $1.45 Net For $5,000,000 Excess $10,000,000

      (b) $1.60 Gross / $1.16 Net For $4,000,000 Excess $11,000,000

      Number of Single Family Dwelling Units estimated at 457,333.

REINSURANCE PLACED WITH:



       Reinsurer               Participation        Percent                R/I Premium
       ---------               -------------        -------                -----------
                                                                 
Facultative Resources          $4,000,000 -          100%                 $1,785,494 Net
(Berkley Ins.)                 $5,000,000


BASIS OF ACCEPTANCE:    Follow Form Excess

CEDE COMMISSION:        27.5%

ORIGINAL CANCELLATION
CLAUSE:                 In the event that any policy reinsured under the Program
                        is canceled or terminated, the reinsurance provided
                        hereunder shall terminate automatically with the same
                        effective date and the Company shall be entitled to a
                        return of premium in accordance with the terms of the
                        policy reinsured.

                        In the event of non-payment of premium, the Reinsurer
                        may cancel this Binder by giving prior written notice of
                        not less than 15 days. Any such cancellation shall be
                        effective at midnight of the last day of the notice
                        period.



COMPANY POLICY TERMS/
EXTENSIONS/EXCLUSIONS:  Follow Form Company's Policy

ADDITIONAL REINSURANCE
TERMS AND CONDITIONS:   Excludes Asbestos, Pollution, Mold & Lead

ACCOUNTS:               The Reinsurer shall be provided with a monthly bordereau
                        no later than 30 days after the end of each month.

                        Reinsurance premium due to the Reinsurer shall be
                        payable by the Company within 30 days after the end of
                        each month subject to receipt and agreement of the
                        bordereau.

UNDERLYING INSURANCE:   General Liability

                        $1,000,000  Each Occurrence
                        $2,000,000  General Aggregate
                        $2,000,000  Products/Completed Operations
                                    Aggregate

                        Automobile Liability

                        $1,000,000  Each Accident BI & PD
                                    Combined Single Limit

                        Employers Liability

                        $100,000  Each Employee
                        $500,000  Each Disease
                        $100,000  Policy Limit

                        Directors & Officers

                        $1,000,000  Per Loss
                        $1,000,000  Aggregate

                        Employee Benefits Liability

                        $1,000,000  Each Employee
                        $1,000,000  Aggregate

All other information as per our electronic submission of February 3, 2004.

Please confirm your agreement to bind coverage by return and advise assigned
reference number as soon as possible.

Regards,

Rich Macrane
Vice President / Casualty Manager
Willis Re, Inc.

EX-10.5

                                                                    EXHIBIT 10.5

                                                                CERTIFICATE NO.
                                                                  4 23 004 P1
                                                                RENEWAL/REPLACES

Client Company and Address                   Ceding Company and Address
PHILADELPHIA INSURANCE COMPANIES             PHILADELPHIA INSURANCE COMPANIES
ONE BALA PLAZA, STE. 100                     ONE BALA PLAZA, STE. 100
BALA CYNWYD, PA 19004                        BALA CYNWYD, PA 19004

                                             Ceding Company Policy No

ATTENTION: Mr. Neal Schmidt                  AS PER MONTHLY BORDEREAU
                                             _________________________________
Named Insured                                Ceding Company Policy Period
PHILADELPHIA INSURANCE COMPANIES - LIQUOR    FROM: 6/1/04 TO 6/1/05
LIABILITY - AS PER MONTHLY BORDEREAU         _________________________________
BALA CYNWYD, PA                              Reinsurer Certificate Policy Period
                                             FROM 6/1/04  TO 6/1/05
                                             _________________________________



               Item 1
          Type of Insurance                   LIQUOR LIABILITY
          -----------------                   ----------------
               Item 2                                      Item 3                                          Item 4
            Policy Limits                            Company Retention                              Reinsurance Accepted
            -------------                            -----------------                              --------------------
                                                                                    
UP TO $1,000,000 EACH COMMON CAUSE,       25% OF UP TO $1,000,000 EACH COMMON CAUSE,      75% OF UP TO $1,000,000 EACH COMMON CAUSE,
$1,000,000 AGGREGATE                      $1,000,000 AGGREGATE                            $1,000,000 AGGREGATE

Item 5 Basis of Acceptance                PRO RATA


The Reinsurance Premium for this Certificate is: $1.00 Net due at INCEPTION



Countersigned at Philadelphia, PA ___________________ this 26th day of May, 2004

                                  By _________________________________
                                           Authorized Signature

                            B F RE UNDERWRITERS, LLC

                                  on behalf of

                            BERKLEY INSURANCE COMPANY

                      REINSURING AGREEMENTS AND CONDITIONS

In consideration of the payment of the premium, and the terms, conditions, and
limit(s) liability set forth herein and in the Declarations made a part hereof,
Berkley Insurance Company (herein called the Reinsurer) does hereby reinsure the
ceding company named in the Declarations (herein called the Company) in respect
of the Company's policy(ies) as follows:

A. It is understood and agreed that Berkley Insurance Company is the Reinsurer
hereunder and that B F Re Underwriters, LLC, neither is nor shall be in any way
or to any extent liable for any loss or claim hereunder.

B. The Company warrants to retain for its own account, subject to treaty
reinsurance, if applicable and whether collectible or not, the amount of
liability specified in Item 3 of the Declarations. The liability of the
Reinsurer, as specified in Item 4 of the Declarations, shall follow that of the
Company for losses or damages for which the Company is legally obligated to pay
and shall be subject in all respects to all the terms, conditions, and limits of
the Company's policy(ies) except when otherwise specifically provided herein, or
when designated as nonconcurrent reinsurance in the Declarations, or except such
as may purport to create a direct obligation of the Reinsurer to the original
insured or any other third party. The Reinsurer Certificate Period shall be as
specified in the Declarations at 12:01 A.M. as to both dates at the place
specified in the Company's policy(ies). The Company shall furnish the Reinsurer
with a copy of its policy(ies) and, if material, underlying policy or
policy(ies) and all endorsements thereto, and agrees to notify the Reinsurer
promptly of all



changes thereto which may in any manner affect this certificate of reinsurance.
Any alteration to the Company's original policy(ies) shall not be binding on the
Reinsurer until agreed in writing or by facsimile or electronic mail between the
parties hereto. The Company shall cooperate and shall make available for
inspection and reproduction and place at the disposal of the Reinsurer, through
its authorized representatives, at all reasonable times during the currency of
this certificate and thereafter, Company personnel and all books, records and
documents of the Company relating to this certificate of reinsurance or claims
in connection therewith.

C. In no event shall anyone other than the Company, or in the event of the
Company's insolvency, its receiver, liquidator, or statutory successor, have any
rights under this certificate, and this certificate shall not be assignable by
the Company.

D. The reinsurance excludes 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, 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 any 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 part.

E. The Company shall promptly notify the Reinsurer in writing, of any
occurrence, accident, event, or circumstance, and any developments subsequent
thereto, which might result in claim, settlement, or judgment in an amount
sufficient to involve this certificate of reinsurance. The Company shall also
promptly notify the Reinsurer, of any occurrence, accident, event, or
circumstance in respect of which the Company has established a loss reserve
equal to or greater than fifty (50) percent of the Company's retention specified
in Item 3 of the Declarations, or if this reinsurance applies on a contributing
excess basis, when notice of claim is received by the Company. The Company shall
also promptly notify the Reinsurer of any material change(s) to the
aforementioned loss reserve(s).

The Company has the obligation and duty to investigate and defend claims or
suits affecting this reinsurance and to conduct a full defense to a final
determination. While the Reinsurer does not undertake to investigate or defend
claims or suits, it shall nevertheless have the right and shall be given the
opportunity, at its request, with the full cooperation of the Company, to
appoint counsel at its own expense and to become associated with the Company and
its representatives in the defense and control of any claim, suit, or proceeding
involving this certificate of reinsurance.

F. All loss settlements made by the Company, providing they are within the
terms, conditions, and limit(s) of the original policy(ies) and within the
terms, conditions and limit(s) of this certificate of reinsurance, shall be
binding on the Reinsurer. Upon receipt of satisfactory evidence of payment of a
loss, the Reinsurer shall promptly pay its proportion of such loss as set forth
in the Declarations, or as otherwise required. In addition thereto, the
Reinsurer shall pay its proportion of expenses (other than office expenses and
payments to any salaried employee) incurred by the Company in the investigation
and settlement of claims or suits and its proportion of court costs and interest
on any judgment or award, in the ratio that the Reinsurer loss payment bears to
the Company's gross loss payment. If there is no loss payment, the Reinsurer
shall pay, within the limit(s) of the Company's policy, or the applicable layer
of participation, its proportion of such expenses only in respect of business
accepted on a contributing excess basis, and then only in the percentage stated
in Item 4 of the Declarations. The Company agrees to enforce its right of
recovery. The Reinsurer shall be paid or credited by the Company with its
proportionate share of recoveries. Recoveries shall be calculated as
reimbursement obtained or recovery made by the Company less the cost of
obtaining such recovery (excluding office expenses and payments to any salaried
official or employee of the Company or any affiliate). If the reinsurance
afforded by this certificate is or an Excess of Loss basis recoveries shall be
applied in the inverse order in which liability attaches.

G. Definitions

As used in this certificate, the following terms shall have the meaning set
opposite each:

Excess of Loss - the limit(s) of liability of the Reinsurer, as stated in Item 4
of the Declarations, applies(y) only to that portion of loss within the policy
limits, in excess of the applicable retention of the Company as stated in Item 3
of the Declarations.

Contributing Excess - The Company's polices(y) apply(ies) in excess of other
insurance, reinsurance, or a self-insured retention, whether collectible or not,
and the limit(s) of liability of the Reinsurer apply(ies) proportionately to all
loss within the policy limit(s) or the applicable layer of participation in the
percentage(s) as stated in Item 4 of the Declarations.

Nonconcurrent - The reinsurance provided does not apply to any hazards or risks
of loss or damage covered under the Company's policy(ies) other than those
specifically set forth in the Declarations; or, as respects the dates of
coverage, to any Reinsurer Certificate Period other than as set forth in the
Declarations. The retention of the Company and the liability of the Reinsurer
shall be determined as though the Company's policy(ies) applied only to the
hazards or risks of loss or damage specifically described in the Declarations.

H. The Company will be liable for all taxes on premiums ceded to the Reinsurer
under this certificate of reinsurance.

I. In the event of the insolvency of the Company, the reinsurance provided by
this certificate shall be payable by the Reinsurer on the basis of the liability
of the Company under the policy(ies) reinsured, without diminution because of
such insolvency, directly to the Company or its receiver, liquidator, or
statutory successor but not exceeding the proportion thereof payable under the
terms of this certificate. The Reinsurer shall be given written notice of the
pendency of each claim against the Company on the policy(ies) reinsured
hereunder within a reasonable time after such claim is filed in the insolvency
proceedings. The Reinsurer shall have the right to investigate each such claim
and interpose, at its own expense, in the proceeding where such claim is to be
adjudicated, any defenses which it may deem available to the Company or its
receiver, liquidator, or statutory successor. The expense thus incurred by the
Reinsurer shall be chargeable, subject to court approval, against the insolvent
Company as part of the expense of liquidation to the extent of a proportionate
share of the benefit which may accrue to the Company solely as the result of the
defense undertaken by the Reinsurer. The reinsurance shall be payable as herein
before in this paragraph provided except (a) where this certificate specifically
provides another payee of such reinsurance in the event of the insolvency of the
company and (b) where the Reinsurer with the consent of the direct insured or
insurers has expressly assumed such policy obligations of the Company as direct
obligations of the Reinsurer the payee under such policy and in substitution for
the obligations of the Company to such payee.

J. The Reinsurer may offset any balance(s), whether on account of premiums,
commissions, claims, losses, adjustment expense, salvage, or any other amount(s)
due from one party to the other (or, if more than one, any other) party(ies)
under this certificate of reinsurance or under any other agreement heretofore or
hereafter entered into between the Company and the Reinsurer, whether acting as
assuming reinsurer or ceding company. The right of offset shall exist whether
the Company is determined to be insolvent, in liquidation or rehabilitation or
is otherwise legally impaired, to the extent of these predetermined mutual
obligations of the parties to this certificate of reinsurance.

K. Should the Company's policy(ies) be cancelled, this certificate of
reinsurance shall terminate automatically at the same time and date. This
certificate may also be canceled by the Company upon not less than thirty (30)
days prior written notice, stating when thereafter the reinsurance afforded
hereby shall terminate. This certificate may also be cancelled by the Reinsurer
upon written notice to the Company stating when thereafter the reinsurance
afforded hereby shall terminate. The date of such termination shall be the date
written notice is mailed plus the number of days required to cancel the
Company's policy(ies) reinsured hereby plus fifteen (15) days. The Reinsurer may
also cancel this certificate, because of nonpayment of premium, by giving not
less than ten (10) days written notice stating when such cancellation shall be
effective.

Proof of mailing shall be deemed proof of notice and calculation of the earned
premium shall follow the Company's calculation in the use of short rate or pro
rata tables. The Company shall be entitled to return premiums payable on the
cancelled reinsurance less the amount of the ceding commission, if any.



L. The terms of this certificate of reinsurance and the Declarations which
constitute a part thereof shall not be waived or changed except by written
endorsement issued to form a part hereof, executed by a duly authorized
representative of the Reinsurer.

M. Any irreconcilable difference of opinion between the Reinsurer and the
Company with respect to the interpretation of any terms of this certificate or
the performance of the obligations under this certificate shall be submitted to
arbitration. Each party shall select an arbitrator within one month after
written request for arbitration has been received from the party requesting
arbitration. If either party refuses or neglects to name an arbitrator within
the specified period, the requesting party shall appoint a second arbitrator.
The two arbitrators so chosen shall select a third arbitrator within ten days
after both have been appointed. Should the arbitrators fail to agree on a third
arbitrator, each arbitrator shall select one name from a list of three names
submitted by the other arbitrator, and the third arbitrator shall be selected by
lot between the two names chosen. The arbitrators shall be disinterested
officers or former officers of other insurance or reinsurance companies. The
arbitrators shall adopt their own rules and procedures. The decision of a
majority of the arbitrators shall be final and binding on the parties. Judgment
may be entered upon the final decision of the arbitrators in any court having
jurisdiction. Any such arbitration shall take place at Greenwich, Connecticut
unless some other location is mutually agreed to by the two parties in interest.

In Witness Whereof, Berkley Insurance Company has caused this certificate to be
signed by its Secretary at Greenwich, Connecticut, but the same shall not be
binding upon the Reinsurer unless countersigned by an authorized representative
of the reinsurer.



                                   ADDENDUM I

THE REINSURING AGREEMENTS AND CONDITIONS OF THE CERTIFICATE ARE AMENDED AS
FOLLOWS:

SECTION B IS REPLACED BY THE FOLLOWING:

B.    The company warrants to retain for its own account, subject to treaty
      reinsurance, if applicable and whether collectible or not, the amount of
      liability specified in Item 3. of the Declarations. The liability of the
      Reinsurer, as specified in Item 4. of the Declarations, shall follow that
      of the Company for losses or damages for which the Company is legally
      obligated to pay and shall be subject in all respects to all the terms,
      conditions and limits of the Company's policy (ies) except when otherwise
      specifically provided herein, or when designated as nonconcurrent
      reinsurance in the Declarations, or except such as may purport to create a
      direct obligation of the Reinsurer to the original insured or any other
      third party. Any alteration to the Company's original policy (ies) which
      are subject to this certificate, shall not be binding on the Reinsurer
      until the Reinsurer grants written approval for any such alteration. The
      Company shall cooperate and shall make available for inspection and
      reproduction and place at the disposal of the Reinsurer, through its
      authorized representative, at all reasonable times during the currency of
      this Certificate and thereafter, Company personnel and all books, records
      and documents of the Company relating to this certificate of reinsurance
      or claims in connection therewith.

SECTION E.

In addition to the conditions contained in Section E of this Certificate, the
Company shall promptly notify the Reinsurer of losses involving the following
injuries:

            1.    Any brain damage;

            2.    Spinal-cord injury with paralysis;

            3.    Severe burns resulting in disfigurement;

            4.    Amputations and/or multiple fractures;

            5.    Fatal injuries;

            6.    Permanent disabilities;



All other conditions of Section E remain unchanged.

      SECTION K. CANCELLATION IS REPLACED BY THE FOLLOWING:

      K.    This Certificate may be terminated by either party sending to the
            other party by registered mail to its principal office, notice
            stating the time and date of when, not less than 60 days after the
            date of mailing such notice, termination shall be effective. Upon
            termination of the Certificate and unless otherwise mutually agreed,
            the liability of the reinsurer with the respect to policies in
            effect at the time and date of termination shall continue until
            expiration or cancellation or next anniversary date plus odd time
            (not to exceed 15 months) of each such policy of the Company,
            whichever comes first.

      SECTION L. IS REPLACED BY THE FOLLOWING:

      L.    The terms of this Certificate of Reinsurance and the Declarations
            which constitute a part thereof shall not be waived or changed
            except by written endorsement to form a part hereof or written
            special acceptance, executed by a duly authorized representative of
            the Reinsurer.

      THE FOLLOWING SECTIONS ARE HEREBY ADDED:

      N.    This Certificate shall apply to all new and renewal liquor liability
            policies or endorsements of the Company which are subject to this
            certificate at or after 12:01A.M. (Eastern Standard Time) April 1,
            2004.

      O.    Eligible business: All liquor liability business that meets
            Philadelphia Insurance Company's Liquor Liability Underwriting
            Guidelines as agreed to by B F Re Underwriters, LLC as of the date
            of this agreement and revised upon mutual agreement thereafter.

      P.    Reinsurance Premium:

                  a.    The Company shall pay to the Reinsurer 75% of the gross
                        written premium less 30% ceding commission.

      Q.    Reports and Remittances:

              1.  Bordereau reports - Within 30 days after the close of each
                  month, the Company shall render to the Reinsurer a bordereau
                  report, on form acceptable to the Reinsurer giving details of
                  each policy reinsured hereunder and issued during the month.

              2.  Reinsurance Premium - Within 30 days after the close of each
                  month, the Company shall render to the Reinsurer a report of
                  the reinsurance premium for the policies reinsured hereunder
                  written during the month and the amount due either party shall
                  be remitted within 30 days after the close of the month.

      R.    Company Forms:

              ISO Liquor Liability Coverage Form CG 0033.

      All other terms and conditions remain unchanged.



                            B F RE UNDERWRITERS, LLC
                           Stamford, Connecticut 06901

                                  on behalf of
                            BERKLEY INSURANCE COMPANY

                                                                 CERTIFICATE NO.
                                                                   4-23-004-P1

Client Company and Address                  Ceding Company and Address

Philadelphia Insurance Company              Philadelphia Insurance Company
One Bala Plaza, Ste. 100                    One Bala Plaza, Ste. 100
Bala Cynwyd, PA 19004                       Bala Cynwyd, PA 19004

                                            Ceding Company Policy No
ATTENTION:  Mr. Neal Schmidt                AS PER MONTHLY BORDEREAU
                                            ____________________________________
Named Insured                               Ceding Company Policy Period
PHILADELPHIA INSURANCE COMPANIES - LIQUOR   From 6/1/04 To 6/1/05
LIABILITY - AS PER MONTHLY BORDEREAU        Reinsurer Certificate Policy Period
BALA CYNWYD, PA                             From 6/1/04 To 6/1/05
                                            ____________________________________

It is hereby understood and agreed that Addendum 1, Section N is amended as
follows:

N. This Certificate shall apply to all new and renewal liquor liability policies
or endorsements of the company which are subject to this certificate at or after
12:01 A.M. (Eastern Standard Time) June 1, 2004 for the Hotel, Motel and Health
Club Program, and August 17, 2004 for the Bowling Center Program.

Countersigned at Stamford, Connecticut ___________this 24th day of  August, 2004

                                            By _________________________________
                                                      Authorized Signature

EX-10.6

                                                                    EXHIBIT 10.6

                         AMENDED REIMBURSEMENT CONTRACT
           (This Reimbursement Contract Supercedes All Prior Versions
                    with an Effective Date of June 1, 2004)
                             EFFECTIVE: JUNE 1, 2004
                                   (CONTRACT)

                                     between

                       LIBERTY AMERICAN INSURANCE COMPANY
                                PINELLAS PARK, FL
                                    (Company)

                                  NAIC # 10955

                                       and

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

PREAMBLE

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

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

ARTICLE I - SCOPE OF AGREEMENT

As a condition precedent to the SBA's obligations under this Contract, the
Company, an Authorized Insurer or an entity writing Covered Policies under
Section 627.351, Florida Statutes, in the State of Florida, shall report to the
SBA in a specified format the business it writes which is described in this
Contract as Covered Policies.

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



Policies in excess of the Company's Retention as a result of each Loss
Occurrence commencing during the Contract Year, to the extent funds are
available, all as hereinafter defined.

ARTICLE II - PARTIES TO THE CONTRACT

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

ARTICLE III - TERM

This Contract shall apply to Loss Occurrences which commence during the period
from 12:01 a.m., Eastern Time, June 1, 2004, to 12:01 a.m., Eastern Time, June
1, 2005 (Contract Year).

The Company must designate a coverage level and, make the required selections on
pages 19 and 20 within this Contract. Note: Due to 2004 legislation, which has
just become law, a Company has a transitional option which can be selected by
executing Schedule 1, which is provided with and is a part of this Contract. The
Company shall return this fully executed Contract (two originals) to the FHCF
Administrator so that the Contract is received by the FHCF Administrator no
later than 5 p.m., Central Time, June 1, 2004. Failure to do so will result in a
referral to the Office of Insurance Regulation within the Department of
Financial Services for administrative action. Furthermore, the Company's
coverage level under this Contract will be deemed as follows:

(1)   For Companies that are a member of a National Association of Insurance
      Commissioners (NAIC) group, the same coverage level selected by the other
      Companies of the same NAIC group shall be deemed. If executed Contracts
      for none of the members of an NAIC group have been received by the FHCF
      Administrator, the coverage level from the prior Contract Year shall be
      deemed.

(2)   For Companies that are not a member of an NAIC group under which other
      Companies are active participants in the FHCF, the coverage level from the
      prior Contract Year shall be deemed.

(3)   For New Participants that are a member of an NAIC group, the same coverage
      level selected by the other Companies of the same NAIC group shall be
      deemed.

(4)   For New Participants, as that term is defined in Article V(21) herein,
      that are not a member of an NAIC group under which other Companies are
      active participants in the FHCF, the 45% coverage level shall be deemed.



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

ARTICLE IV - LIABILITY OF THE FHCF

(1)   The SBA shall reimburse the Company, with respect to each Loss Occurrence
      commencing during the Contract Year for the "Reimbursement Percentage"
      elected, this percentage times the amount of Ultimate Net Loss paid by the
      Company in excess of the Company's Retention, plus 5% of the reimbursed
      losses for Loss Adjustment Expense Reimbursement.

(2)   The Reimbursement Percentage will be 45% or 75% or 90%, at the Company's
      option as elected under ARTICLE XVIII herein.

(3)   The aggregate liability of the FHCF with respect to all Reimbursement
      Contracts covering this contract year shall not exceed the limit set forth
      under Section 215.555(4)(c)1., Florida Statutes. For specifics regarding
      loss reimbursement calculations, see section (3)(c) of ARTICLE X herein.

(4)   Reimbursement amounts shall not be reduced by reinsurance paid or payable
      to the Company from other sources.

(5)   After the end of each calendar year, the SBA shall notify insurers of the
      estimated Borrowing Capacity and the Balance of the Fund as of December
      31. In May and October of each year, the SBA shall publish in the Florida
      Administrative Weekly a statement of the FHCF's estimated Borrowing
      Capacity and the projected Balance of the Fund as of December 31.

(6)   The obligation of the SBA with respect to all Contracts covering a
      particular Contract Year shall not exceed the Balance of the Fund as of
      December 31 of that Contract Year, together with the maximum amount the
      SBA is able to raise through the issuance of revenue bonds or other means
      available to the SBA under Section 215.555, Florida Statutes, up to the
      limit in accordance with Section 215.555(4)(c)1., Florida Statutes. The
      obligations and the liability of the SBA are more fully described in Rule
      19-8.013, Florida Administrative Code (F.A.C.). If Reimbursement Premiums
      are used for debt service in the event of a temporary shortfall in the
      collection of emergency assessments, then the amount of the Premiums so
      used will be reimbursed to the SBA when sufficient emergency assessments
      are received.

ARTICLE V - DEFINITIONS

(1)   ACTUAL CLAIMS-PAYING CAPACITY OF THE FHCF

      This term means the sum of the Balance of the Fund as of December 31 of a
      Contract Year, plus any reinsurance purchased by the FHCF, plus the amount
      the SBA is able to raise



      through the issuance of revenue bonds up to the limit in accordance with
      Section 215.555(4)(c)1. and (6), Florida Statutes.

(2)   ACTUARIALLY INDICATED

      This term means, with respect to Premiums paid by Companies for
      reimbursement provided by the FHCF, an amount determined in accordance
      with the definition provided in Section 215.555(2)(a), Florida Statutes.

(3)   ADDITIONAL LIVING EXPENSE (ALE)

      ALE losses covered by the FHCF are not to exceed 40 percent of the insured
      value of a Residential Structure or its contents based on the coverage
      provided in the policy. Fair rental value, loss of use, loss of rents, or
      business interruption losses are not covered by the FHCF.

(4)   ADMINISTRATOR

      This term means the entity with which the SBA contracts to perform
      administrative tasks associated with the operations of the FHCF. The
      present Administrator is Paragon Strategic Solutions Inc., 3600 American
      Boulevard West, Minneapolis, Minnesota 55431. The telephone number is
      (800) 689-3863, and the facsimile number is (800) 264-0492.

(5)   AUTHORIZED INSURER

      This term is defined in Section 624.09(1), Florida Statutes.

(6)   BORROWING CAPACITY

      This term means the amount of funds which are able to be raised by the
      issuance of revenue bonds or through other financing mechanisms, less bond
      issuance expenses and reserves.

(7)   CITIZENS PROPERTY INSURANCE CORPORATION (CITIZENS)

      This term means an entity formed under Section 627.351(6), Florida
      Statutes and refers to both Citizens Property Insurance Corporation High
      Risk Account and Citizens Property Insurance Corporation Personal Lines
      and Commercial Lines Accounts.

(8)   CONTRACT

      This term means this Reimbursement Contract for the current Contract Year.

(9)   COVERED EVENT

      This term means any one storm declared to be a hurricane by the National
      Hurricane Center, which causes insured losses in Florida, both while it is
      still a hurricane and throughout any subsequent downgrades in storm status
      by the National Hurricane Center. Any storm, including a tropical storm,
      which does not become a hurricane is not a Covered Event.

(10)  COVERED POLICY OR COVERED POLICIES

      (a)   Covered Policy, as defined in Section 215.555(2)(c), Florida
            Statutes, is further clarified to mean only that portion of a
            binder, policy or contract of insurance (Policy Contract) that
            insures real or personal property located in the State of Florida to
            the extent such Policy Contract insures a Residential Structure, as
            defined in definition (26) herein, or the contents of a Residential
            Structure, located in the State of Florida, or ALE coverage as
            defined in definition (3) herein.

      (b)   Due to the specialized nature of the definition of Covered Policies,
            Covered Policies are not limited to only one line of business in the
            Company's annual statement required to



            be filed by Section 624.424, Florida Statutes. Instead, Covered
            Policies are found in several lines of business on the Company's
            annual statement. Covered Policies will at a minimum be reported in
            the Company's statutory annual statement as:

                  -     Fire

                  -     Allied Lines

                  -     Farmowners Multiple Peril

                  -     Homeowners Multiple Peril

                  -     Commercial Multiple Peril (non liability portion,
                        covering condominiums and apartments)

                  -     Inland Marine

            Note that where particular insurance exposures are reported on an
            annual statement is not dispositive of whether or not the exposure
            is a Covered Policy.

      (c)   This definition applies only to the first-party property section of
            Policy Contracts pertaining strictly to the structure, its contents,
            appurtenant structures, or ALE coverage.

      (d)   Covered Policy also includes any collateral protection insurance
            policy covering personal residences which protects both the
            borrower's and the lender's financial interest, in an amount at
            least equal to the coverage for the dwelling in place under the
            lapsed homeowner's policy, if such policy can be accurately reported
            as required in Section 215.555(5), Florida Statutes. A Company will
            be deemed to be able to accurately report data if the required data,
            as specified in the Premium Formula adopted in Section 215.555(5),
            Florida Statutes, is available.

      (e)   See Article VI of this Contract for specific exclusions.

(11)  ESTIMATED CLAIMS-PAYING CAPACITY OF THE FHCF

      This term means the sum of the projected Balance of the Fund as of
      December 31 of a Contract Year, plus any reinsurance purchased by the
      FHCF, plus the most recent estimate of the Borrowing Capacity of the FHCF,
      determined pursuant to Section 215.555(4)(c), Florida Statutes.

(12)  EXCESS POLICIES

      This term, for the purposes of the FHCF, means a policy that provides
      insurance protection for large commercial property risks that provides a
      layer of coverage above a primary layer (which is insured by a different
      insurer) that acts much the same as a very large deductible.

(13)  FLORIDA DEPARTMENT OF FINANCIAL SERVICES (DEPARTMENT )

      This term means that Florida regulatory agency charged with regulating the
      Florida insurance market and administering the Florida Insurance Code.

(14)  FLORIDA INSURANCE CODE

      This term means those chapters in Section 624.01, Florida Statutes, which
      are designated as the Florida Insurance Code.

(15)  FORMULA OR THE PREMIUM FORMULA

      This term means the Formula approved by the SBA for the purpose of
      determining the Actuarially Indicated Premium to be paid to the FHCF. The
      Premium Formula is defined



      as an approach or methodology which leads to the creation of premium
      rates. The resulting rates are therefore incorporated as part of the
      Premium Formula.

(16)  FUND BALANCE OR BALANCE OF THE FUND AS OF DECEMBER 31

      These terms mean the "Net assets: Unrestricted" as indicated on the
      unconsolidated FHCF Statement of Net Assets for the then current Contract
      Year, to which is added: reported FHCF losses (including Loss Adjustment
      Expense) for the then current Contract Year, whether paid or unpaid by
      FHCF, as of December 31, and from which is subtracted: any reinsurance
      recovered prior to, or recoverable as of, December 31; any obligations
      paid or expected to be paid with bonding proceeds or receipts from
      emergency assessments; amounts needed for administration for the then
      current State of Florida fiscal year which have not been spent and which
      are not reflected on the FHCF Statement of Net Assets; and the amount of
      undispersed mitigation funds appropriated for the then current State of
      Florida fiscal year.

(17)  INSURER GROUP

      For purposes of the coverage option election in Section 215.555(4)(b),
      Florida Statutes, Insurer Group means the group designation assigned by
      the National Association of Insurance Commissioners (NAIC) for purposes of
      filing consolidated financial statements. A Company is a member of a group
      as designated by the NAIC until such Company is assigned another group
      designation or is no longer a member of a group recognized by the NAIC.

(18)  LOSS OCCURRENCE

      This term means the sum of individual insured losses incurred under
      Covered Policies resulting from the same Covered Event. "Losses" means
      direct incurred losses under Covered Policies and excludes Loss Adjustment
      Expenses.

(19)  LOSS ADJUSTMENT EXPENSE REIMBURSEMENT

      (a)   Loss Adjustment Expense Reimbursement shall be 5% of the reimbursed
            losses under this Contract as provided in Article IV, pursuant to
            Section 215.555(4)(b)1., Florida Statutes.

      (b)   To the extent that loss reimbursements are limited to the Payout
            Multiple applied to each Company, the 5% Loss Adjustment Expense is
            included in the total Payout Multiple applied to each Company.

(20)  NEW PARTICIPANT(s)

      This term means all Companies which are granted a certificate of authority
      by the Department after the beginning of the FHCF's Contract Year on June
      1 and begin writing Covered Policies on or after the beginning of the
      Contract Year, or which already have a certificate of authority and begin
      writing Covered Policies on or after the beginning of the Contract Year. A
      Company that removes exposure from either Citizens entity, as that term is
      defined in (7) above, pursuant to an assumption agreement effective after
      June 1 and had written no other Covered Policies on or before June 1 is
      also considered a New Participant.

(21)  OFFICE OF INSURANCE REGULATION



      This term means that office within the Department of Financial Services
      and which was created in Section 20.121(3), Florida Statutes.

(22)  PAYOUT MULTIPLE

      This term means the multiple as calculated in accordance with Section
      215.555(4)(c), Florida Statutes, unless the transitional option provided
      under Schedule 1 of this contract is chosen by June 1, 2004, which is
      derived by dividing the Claims-Paying Capacity of the FHCF by the total
      industry Reimbursement Premium for the FHCF for the Contract Year billed
      as of December 31 of the Contract Year. The multiple is finally determined
      once Reimbursement Premiums have been billed as of December 31 and the
      amount of bond proceeds has been determined.

(23)  PREMIUM

      This term means the same as Reimbursement Premium.

(24)  PROJECTED PAYOUT MULTIPLE

      The Projected Payout Multiple is used to calculate a Company's projected
      payout pursuant to Section 215.555(4)(d)2.b., Florida Statutes, unless the
      transitional option provided under Schedule 1 of this contract is chosen
      by June 1, 2004. The Projected Payout Multiple is derived by dividing the
      estimated single season Claims-Paying Capacity of the FHCF by the
      estimated total industry Reimbursement Premium for the FHCF for the
      Contract Year. The Company's Reimbursement Premium as paid to the SBA for
      the Contract Year is multiplied by the Projected Payout Multiple to
      estimate the Company's coverage from the FHCF for the Contract Year.

(25)  REIMBURSEMENT PREMIUM

      This term means the Premium determined by multiplying each $1,000 of
      insured value reported by the Company in accordance with Section
      215.555(5)(b), Florida Statutes, by the rate as derived from the Premium
      Formula, as described in Rule 19-8.028, F.A.C.

(26)  RESIDENTIAL STRUCTURES

      This term means dwelling units used as a home or residence for other than
      transient occupancy, as that term is defined in Section 83.43(10), Florida
      Statutes. These include the primary structure and appurtenant structures
      insured under the same policy and any other structures covered under
      endorsements associated with a policy covering a residential structure,
      the principal function of which at the time of loss was as a primary or
      secondary residence. COVERED RESIDENTIAL STRUCTURES DO NOT INCLUDE any
      structures listed under Article VI herein.

(27)  RETENTION

      The Company's Retention means the amount of hurricane losses incurred by
      the Company below which the Company is not entitled to reimbursement from
      the FHCF. The Company is eligible for reimbursement only after its paid
      covered losses exceed its Retention. The Company's Retention is
      established in accordance with the provisions of Section 215.555(2)(e),
      Florida Statutes, unless the transitional option provided under Schedule 1
      of this contract is chosen by June 1, 2004. The Company's Retention shall
      be determined by



      multiplying the Retention Multiple by the Company's Reimbursement Premium
      for the Contract Year.

(28)  RETENTION MULTIPLE

      (a)   The Retention Multiple is applied to the Company's Reimbursement
            Premium to determine the Company's Retention. The Retention Multiple
            for the 2004-2005 Contract Year shall be equal to $4.5 billion,
            divided by the estimated total industry Reimbursement Premium at the
            90% reimbursement percentage level for the Contract Year as
            determined by the SBA unless the transitional option provided under
            Schedule 1 of this contract is chosen by June 1, 2004.

      (b)   The Retention Multiple as determined under (28)(a) above shall be
            adjusted to reflect the reimbursement percentage elected by the
            Company under this Contract as follows:

            1.    If the Company elects a 90% reimbursement percentage, the
                  adjusted Retention Multiple is 100% of the amount determined
                  under (28)(a) above;

            2.    If the Company elects a 75% reimbursement percentage, the
                  adjusted Retention Multiple is 120% of the amount determined
                  under (28)(a) above; or

            3.    If the Company elects a 45% reimbursement percentage, the
                  adjusted Retention Multiple is 200% of the amount determined
                  under (28)(a) above.

(29)  ULTIMATE NET LOSS

      (a)   This term means all losses of the Company under Covered Policies,
            prior to the application of the Company's FHCF Retention and
            reimbursement percentage, and excluding loss adjustment expense,
            arising from each Loss Occurrence during the Contract Year,
            provided, however, that the Company's loss shall be determined in
            accordance with the deductible levels reported to the FHCF for the
            exposure sustaining the loss.

      (b)   Salvages and all other recoveries, excluding reinsurance recoveries,
            shall be first deducted from such loss to arrive at the amount of
            liability attaching hereunder.

      (c)   All salvages, recoveries or payments recovered or received
            subsequent to a loss settlement under this Contract shall be applied
            as if recovered or received prior to the aforesaid settlement and
            all necessary adjustments shall be made by the parties hereto.

      (d)   Nothing in this clause shall be construed to mean that losses under
            this Contract are not recoverable until the Company's Ultimate Net
            Loss has been ascertained.

      (e)   The SBA shall be subrogated to the rights of the Company to the
            extent of its reimbursement of the Company. The Company agrees to
            assist and cooperate with the SBA in all respects as regards such
            subrogation. The Company further agrees to undertake such actions as
            may be necessary to enforce its rights of salvage and subrogation,
            and its rights, if any, against other insurers as respects any
            claim, loss, or payment arising out of a Covered Event.

ARTICLE VI - EXCLUSIONS



This Contract does not provide reimbursement for:

(1)   Any losses not defined as being within the scope of a Covered Policy.

(2)   Any policy which excludes wind or hurricane coverage.

(3)   Any Excess Policy or deductible buy-back policy that requires
      individual ratemaking.

(4)   Any liability of the Company attributable to losses for fair rental value,
      loss of use, loss of rents, or business interruption.

(5)   Any collateral protection policy that does not meet the definition of
      Covered Policy as defined in Article V(10) herein.

(6)   Any reinsurance assumed by the Company.

(7)   Any exposure for: hotels, motels, timeshares, or other similar structures
      that are rented out daily, weekly, or monthly; homeowner associations, if
      no habitational structures are insured under the policy; shelters, camps
      or retreats; vacant properties insured under a commercial policy; and
      boats insured under a separate policy or endorsement.

(8)   Commercial healthcare facilities and nursing homes, unless the facility is
      part of a structure primarily consisting of other residences.

(9)   Any exposure under commercial policies covering only appurtenant
      structures or structures that do not function as a habitational structure
      (e.g. a policy covering only the pool of an apartment complex).

(10)  Personal contents in a commercial storage facility covered under a policy
      that covers only those personal contents.

(11)  Policies covering only Additional Living Expense.

(12)  Any liability of the Company for extra contractual obligations and excess
      of original policy limits liabilities.

(13)  Losses in excess of the sum of the Balance of the Fund as of December 31
      of the Contract Year and the amount the SBA is able to raise through the
      issuance of revenue bonds or by the use of other financing mechanisms, up
      to the limit pursuant to Section 215.555(4)(c), Florida Statutes.

(14)  Any liability assumed by the Company from Pools, Associations, and
      Syndicates. Exception: Covered Policies assumed from Citizens under the
      terms and conditions of an executed assumption agreement between the
      Authorized Insurer and Citizens are covered by this Contract.

(15)  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, howsoever 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.

(16)  Any liability of the Company for loss or damage caused by or resulting
      from nuclear reaction, nuclear radiation, or radioactive contamination
      from any cause, whether direct or



      indirect, proximate or remote, and regardless of any other cause or event
      contributing concurrently or in any other sequence to the loss.

(17)  The FHCF does not provide coverage for water damage which is generally
      excluded under property insurance contracts and has been defined to mean
      flood, surface water, waves, tidal water, overflow of a body of water, or
      spray from any of these, whether or not driven by wind.

ARTICLE VII - MANAGEMENT OF CLAIMS AND LOSSES

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

ARTICLE VIII - LOSS REIMBURSEMENT ADJUSTMENTS

(1)   OFFSETS

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

(2)   REIMBURSEMENT ADJUSTMENTS

      Section 215.555(4)(d) and (e), Florida Statutes, provides the SBA with the
      right to seek the return of excess loss reimbursements or advances which
      have been paid to the Company along with interest thereon. Excess loss
      reimbursements or advances are those payments or advances made to the
      Company by the SBA on the basis of incorrect exposure submissions or
      resubmissions, incorrect calculations of Reimbursement Premiums or
      Retentions, payments in excess of the projected payout, incorrect Proof of
      Loss Reports, incorrect calculation of reinsurance recoveries, or
      subsequent readjustment of policyholder claims, including subrogation and
      salvage, or any combination of the foregoing. The Company will be sent an
      invoice showing the due date for adjustments along with the interest due
      thereon through the due date. The applicable interest rate for interest
      credits, and for interest charges for adjustments beyond the Company's
      control, will be the average rate earned by the SBA for the FHCF for the
      first five months of the Contract Year. The applicable interest rate for
      interest charges due to adjustments resulting from incorrect exposure
      submissions or Proof of Loss Reports will accrue at this rate plus 3%.
      Interest will continue to accrue if not paid by the due date.

ARTICLE IX - REIMBURSEMENT PREMIUM

(1)   The Company shall, in a timely manner, pay the SBA its Reimbursement
      Premium for the Contract Year. The Reimbursement Premium for the Contract
      Year shall be calculated in



      accordance with Section 215.555, Florida Statutes, with any rules
      promulgated thereunder, and with Article X(2).

(2)   Since the calculation of the Actuarially Indicated Premium assumes that
      the Companies will pay their Reimbursement Premiums timely, interest
      charges will accrue under the following circumstances. A Company may
      choose to estimate its own Premium installments. However, if the Company's
      estimation is less than the provisional Premium billed, an interest charge
      will accrue on the difference between the estimated Premium and the final
      Premium. If a Company estimates its first installment, the Administrator
      shall bill that estimated Premium as the second installment as well, which
      will be considered as an estimate by the Company. No interest will accrue
      regarding any provisional Premium if paid as billed by the FHCF's
      Administrator, except in the case of an estimated second installment as
      set forth in this Article. Also, if a Company makes an estimation that is
      higher than the provisional Premium billed but is less than the final
      Premium, interest will not accrue. If the Premium payment is not received
      from a Company when it is due, an interest charge will accrue on a daily
      basis until the payment is received. Interest will also accrue on Premiums
      resulting from submissions or resubmissions finalized after December 1 of
      the Contract Year. An interest credit will be applied for any Premium
      which is overpaid as either an estimate or as a provisional Premium.
      Interest shall not be credited past December 1 of the Contract Year. The
      applicable interest rate for interest credits will be the average rate
      earned by the SBA for the FHCF for the first five months of the Contract
      Year. The applicable interest rate for interest charges will accrue at
      this rate plus 3%.

ARTICLE X - REPORTS AND REMITTANCES

(1)   EXPOSURES

      (a)   If the Company writes Covered Policies on or before June 1 of the
            Contract Year, the Company shall report to the SBA, unless otherwise
            provided in Rule 19ER04-2 (19-8.029), F.A.C., no later than the
            statutorily required date of September 1 of the Contract Year, by
            ZIP Code or other limited geographical area as specified by the SBA,
            its insured values under Covered Policies as of June 30 of the
            Contract Year as outlined in the Data Call adopted for the Contract
            Year under Rule 19ER04-2 (19-8.029), F.A.C., and other data or
            information in the format specified by the SBA.

      (b)   If the Company first begins writing Covered Policies after June 1
            but prior to December 1 of the Contract Year, the Company shall
            report to the SBA, no later than March 1 of the Contract Year, by
            ZIP Code or other limited geographical area as specified by the SBA,
            its insured values under Covered Policies as of December 31 of the
            Contract Year as outlined in the Supplemental Instructions for New
            Participants section of the Data Call adopted for the Contract Year
            under Rule 19ER04-2 (19-8.029), F.A.C., and other data or
            information in the format specified by the SBA.



      (c)   If the Company first begins writing Covered Policies on or after
            December 1 but through and including May 31 of the Contract Year,
            the Company shall not report its exposure data for the Contract Year
            to the SBA.

      (d)   The requirement that a report is due on a certain date means that
            the report shall be in the physical possession of the FHCF's
            Administrator in Minneapolis no later than 5 p.m. on the due date.
            If the applicable due date is a Saturday, Sunday or legal holiday,
            then the actual due date will be the day immediately following the
            applicable due date which is not a Saturday, Sunday or legal
            holiday. For purposes of the timeliness of the submission, neither
            the United States Postal Service postmark nor a postage meter date
            is in any way determinative. Reports sent to the SBA in Tallahassee,
            Florida, will be returned to the sender. Reports not in the physical
            possession of the FHCF's Administrator by 5 p.m., Central Time, on
            the applicable due date are late.

      (e)   Pursuant to the provisions of Section 215.557, Florida Statutes, the
            reports of insured values under Covered Policies by ZIP Code
            submitted to the SBA pursuant to Section 215.555, Florida Statutes,
            are confidential and exempt from the provisions of Section
            119.07(1), Florida Statutes, and Section 24(a), Art. I of the State
            Constitution.

(2)   REIMBURSEMENT PREMIUM

      (a)   If the Company writes Covered Policies on or before June 1 of the
            Contract Year, the Company shall pay the FHCF its Reimbursement
            Premium in installments due on or before August 1, October 1, and
            December 1 of the Contract Year in amounts to be determined by the
            FHCF. However, if the Company's Reimbursement Premium for the prior
            Contract Year was less than $5,000, the Company's full provisional
            Reimbursement Premium, in an amount equal to the Reimbursement
            Premium paid in the prior year, shall be due in full on or before
            August 1 of the Contract Year. The Company will be invoiced for
            amounts due, if any, beyond the provisional Reimbursement Premium
            payment, on or before December 1 of the Contract Year. In addition,
            if a company has been placed under regulatory supervision by a State
            or control of the Company has been transferred through any legal or
            regulatory proceeding to a state regulator or court appointed
            receiver or rehabilitator (referred to in the aggregate as "State
            action"), the full annual provisional Reimbursement Premium as
            billed and any outstanding balances will be due on August 1, or the
            date that such State action occurs after August 1 and before May 31
            of the Contract Year.

      (b)   A New Participant that first begins writing Covered Policies prior
            to December 1 of the Contract Year shall pay the FHCF a provisional
            Reimbursement Premium of $1,000 upon execution of this Contract. The
            Administrator shall calculate the Company's actual Reimbursement
            Premium for the period based on its actual exposure as of December
            31 of the Contract Year, as reported on or before March 1. To
            recognize that New Participants have limited exposure during this
            period, the actual Premium as determined by processing the Company's
            exposure data shall then be divided in half, the provisional Premium
            shall be credited, and the resulting amount shall be the total



            Premium due for the Company for the remainder of the Contract Year.
            However, if that amount is less than $1,000, then the Company shall
            pay $1,000. The Premium payment is due no later than May 1 of the
            Contract Year. The Company's Retention and coverage will be
            determined based on the total Premium due as calculated above.

      (c)   A New Participant that first begins writing Covered Policies on or
            after December 1 but through and including May 31 of the Contract
            Year shall pay the FHCF a final Reimbursement Premium of $1,000 upon
            execution of this Contract.

      (d)   The requirement that the Reimbursement Premium is due on a certain
            date means that the Premium shall be in the physical possession of
            the FHCF no later than 5 p.m., Eastern Time, on the due date
            applicable to the particular installment. If remitted by check to
            the FHCF's Post Office Box, the check shall be physically in the
            Post Office Box 550261, Tampa, FL 33655-0261, as set out on the
            invoice sent to the Company. If remitted by check by hand delivery,
            the check shall be physically on the premises of the FHCF's bank in
            Tampa, Florida, as set out on the invoice sent to the Company. If
            remitted electronically, the wire transfer shall have been completed
            to the FHCF's account at its bank in Tampa, Florida, as set out on
            the invoice sent to the Company. If the applicable due date is a
            Saturday, Sunday or legal holiday, then the actual due date will be
            the day immediately following the applicable due date which is not a
            Saturday, Sunday or legal holiday. For purposes of the timeliness of
            the remittance, neither the United States Postal Service postmark
            nor a postage meter date is in any way determinative. Premium checks
            sent to the SBA in Tallahassee, Florida, or to the FHCF's
            Administrator in Minneapolis, Minnesota, will be returned to the
            sender. Reimbursement Premiums not in the physical possession of the
            FHCF by 5 p.m., Eastern Time, on the applicable due date are late.

(3)   CLAIMS AND LOSSES

      (a)   IN GENERAL

            1.    Claims and losses resulting from Loss Occurrences commencing
                  during the Contract Year shall be reported by the Company and
                  reimbursed by the FHCF as provided herein and in accordance
                  with the Statute, this Contract, and any rules adopted
                  pursuant to the Statute. For a Company participating in a
                  quota share primary insurance agreement(s) with Citizens
                  Property Insurance Corporation High Risk Account, Citizens and
                  the Company shall report only their respective portion of
                  losses under the quota share primary insurance agreement(s).
                  Pursuant to Section 215.555(4)(c), Florida Statutes, the SBA
                  is obligated to pay for losses not to exceed the Actual
                  Claims-Paying Capacity of the FHCF, up to the limit in
                  accordance with Section 215.555(4)(c)1., Florida Statutes, for
                  any one Contract Year.

      (b)   LOSS REPORTS

            1.    At the direction of the SBA, the Company shall report its
                  projected Ultimate Net Loss from each Loss Occurrence to
                  provide information to the SBA in determining any potential
                  liability for possible reimbursable losses under the Contract
                  on the



                  Interim Loss Report, Form FHCF-L1A, as adopted in Rule
                  19ER04-2 (19-8.029), F.A.C.

            2.    No later than December 31 of the Contract Year, the Company
                  shall report to the FHCF its Ultimate Net Loss, incurred and
                  paid, with respect to each Loss Occurrence during the Contract
                  Year on the Proof of Loss Report, Form FHCF-L1B, as adopted in
                  Rule 19ER04-2 (19-8.029), F.A.C.

            3.    Quarterly thereafter until all claims and losses resulting
                  from the Loss Occurrence(s) are fully discharged, the Company
                  shall render to the FHCF revised Proof of Loss Reports with
                  respect to each Loss Occurrence. If the Company's Retention
                  must be recalculated as the result of an exposure
                  resubmission, and if the recalculated Retention changes the
                  FHCF's reimbursement obligations, then the Company shall
                  submit additional Proof of Loss Reports for recalculation of
                  the FHCF's obligations.

            4.    The SBA will determine and pay, as soon as practicable after
                  receiving Proof of Loss Reports described and adopted in Rule
                  19ER04-2 (19-8.029), F.A.C. the reimbursement amount due based
                  on losses paid by the Company to date and adjustments to this
                  amount based on subsequent quarterly information. The
                  adjustments to reimbursement amounts shall require the SBA to
                  pay, or the Company to return, amounts reflecting the most
                  recent determination of losses.

            5.    Initial or quarterly reports received on or before the due
                  date for that report will be reimbursed within 30 days
                  following the due date or as soon as practicable after the
                  receipt of the report and verification of the reported losses.
                  Those received after the initial or quarterly reporting due
                  date will be reimbursed within 30 days following the due date
                  or as soon as practicable after the receipt of the report and
                  verification of the reported losses.

            6.    If a Covered Event occurs during the Contract Year, but after
                  December 31, at the direction of the SBA, Companies shall file
                  an Interim Loss Report within 30 days after the Covered Event
                  and Proof of Loss Reports quarterly thereafter. Subparagraphs
                  3-6 above regarding Proof of Loss Reports shall apply.

            7.    All loss reports received will be compared with the FHCF's
                  exposure data to establish the facial reasonableness of the
                  reports. Preliminarily, the FHCF will examine the reported
                  losses to determine whether reported losses exceed reported
                  exposure in the affected counties; whether the Company has
                  reported a low concentration of exposure in the affected
                  counties; and whether the Ultimate Net Loss as a percentage of
                  exposure in affected counties is significantly higher than the
                  average. Companies meeting these tests for reasonableness will
                  be scheduled for reimbursement. Companies not meeting these
                  tests for reasonableness will be handled on a case-by-case
                  basis and will be contacted to provide specific information
                  regarding their individual book of business.

(c)   LOSS REIMBURSEMENT CALCULATIONS



            1.    In general, the Company's paid Ultimate Net Losses must exceed
                  its FHCF Retention before any reimbursement is payable from
                  the FHCF. Each Company sustaining reimbursable losses will
                  receive the amount of reimbursement due under the Contract up
                  to the amount of the Company's payout. If more than one
                  Covered Event occurs in any one Contract Year, any
                  reimbursements due from the FHCF shall take into account the
                  Company's Retention for each Covered Event. However, the
                  Company's reimbursements from the FHCF for all Covered Events
                  occurring during the Contract Year shall not exceed, in
                  aggregate, the Projected Payout Multiple or Payout Multiple,
                  as applicable, times the individual Company's Reimbursement
                  Premium for the Contract Year.

            2.    In determining reimbursements under this Contract, the SBA
                  shall:

                  a.    First, reimburse Companies qualified as limited
                        apportionment companies under Section 627.351(2)(b)3.,
                        Florida Statutes, for the amount (if any) of
                        reimbursement due under the individual Company's
                        Contract, but not to exceed the lesser of $10 million or
                        an amount equal to 10 times the individual Company's
                        Reimbursement Premium for the Contract Year. This
                        provision does not apply if the projected Balance of the
                        Fund as of December 31 of the Contract Year, exclusive
                        of any bonding capacity of the FHCF, exceeds $2 billion.
                        Further, if the Company is a member of an NAIC group,
                        the Company may not receive reimbursement under this
                        provision if any other member of the NAIC group has
                        received reimbursement under this provision.

                  b.    Next, reimburse each of the Companies for the amount (if
                        any) of reimbursement due under the individual Company's
                        Contract, but not to exceed for all Loss Occurrences, an
                        amount equal to the Projected Payout Multiple or the
                        Payout Multiple, as applicable, times the individual
                        Company's Reimbursement Premium for the Contract Year.
                        For a limited apportionment company, any amount payable
                        under this provision shall be reduced by the amount (if
                        any) payable under (a) above.

                  c.    Thereafter, pursuant to Section 215.555(4)(d)2.c.,
                        Florida Statutes, establish the prorated reimbursement
                        level at the highest level for which any remaining fund
                        balance or bond proceeds (as limited by Section
                        215.555(4)(c), Florida Statutes) are sufficient to
                        reimburse entities created pursuant to Section
                        627.351(6), Florida Statutes, for reimbursable losses
                        exceeding the amounts payable pursuant to (b) above for
                        the Contract Year. The proration shall be determined
                        based on each entity's share of their aggregate
                        reimbursable losses exceeding the amounts payable
                        pursuant to (b) above. Any additional reimbursements
                        pursuant to this paragraph shall not include losses
                        under an entity's FHCF Retention and will be at the 90%
                        Reimbursement Percentage. In order to determine the
                        amount available for additional reimbursements, the SBA
                        will review reported loss information from all Companies
                        and determine that all Companies which received payments
                        for reimbursable losses but which



                        did not exceed their projected payout have settled all,
                        or substantially all, of their claims eligible for
                        reimbursement. The SBA will then determine the remaining
                        amount of Claims-Paying Capacity available for such
                        additional reimbursements. Such additional reimbursement
                        amounts shall not be limited due to the transitional
                        provision created for the 2004-2005 Contract Year.

      3.    Reserve established. When a Covered Event occurs in a subsequent
            Contract Year when reimbursable losses are still being paid for a
            Covered Event in a previous Contract Year, the SBA will establish a
            reserve for the outstanding reimbursable losses for the previous
            Contract Year, based on the length of time the losses have been
            outstanding, the amount of losses already paid, the percentage of
            incurred losses still unpaid, and any other factors specific to the
            loss development of the Covered Events involved.

(d)   COMMUTATION

      1.    Not less than 36 months or more than 60 months after the end of the
            Contract Year, the Company shall report to the FHCF all claims and
            losses, both reported and unreported, for the Contract Year which
            are not finally settled and which may be reimbursable losses under
            this Contract. The Company and the SBA or their respective
            representatives may, by mutual agreement, determine the capitalized
            value of all claims and losses, both reported and unreported,
            resulting from Loss Occurrences commencing during the Contract Year,
            and the Company shall provide the SBA with a copy of a written
            opinion on such capitalized value by the Company's certifying
            actuary. Payment by the SBA of its portion of any amount or amounts
            so mutually agreed and certified by the Company's certifying actuary
            shall constitute a complete and final release of the SBA in respect
            of all claims and losses, both reported and unreported, under this
            Contract.

      2.    If agreement on capitalized value cannot be reached within 60 days
            after the Company reports its claims and losses to the FHCF, the
            Company and the SBA may mutually appoint an actuary or appraiser to
            investigate, determine and capitalize such claims or losses. If both
            parties then agree, the SBA shall pay its portion of the amount so
            determined to be the capitalized value of such claims or losses.

      3.    If the parties fail to agree, then any difference shall be settled
            by a panel of three actuaries, one to be chosen by each party and
            the third by the two so chosen. If either party does not appoint an
            actuary within 30 days, the other party may appoint two actuaries.
            If the two actuaries fail to agree on the selection of a third
            actuary within 30 days of their appointment, each of them shall name
            two, of whom the other shall decline one and the decision shall be
            made by drawing lots. All the actuaries shall be regularly engaged
            in the valuation of property claims and losses and shall be members
            of the Casualty Actuarial Society and of the American Academy of
            Actuaries. None of the actuaries shall be under the control of
            either party to this Contract. Each party shall submit its case to
            its actuary within 30 days



            of the appointment of the third actuary. The decision in writing of
            any two actuaries, when filed with the parties hereto, shall be
            final and binding on both parties.

      4.    The reasonable and customary expense of the actuaries and of the
            commutation (as a result of 2. and 3. above) shall be equally
            divided between the two parties. Said commutation shall take place
            in Tallahassee, Florida, unless some other place is mutually agreed
            upon by the Company and the SBA.

(4)   ADVANCES

      (a)   The SBA may make advances for loss reimbursements as defined herein,
            at market interest rates, to the Company in accordance with Section
            215.555(4)(e), Florida Statutes. The market interest rate shall be
            the average rate earned by the SBA for the FHCF for the first five
            months of the Contract Year. All interest charged will commence on
            the date the SBA issues a check for an advance and will cease at
            midnight on the date upon which the FHCF has received the Company's
            Proof of Loss Report for the Covered Event for which the advance was
            issued qualifying the Company for reimbursement equal to or
            exceeding the amount(s) of the advance(s). If it is determined that
            the Company received funds in excess of those to which it was
            entitled, the interest as to those sums will not cease on the date
            of the receipt of the Proof of Loss Report but will continue until
            the Company reimburses the FHCF for the overpayment. The Company's
            final reimbursement shall be reduced by an amount equal to the
            amount of the advance(s) and the interest thereon. The specific type
            of advances enumerated in the Statute follow.

            1.    Advances to Companies to prevent insolvency.

                  a.    Section 215.555(4)(e)1., Florida Statutes, provides that
                        the SBA shall advance to the Company amounts necessary
                        to maintain the solvency of the Company, up to 50
                        percent of the SBA's estimate of the reimbursement due
                        to the Company. In determining insolvency for this
                        advance, a Company will be considered insolvent if it is
                        unable to pay its policyholders for justifiable claims.

                  b.    The requirements for an advance to a Company to prevent
                        insolvency are that the Company demonstrates that it is
                        likely to qualify for reimbursement, that the Company
                        demonstrates that the immediate receipt of moneys from
                        the SBA is likely to prevent the Company from becoming
                        insolvent, and that the Company provides the information
                        in (4)(b) below to aid in the SBA's determination to
                        grant an advance.

                  c.    The SBA's final decision regarding an application for an
                        advance to prevent insolvency shall be based on whether
                        or not, considering the totality of the circumstances,
                        including the SBA's obligations to provide reimbursement
                        for all Covered Events occurring during the Contract
                        Year, granting an advance is essential to allowing the
                        entity to continue to pay additional claims for a
                        Covered Event in a timely manner.



            2.    Advances to entities created pursuant to Section 627.351(6),
                  Florida Statutes.

                  a.    Section 215.555(4)(e)2., Florida Statutes, provides that
                        the SBA may advance to an entity created pursuant to
                        Section 627.351(6), Florida Statutes, up to 90% of the
                        lesser of the SBA's estimate of the reimbursement due or
                        the entity's share of the actual aggregate Reimbursement
                        Premium for that Contract Year, multiplied by the
                        current available liquid assets of the FHCF.

                  b.    The requirements for an advance to entities created
                        pursuant to Section 627.351(6), Florida Statutes are
                        that the entity must demonstrate to the SBA that the
                        advance is essential to allow the entity to pay claims
                        for a Covered Event and that the entity provides the
                        information in (4)(b) below to aid in the SBA's
                        determination to grant an advance.

                  c.    The SBA must determine that its assets are sufficient
                        and sufficiently liquid to fulfill its obligations to
                        other Companies under the Contract prior to granting an
                        advance.

            3.    Advances to limited apportionment companies.

                  a.    Section 215.555(4)(e)3., Florida Statutes, provides that
                        the SBA may advance the amount of estimated
                        reimbursement payable to limited apportionment
                        companies.

                  b.    The requirement for an advance to limited apportionment
                        companies is that they make an application to the SBA
                        and provide the SBA with a report of their exposures and
                        losses in order to determine Retention levels and loss
                        reimbursements payable.

                  c.    The SBA must determine that its assets are sufficient
                        and sufficiently liquid to fulfill its obligations to
                        other Companies under the Contract prior to granting an
                        advance.

      (b)   Companies shall request a specific amount for the advance from the
            SBA and, for those Companies or entities designated in (4)(a)1. and
            (4)(a)2. above, shall provide the SBA with the following
            information, determined in accordance with statutory accounting
            principles, which are the rules and procedures governing insurer
            financial reporting for regulatory purposes:

            1.    Current assets;

            2.    Current liabilities other than liabilities due to the Covered
                  Event;

            3.    Current liabilities due to the Covered Event, paid and unpaid,
                  submitted on the Proof of Loss Report, Form FHCF-L1B, as
                  adopted in Rule 19ER04-2 (19-8.029), F.A.C.;

            4.    Evidence of estimated Retention breached by payment of paid
                  losses from the Covered Event;

            5.    Current surplus as to policyholders;

            6.    Estimate of expected liabilities due to the Covered Event;

            7.    Estimate of other expected liabilities not due to the Covered
                  Event;



            8.    Amount of reinsurance available to pay claims for the Covered
                  Event under other reinsurance treaties;

            9.    Estimated amount of payout from the FHCF, determined in
                  accordance with Section 215.555(4)(b), Florida Statutes. This
                  estimate is necessarily predicated on the Company's Premium
                  which in turn is predicated on its exposure. Therefore, if the
                  Covered Event occurs in June, July, or August, the Company
                  will need to provide its exposure data prior to September 1 in
                  order that the appropriate calculations may be made.

      (c)   The information outlined herein shall be supplied in the form of a
            letter, signed by two executive officers of the Company, with the
            supporting information attached.

      (d)   In determining whether or not to grant an advance, the SBA shall:

            1.    Carefully review and consider all the information submitted by
                  such Companies;

            2.    Consult with all relevant regulatory agencies seeking all
                  relevant information about the Company's financial and
                  solvency condition;

            3.    Carefully review its currently available liquid assets; and

            4.    Review the damage caused by the Covered Event and when that
                  Covered Event occurred.

      (e)   Any amount advanced by the SBA shall be used by the Company only to
            pay claims of its policyholders for the Covered Event or Covered
            Events which have precipitated the immediate need to continue to pay
            additional claims as they become due. The advance is a reimbursement
            which allows the Company to continue to pay claims in a timely
            manner.

(5)   DELINQUENT PREMIUM PAYMENTS

      Failure to submit a Premium or Premium installment when due is a violation
      of the terms of this Contract and Section 215.555, Florida Statutes.
      Interest on late payments shall be due as set forth in Article IX(2) of
      this Contract.

(6)   INADEQUATE DATA SUBMISSIONS

      If exposure data or other information required to be reported by the
      Company under the terms of this Contract is not received by the FHCF in
      the format specified by the FHCF and is inadequate to the extent that the
      FHCF requires resubmission of data, the Company will be required to pay
      the FHCF a resubmission fee of $1,000. The $1,000 fee is also applicable
      to exposure resubmissions made as a result of examinations of the
      Company's exposure and claims data.

(7)   DELINQUENT SUBMISSIONS

      Failure to submit an exposure submission or resubmission when due is a
      violation of the terms of this Contract and Section 215.555, Florida
      Statutes.

ARTICLE XI - TAXES

In consideration of the terms under which this Contract is issued, the Company
agrees to make no deduction in respect of the Premium herein when making premium
tax returns to the appropriate



authorities. Should any taxes be levied on the Company in respect of the Premium
herein, the Company agrees to make no claim upon the SBA for reimbursement in
respect of such taxes.

ARTICLE XII - ERRORS AND OMISSIONS

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

ARTICLE XIII - INSPECTION OF RECORDS

The Company shall allow the SBA to inspect, examine, and verify, at reasonable
times, all records of the Company relating to the Covered Policies under this
Contract, including Company files concerning claims, losses, or legal
proceedings regarding subrogation or claims recoveries which involve this
Contract, including premium, loss records and reports involving exposure data on
Covered Policies and applicable ceded reinsurance contracts. All discovered
errors, inadvertent omissions, and typographical errors associated with the data
reporting of insured values shall be corrected to reflect the proper values.
This right shall survive the termination of this Contract. The Company shall
retain its records in accordance with the requirements for records retention
regarding exposure reports and claims reports outlined herein, and in any
administrative rules adopted pursuant to Section 215.555, Florida Statutes.
Companies writing covered collateral protection policies, as defined in
definition (10) of Article V herein, must be able to provide documentation that
the policy covers personal residences, protects both the borrower's and lender's
interest, and that the coverage is in an amount at least equal to the coverage
for the dwelling in place under the lapsed homeowner's policy.

(1)   EXAMINATION REQUIREMENTS FOR EXPOSURE VERIFICATION

      The Company shall retain complete and accurate records, in policy level
      detail, of all exposure data submitted to the SBA in any Contract Year
      until the SBA has completed its examination of the Company's exposure
      submissions. The Company shall also retain complete and accurate records
      of any completed exposure examination for any Contract Year in which the
      Company incurred losses until the completion of the loss reimbursement
      examination for that Contract Year. The records to be retained shall
      include the exam file which supports the exposure reported to the SBA and
      any other information which would allow for a complete examination of the
      Company's reported exposure data. The exam file shall be prepared
      according to the SBA Exam File Specifications outlined in the Data Call.
      The Company must also have available, at the time of the examination, a
      copy of its underwriting manual, a copy of its rating manual, and staff to
      respond to the questions of the SBA or its agents. The Company is also
      required to retain declarations pages and policy applications to support
      reported exposure. To meet the requirement that the application must be
      retained, the Company may retain either the actual application or may
      retain the actual application in an electronic format.



(2)   EXAMINATION REQUIREMENTS FOR LOSS REPORTS

      The Company shall retain complete and accurate records of all reported
      losses and/or advances submitted to the SBA until the SBA has completed
      its examination of the Company's reimbursable losses. The records to be
      retained are set forth as part of the Proof of Loss Report, Form FHCF-L1B,
      adopted in Rule 19ER04-2 (19-8.029), F.A.C. The Company must also retain
      the required exposure exam file for the Contract Year in which the loss
      occurred, and must have available any other information which would allow
      for a complete examination of the Company's losses.

(3)   EXAMINATION PROCEDURES

      (a)   The FHCF will send an examination notice to the Company providing
            the commencement date of the examination, the site of the
            examination, any accommodation requirements of the examiner, and the
            reports and data which must be assembled by the Company and
            forwarded to the FHCF upon request. The Company shall be prepared to
            choose one location in which to be examined, unless otherwise
            specified by the SBA.

      (b)   The reports and data are required to be forwarded to the FHCF as set
            forth in an examination notice letter. The information is then
            forwarded to the examiner. If the FHCF receives accurate and
            complete records as requested, the examiner will contact the Company
            to inform the Company as to what policies or other documentation
            will be required once the examiner is on site. Any records not
            required to be provided to the examiner in advance shall be made
            available at the time the examiner arrives on site.

      (c)   At the conclusion of the examiner's work and the management review
            of the examiner's report, findings, recommendations, and work
            papers, the FHCF will forward a preliminary draft of the examination
            report to the Company and require a response from the Company by a
            date certain as to the examination findings and recommendations.

      (d)   If the Company accepts the examination findings and recommendations,
            and there is no recommendation for resubmission of the Company's
            exposure data, the examination report will be finalized and the exam
            file closed.

      (e)   If the Company disputes the examiner's findings, the areas in
            dispute will be resolved by a meeting or a conference call between
            the Company and FHCF management.

      (f) 1. The recommendation of a loss reimbursement examination could
             require the Company to resubmit its loss reports or exposure data.

          2. If the recommendation of the examiner is to resubmit the Company's
             exposure data for the Contract Year in question, then the FHCF will
             send the Company a letter outlining the process for resubmission
             and including a deadline to resubmit. The resubmission will include
             a data file to be submitted to the FHCF's Administrator and an exam
             file to be submitted to the offices of the SBA. The resubmission is
             also required to be accompanied by a detailed written description
             of the specific changes made to the resubmitted data. Once the
             resubmission is received by the FHCF's



                  Administrator, the FHCF's Administrator calculates a revised
                  Reimbursement Premium for the Contract Year which has been
                  examined. The SBA shall then review the resubmission with
                  respect to the examiner's findings, and accept the
                  resubmission or contact the Company with any questions
                  regarding the resubmission. Once the SBA has accepted the
                  resubmission as a sufficient response to the examiner's
                  findings, the FHCF's Administrator will send the Company an
                  invoice for any Reimbursement Premium and interest due or to
                  refund Reimbursement Premium, as the case may be. Once the
                  resubmission has been approved, the exam file is closed.

            3.    If the recommendation of the examiner is either to resubmit
                  the Company's exposure data for the Contract Year in question
                  or giving the option to pay the estimated Premium difference,
                  then the FHCF will send the Company a letter outlining the
                  process for resubmission or for paying the estimated Premium
                  difference and including a deadline for the resubmission or
                  the payment to be received by the FHCF's Administrator. If the
                  Company chooses to resubmit, the same procedures outlined in
                  Article XIII(3)(f)2. apply.

            (g)   If the Company continues to dispute the examiner's findings
                  and/or recommendations and no resolution of the disputed
                  matters is obtained through discussions between the Company
                  and FHCF management, then the process within the SBA is at an
                  end and further administrative remedies may be obtained under
                  Chapter 120, Florida Statutes.

            (h)   The examiner's list of errors is made available in the
                  examination report sent to the Company. Given that the
                  examination was based on a sample of the Company's policies
                  rather than the whole universe of the Company's Covered Policy
                  exposure, the error list is not intended to provide a complete
                  list of errors but is intended to indicate what Covered Policy
                  information needs to be reviewed and corrected throughout the
                  Company's book of Covered Policy business to ensure more
                  complete and accurate reporting in the resubmission if
                  required and for any future submissions.

(4)   COSTS OF THE EXAMINATIONS

      The costs of the examinations shall be borne by the SBA. However, in order
      to remove any incentive for a Company to delay preparations for an
      examination, the SBA shall be reimbursed by the Company for any
      examination expenses incurred in addition to the usual and customary
      costs, which additional expenses were incurred as a result of the
      Company's failure, despite proper notice, to be prepared for the
      examination or as a result of a Company's failure to provide requested
      information. All requested information must be complete and accurate. The
      Company shall be notified of any administrative remedies which may be
      obtained under Chapter 120, Florida Statutes.

ARTICLE XIV - INSOLVENCY OF THE COMPANY

Participating insurers must notify the FHCF immediately upon becoming insolvent.
Pursuant to Section 215.555(4)(g), Florida Statutes, the FHCF is required to pay
the "net amount of all



reimbursement moneys" due an insolvent insurer to the Florida Insurance Guaranty
Association for the benefit of Florida policyholders.

ARTICLE XV - TERMINATION

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

ARTICLE XVI - VIOLATIONS

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

ARTICLE XVII - APPLICABLE LAW

(1)   APPLICABLE LAW: This Contract shall be governed by and construed according
      to the laws of the State of Florida in respect of any matter relating to
      or arising out of this Contract.

(2)   NOTICE OF RIGHTS: Pursuant to Chapter 120, Florida Statutes, and the
      Uniform Rules of Procedure, codified as Chapters 28-101 through 28-111,
      F.A.C., a person whose substantial interests are affected by a decision of
      the SBA regarding the FHCF may request a hearing within 21 days shall have
      waived his or her right to a hearing. The hearing may be a formal hearing
      or an informal hearing pursuant to the provisions of Sections 120.569 and
      120.57, Florida Statutes. The petition must be filed (received) in the
      office of the Agency Clerk, General Counsel's Office, State Board of
      Administration of Florida, P.O. Box 13300, Tallahassee, FL 32317-3300,
      within the 21 day period.

ARTICLE XVIII - REIMBURSEMENT CONTRACT ELECTIONS

REIMBURSEMENT PERCENTAGE

For purposes of determining reimbursement (if any) due the Company under this
Contract and in accordance with the Statute, the Company has the option to elect
a 45% or 75% or 90% reimbursement percentage under this Contract. If the Company
is a member of an NAIC group, all members must elect the same reimbursement
percentage, and the individual executing this Contract on behalf of the Company,
by placing his or her initials in the box under (a) below, affirms that the
Company has elected the same reimbursement percentage as all members of its NAIC
group. If the Company is an entity created pursuant to Section 627.351, Florida
Statutes,



the Company must elect the 90% reimbursement percentage. The Company shall not
be permitted to change its reimbursement percentage during the Contract Year.
The Company shall be permitted to change its reimbursement percentage at the
beginning of a new Contract Year, but may not reduce its reimbursement
percentage if a Covered Event required the issuance of revenue bonds, until the
bonds have been fully repaid.

The Reimbursement Percentage elected by the Company for the prior Contract Year
effective June 1, 2003 was as follows: Philadelphia Indemnity Insurance Company
- - 90%

(a) NAIC GROUP AFFIRMATION: Initial the following box if the Company is part of
an NAIC Group:

                                      [TBM]

(b)   REIMBURSEMENT PERCENTAGE ELECTION: The Company hereby elects the following
      Reimbursement Percentage for the Contract Year from 12:01 a.m., Eastern
      Time, June 1, 2004, to 12:01 a.m., Eastern Time, June 1, 2005, (the
      individual executing this Contract on behalf of the Company shall place
      his or her initials in the box to the left of the percentage elected for
      the Company):

      [ ] 45%               OR        [ ] 75%           OR      [(TBM)] 90%

REPORTING EXPOSURE FOR A SINGLE STRUCTURE, WITH A MIX OF COMMERCIAL HABITATIONAL
AND COMMERCIAL NON-HABITATIONAL EXPOSURE, WRITTEN ON A COMMERCIAL POLICY

This section is applicable to all Companies with exposure for single structures
with a mix of commercial habitational and commercial non-habitational exposure
written under a Commercial Policy. If the Company does not write this type of
exposure and this section DOES NOT apply, please initial the N/A box below which
completes this ARTICLE. If the Company DOES write this type of exposure, please
read and complete the remainder of this ARTICLE.

                                      [TBM]
                                       N/A

COMMERCIAL-RESIDENTIAL CLASS CODE

If a single structure is used for both habitational and non-habitational
purposes and the structure has a commercial-residential class code (based on a
classification plan on file with and reviewed



by the Administrator), the entire exposure for the structure should be reported
to the FHCF under the Data Call, and the FHCF will reimburse losses for the
entire structure as well.

COMMERCIAL  NON-RESIDENTIAL/BUSINESS CLASS CODE

If a single structure is used for both habitational and non-habitational
purposes and the structure has a commercial non-residential or business class
code (based on a classification plan on file with and reviewed by the
Administrator), the habitational portion of that structure should be identified
and reported to the FHCF under the Data Call.

However, in recognition of the unusual nature of commercial structures with
incidental habitational exposure and the hardship some companies may face in
having to carve out such incidental habitational exposure, as well as the losses
to such structures, the FHCF will accommodate these companies by allowing them
to exclude the entire exposure for the single structure from their Data Call
submission, providing the following two conditions are met:

(1)   The decision to not carve out and report the incidental habitational
      exposure shall apply to all such structures insured by the Company; and

(2)   If the incidental habitational exposure is not reported to the FHCF, the
      Company agrees it shall not report losses to the structure and the FHCF
      shall not reimburse any losses to the structure.

Initial the CARVING box below if the Company is able to carve out and report its
incidental habitational exposure, OR, if this requirement presents a hardship,
the Company must communicate its decision to not carve out and to not report the
incidental exposure by having the individual executing this Contract on behalf
of the Company placing his or her initials in the NOT CARVING bow below.

                           [ ]        OR       [ ]
                         CARVING           NOT CARVING

By initialing the CARVING OR NOT CARVING box above, the Company is making an
irrevocable decision for the corresponding Contract Year Data Call submission
and any subsequent submissions.

IMPORTANT NOTE: SINCE THIS ELECTION WILL IMPACT YOUR DATA CALL SUBMISSION,
PLEASE SHARE THIS DECISION WITH THE INDIVIDUAL(S) RESPONSIBLE FOR COMPILING YOUR
DATA CALL S

ARTICLE XIX - SIGNATURES

APPROVED BY:



Florida Hurricane Catastrophe Fund
By: State Board of Administration of the State of Florida

By: Linda Letta, General Counsel for                                  7/12/2004
    Coleman Stipanovich                                                  Date
    Executive Director

Approved as to legality:

By: Thomas A. Bink, General Counsel                                   7/12/2004
    Linda Lettera                                                       Date
    General Counsel
    FL Bar ID#311911

Liberty American Insurance Company

             COMPANY

By: T. Bruce Meyer, Treasurer                                         5/17/2004
                   Name/Title                                         Date

EX-10.7

                                                                    EXHIBIT 10.7

                         AMENDED REIMBURSEMENT CONTRACT

           (This Reimbursement Contract Supercedes All Prior Versions
                    with an Effective Date of June 1, 2004)
                             EFFECTIVE: JUNE 1, 2004
                                   (CONTRACT)

                                     between

                              MOBILE USA INSURANCE
                                PINELLAS PARK, FL
                                    (Company)

                                  NAIC # 32760

                                       and

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

PREAMBLE

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

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

ARTICLE I - SCOPE OF AGREEMENT

As a condition precedent to the SBA's obligations under this Contract, the
Company, an Authorized Insurer or an entity writing Covered Policies under
Section 627.351, Florida Statutes, in the State of Florida, shall report to the
SBA in a specified format the business it writes which is described in this
Contract as Covered Policies.

The terms of this Contract shall determine the rights and obligations of the
parties. This Contract provides reimbursement to the Company under certain
circumstances, as described herein, and does not provide or extend insurance or
reinsurance coverage to any person, firm, corporation or other entity. The SBA
shall reimburse the Company for its Ultimate Net Loss on Covered Policies in
excess of the Company's Retention as a result of each Loss Occurrence commencing
during the Contract Year, to the extent funds are available, all as hereinafter
defined.

ARTICLE II - PARTIES TO THE CONTRACT

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

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                                      2004K



ARTICLE III - TERM

This Contract shall apply to Loss Occurrences which commence during the period
from 12:01 a.m., Eastern Time, June 1, 2004, to 12:01 a.m., Eastern Time, June
1, 2005 (Contract Year).

The Company must designate a coverage level and, make the required selections on
pages 19 and 20 within this Contract. Note: Due to 2004 legislation, which has
just become law, a Company has a transitional option which can be selected by
executing Schedule 1, which is provided with and is a part of this Contract. The
Company shall return this fully executed Contract (two originals) to the FHCF
Administrator so that the Contract is received by the FHCF Administrator no
later than 5 p.m., Central Time, June 1, 2004. Failure to do so will result in a
referral to the Office of Insurance Regulation within the Department of
Financial Services for administrative action. Furthermore, the Company's
coverage level under this Contract will be deemed as follows:

(1)   For Companies that are a member of a National Association of Insurance
      Commissioners (NAIC) group, the same coverage level selected by the other
      Companies of the same NAIC group shall be deemed. If executed Contracts
      for none of the members of an NAIC group have been received by the FHCF
      Administrator, the coverage level from the prior Contract Year shall be
      deemed.

(2)   For Companies that are not a member of an NAIC group under which other
      Companies are active participants in the FHCF, the coverage level from the
      prior Contract Year shall be deemed.

(3)   For New Participants that are a member of an NAIC group, the same coverage
      level selected by the other Companies of the same NAIC group shall be
      deemed.

(4)   For New Participants, as that term is defined in Article V(21) herein,
      that are not a member of an NAIC group under which other Companies are
      active participants in the FHCF, the 45% coverage level shall be deemed.

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

ARTICLE IV - LIABILITY OF THE FHCF

(1)   The SBA shall reimburse the Company, with respect to each Loss Occurrence
      commencing during the Contract Year for the "Reimbursement Percentage"
      elected, this percentage times the amount of Ultimate Net Loss paid by the
      Company in excess of the Company's Retention, plus 5% of the reimbursed
      losses for Loss Adjustment Expense Reimbursement.

(2)   The Reimbursement Percentage will be 45% or 75% or 90%, at the Company's
      option as elected under ARTICLE XVIII herein.

(3)   The aggregate liability of the FHCF with respect to all Reimbursement
      Contracts covering this contract year shall not exceed the limit set forth
      under Section 215.555(4)(c)1., Florida Statutes. For specifics regarding
      loss reimbursement calculations, see section (3)(c) of ARTICLE X herein.

(4)   Reimbursement amounts shall not be reduced by reinsurance paid or payable
      to the Company from other sources.

                                       18                                 FHCF-
                                      2004K



(5)   After the end of each calendar year, the SBA shall notify insurers of the
      estimated Borrowing Capacity and the Balance of the Fund as of December
      31. In May and October of each year, the SBA shall publish in the Florida
      Administrative Weekly a statement of the FHCF's estimated Borrowing
      Capacity and the projected Balance of the Fund as of December 31.

(6)   The obligation of the SBA with respect to all Contracts covering a
      particular Contract Year shall not exceed the Balance of the Fund as of
      December 31 of that Contract Year, together with the maximum amount the
      SBA is able to raise through the issuance of revenue bonds or other means
      available to the SBA under Section 215.555, Florida Statutes, up to the
      limit in accordance with Section 215.555(4)(c)1., Florida Statutes. The
      obligations and the liability of the SBA are more fully described in Rule
      19-8.013, Florida Administrative Code (F.A.C.). If Reimbursement Premiums
      are used for debt service in the event of a temporary shortfall in the
      collection of emergency assessments, then the amount of the Premiums so
      used will be reimbursed to the SBA when sufficient emergency assessments
      are received.

ARTICLE V - DEFINITIONS

(1)   ACTUAL CLAIMS-PAYING CAPACITY OF THE FHCF

      This term means the sum of the Balance of the Fund as of December 31 of a
      Contract Year, plus any reinsurance purchased by the FHCF, plus the amount
      the SBA is able to raise through the issuance of revenue bonds up to the
      limit in accordance with Section 215.555(4)(c)1. and (6), Florida
      Statutes.

(2)   ACTUARIALLY INDICATED

      This term means, with respect to Premiums paid by Companies for
      reimbursement provided by the FHCF, an amount determined in accordance
      with the definition provided in Section 215.555(2)(a), Florida Statutes.

(3)   ADDITIONAL LIVING EXPENSE (ALE)

      ALE losses covered by the FHCF are not to exceed 40 percent of the insured
      value of a Residential Structure or its contents based on the coverage
      provided in the policy. Fair rental value, loss of use, loss of rents, or
      business interruption losses are not covered by the FHCF.

(4)   ADMINISTRATOR
      This term means the entity with which the SBA contracts to perform
      administrative tasks associated with the operations of the FHCF. The
      present Administrator is Paragon Strategic Solutions Inc., 3600 American
      Boulevard West, Minneapolis, Minnesota 55431. The telephone number is
      (800) 689-3863, and the facsimile number is (800) 264-0492.

(5)   AUTHORIZED INSURER

      This term is defined in Section 624.09(1), Florida Statutes.

(6)   BORROWING CAPACITY

      This term means the amount of funds which are able to be raised by the
      issuance of revenue bonds or through other financing mechanisms, less bond
      issuance expenses and reserves.

(7)   CITIZENS PROPERTY INSURANCE CORPORATION (CITIZENS)

      This term means an entity formed under Section 627.351(6), Florida
      Statutes and refers to both Citizens Property Insurance Corporation High
      Risk Account and Citizens Property Insurance Corporation Personal Lines
      and Commercial Lines Accounts.

(8)   CONTRACT

      This term means this Reimbursement Contract for the current Contract Year.

(9)   COVERED EVENT

      This term means any one storm declared to be a hurricane by the National
      Hurricane Center, which causes insured losses in Florida, both while it is
      still a hurricane and throughout any

                                       18                                  FHCF-
                                      2004K



      subsequent downgrades in storm status by the National Hurricane Center.
      Any storm, including a tropical storm, which does not become a hurricane
      is not a Covered Event.

(10)  COVERED POLICY OR COVERED POLICIES

      (a)   Covered Policy, as defined in Section 215.555(2)(c), Florida
            Statutes, is further clarified to mean only that portion of a
            binder, policy or contract of insurance (Policy Contract) that
            insures real or personal property located in the State of Florida to
            the extent such Policy Contract insures a Residential Structure, as
            defined in definition (26) herein, or the contents of a Residential
            Structure, located in the State of Florida, or ALE coverage as
            defined in definition (3) herein.

      (b)   Due to the specialized nature of the definition of Covered Policies,
            Covered Policies are not limited to only one line of business in the
            Company's annual statement required to be filed by Section 624.424,
            Florida Statutes. Instead, Covered Policies are found in several
            lines of business on the Company's annual statement. Covered
            Policies will at a minimum be reported in the Company's statutory
            annual statement as:

                -  Fire
                -  Allied Lines
                -  Farmowners Multiple Peril
                -  Homeowners Multiple Peril
                -  Commercial Multiple Peril (non liability portion,
                   covering condominiums and apartments)
                -  Inland Marine

            Note that where particular insurance exposures are reported on an
            annual statement is not dispositive of whether or not the exposure
            is a Covered Policy.

      (c)   This definition applies only to the first-party property section of
            Policy Contracts pertaining strictly to the structure, its contents,
            appurtenant structures, or ALE coverage.

      (d)   Covered Policy also includes any collateral protection insurance
            policy covering personal residences which protects both the
            borrower's and the lender's financial interest, in an amount at
            least equal to the coverage for the dwelling in place under the
            lapsed homeowner's policy, if such policy can be accurately reported
            as required in Section 215.555(5), Florida Statutes. A Company will
            be deemed to be able to accurately report data if the required data,
            as specified in the Premium Formula adopted in Section 215.555(5),
            Florida Statutes, is available.

      (e)   See Article VI of this Contract for specific exclusions.

(11)  ESTIMATED CLAIMS-PAYING CAPACITY OF THE FHCF

      This term means the sum of the projected Balance of the Fund as of
      December 31 of a Contract Year, plus any reinsurance purchased by the
      FHCF, plus the most recent estimate of the Borrowing Capacity of the FHCF,
      determined pursuant to Section 215.555(4)(c), Florida Statutes.

(12)  EXCESS POLICIES

      This term, for the purposes of the FHCF, means a policy that provides
      insurance protection for large commercial property risks that provides a
      layer of coverage above a primary layer (which is insured by a different
      insurer) that acts much the same as a very large deductible.

(13)  FLORIDA DEPARTMENT OF FINANCIAL SERVICES (DEPARTMENT )

      This term means that Florida regulatory agency charged with regulating the
      Florida insurance market and administering the Florida Insurance Code.

(14)   FLORIDA INSURANCE CODE

      This term means those chapters in Section 624.01, Florida Statutes, which
      are designated as the Florida Insurance Code.

(15)  FORMULA OR THE PREMIUM FORMULA

                                       18                                  FHCF-
                                      2004K



      This term means the Formula approved by the SBA for the purpose of
      determining the Actuarially Indicated Premium to be paid to the FHCF. The
      Premium Formula is defined as an approach or methodology which leads to
      the creation of premium rates. The resulting rates are therefore
      incorporated as part of the Premium Formula.

(16)  FUND BALANCE OR BALANCE OF THE FUND AS OF DECEMBER 31

      These terms mean the "Net assets: Unrestricted" as indicated on the
      unconsolidated FHCF Statement of Net Assets for the then current Contract
      Year, to which is added: reported FHCF losses (including Loss Adjustment
      Expense) for the then current Contract Year, whether paid or unpaid by
      FHCF, as of December 31, and from which is subtracted: any reinsurance
      recovered prior to, or recoverable as of, December 31; any obligations
      paid or expected to be paid with bonding proceeds or receipts from
      emergency assessments; amounts needed for administration for the then
      current State of Florida fiscal year which have not been spent and which
      are not reflected on the FHCF Statement of Net Assets; and the amount of
      undispersed mitigation funds appropriated for the then current State of
      Florida fiscal year.

(17)  INSURER GROUP

      For purposes of the coverage option election in Section 215.555(4)(b),
      Florida Statutes, Insurer Group means the group designation assigned by
      the National Association of Insurance Commissioners (NAIC) for purposes of
      filing consolidated financial statements. A Company is a member of a group
      as designated by the NAIC until such Company is assigned another group
      designation or is no longer a member of a group recognized by the NAIC.

(18)  LOSS OCCURRENCE

      This term means the sum of individual insured losses incurred under
      Covered Policies resulting from the same Covered Event. "Losses" means
      direct incurred losses under Covered Policies and excludes Loss Adjustment
      Expenses.

(19)  LOSS ADJUSTMENT EXPENSE REIMBURSEMENT

      (a)   Loss Adjustment Expense Reimbursement shall be 5% of the reimbursed
            losses under this Contract as provided in Article IV, pursuant to
            Section 215.555(4)(b)1., Florida Statutes.

      (b)   To the extent that loss reimbursements are limited to the Payout
            Multiple applied to each Company, the 5% Loss Adjustment Expense is
            included in the total Payout Multiple applied to each Company.

(20)  NEW PARTICIPANT(s)

      This term means all Companies which are granted a certificate of authority
      by the Department after the beginning of the FHCF's Contract Year on June
      1 and begin writing Covered Policies on or after the beginning of the
      Contract Year, or which already have a certificate of authority and begin
      writing Covered Policies on or after the beginning of the Contract Year. A
      Company that removes exposure from either Citizens entity, as that term is
      defined in (7) above, pursuant to an assumption agreement effective after
      June 1 and had written no other Covered Policies on or before June 1 is
      also considered a New Participant.

(21)  OFFICE OF INSURANCE REGULATION

      This term means that office within the Department of Financial Services
      and which was created in Section 20.121(3), Florida Statutes.

(22)  PAYOUT MULTIPLE

      This term means the multiple as calculated in accordance with Section
      215.555(4)(c), Florida Statutes, unless the transitional option provided
      under Schedule 1 of this contract is chosen by June 1, 2004, which is
      derived by dividing the Claims-Paying Capacity of the FHCF by the total
      industry Reimbursement Premium for the FHCF for the Contract Year billed
      as of December 31 of the Contract Year. The multiple is finally determined

                                       18                                  FHCF-
                                      2004K



      once Reimbursement Premiums have been billed as of December 31 and the
      amount of bond proceeds has been determined.

(23)  PREMIUM

      This term means the same as Reimbursement Premium.

(24)  PROJECTED PAYOUT MULTIPLE

      The Projected Payout Multiple is used to calculate a Company's projected
      payout pursuant to Section 215.555(4)(d)2.b., Florida Statutes, unless the
      transitional option provided under Schedule 1 of this contract is chosen
      by June 1, 2004. The Projected Payout Multiple is derived by dividing the
      estimated single season Claims-Paying Capacity of the FHCF by the
      estimated total industry Reimbursement Premium for the FHCF for the
      Contract Year. The Company's Reimbursement Premium as paid to the SBA for
      the Contract Year is multiplied by the Projected Payout Multiple to
      estimate the Company's coverage from the FHCF for the Contract Year.

(25)  REIMBURSEMENT PREMIUM

      This term means the Premium determined by multiplying each $1,000 of
      insured value reported by the Company in accordance with Section
      215.555(5)(b), Florida Statutes, by the rate as derived from the Premium
      Formula, as described in Rule 19-8.028, F.A.C.

(26)  RESIDENTIAL STRUCTURES

      This term means dwelling units used as a home or residence for other than
      transient occupancy, as that term is defined in Section 83.43(10), Florida
      Statutes. These include the primary structure and appurtenant structures
      insured under the same policy and any other structures covered under
      endorsements associated with a policy covering a residential structure,
      the principal function of which at the time of loss was as a primary or
      secondary residence. COVERED RESIDENTIAL STRUCTURES DO NOT INCLUDE any
      structures listed under Article VI herein.

(27)  RETENTION

      The Company's Retention means the amount of hurricane losses incurred by
      the Company below which the Company is not entitled to reimbursement from
      the FHCF. The Company is eligible for reimbursement only after its paid
      covered losses exceed its Retention. The Company's Retention is
      established in accordance with the provisions of Section 215.555(2)(e),
      Florida Statutes, unless the transitional option provided under Schedule 1
      of this contract is chosen by June 1, 2004. The Company's Retention shall
      be determined by multiplying the Retention Multiple by the Company's
      Reimbursement Premium for the Contract Year.

(28)  RETENTION MULTIPLE

      (a)   The Retention Multiple is applied to the Company's Reimbursement
            Premium to determine the Company's Retention. The Retention Multiple
            for the 2004-2005 Contract Year shall be equal to $4.5 billion,
            divided by the estimated total industry Reimbursement Premium at the
            90% reimbursement percentage level for the Contract Year as
            determined by the SBA unless the transitional option provided under
            Schedule 1 of this contract is chosen by June 1, 2004.

      (b)   The Retention Multiple as determined under (28)(a) above shall be
            adjusted to reflect the reimbursement percentage elected by the
            Company under this Contract as follows:

            1.    If the Company elects a 90% reimbursement percentage, the
                  adjusted Retention Multiple is 100% of the amount determined
                  under (28)(a) above;
            2.    If the Company elects a 75% reimbursement percentage, the
                  adjusted Retention Multiple is 120% of the amount determined
                  under (28)(a) above; or
            3.    If the Company elects a 45% reimbursement percentage, the
                  adjusted Retention Multiple is 200% of the amount determined
                  under (28)(a) above.

(29)  ULTIMATE NET LOSS

                                       18                                  FHCF-
                                      2004K



      (a)   This term means all losses of the Company under Covered Policies,
            prior to the application of the Company's FHCF Retention and
            reimbursement percentage, and excluding loss adjustment expense,
            arising from each Loss Occurrence during the Contract Year,
            provided, however, that the Company's loss shall be determined in
            accordance with the deductible levels reported to the FHCF for the
            exposure sustaining the loss.

      (b)   Salvages and all other recoveries, excluding reinsurance recoveries,
            shall be first deducted from such loss to arrive at the amount of
            liability attaching hereunder.

      (c)   All salvages, recoveries or payments recovered or received
            subsequent to a loss settlement under this Contract shall be applied
            as if recovered or received prior to the aforesaid settlement and
            all necessary adjustments shall be made by the parties hereto.

      (d)   Nothing in this clause shall be construed to mean that losses under
            this Contract are not recoverable until the Company's Ultimate Net
            Loss has been ascertained.

      (e)   The SBA shall be subrogated to the rights of the Company to the
            extent of its reimbursement of the Company. The Company agrees to
            assist and cooperate with the SBA in all respects as regards such
            subrogation. The Company further agrees to undertake such actions as
            may be necessary to enforce its rights of salvage and subrogation,
            and its rights, if any, against other insurers as respects any
            claim, loss, or payment arising out of a Covered Event.

ARTICLE VI - EXCLUSIONS

This Contract does not provide reimbursement for:

(1)   Any losses not defined as being within the scope of a Covered Policy.

(2)   Any policy which excludes wind or hurricane coverage.

(3)   Any Excess Policy or deductible buy-back policy that requires individual
      ratemaking.

(4)   Any liability of the Company attributable to losses for fair rental value,
      loss of use, loss of rents, or business interruption.

(5)   Any collateral protection policy that does not meet the definition of
      Covered Policy as defined in Article V(10) herein.

(6)   Any reinsurance assumed by the Company.

(7)   Any exposure for: hotels, motels, timeshares, or other similar structures
      that are rented out daily, weekly, or monthly; homeowner associations, if
      no habitational structures are insured under the policy; shelters, camps
      or retreats; vacant properties insured under a commercial policy; and
      boats insured under a separate policy or endorsement.

(8)   Commercial healthcare facilities and nursing homes, unless the facility is
      part of a structure primarily consisting of other residences.

(9)   Any exposure under commercial policies covering only appurtenant
      structures or structures that do not function as a habitational structure
      (e.g. a policy covering only the pool of an apartment complex).

(10)  Personal contents in a commercial storage facility covered under a policy
      that covers only those personal contents.

(11)  Policies covering only Additional Living Expense.

(12)  Any liability of the Company for extra contractual obligations and excess
      of original policy limits liabilities.

(13)  Losses in excess of the sum of the Balance of the Fund as of December 31
      of the Contract Year and the amount the SBA is able to raise through the
      issuance of revenue bonds or by the use of other financing mechanisms, up
      to the limit pursuant to Section 215.555(4)(c), Florida Statutes.

(14)  Any liability assumed by the Company from Pools, Associations, and
      Syndicates. Exception: Covered Policies assumed from Citizens under the
      terms and conditions of an

                                       18                                  FHCF-
                                      2004K



      executed assumption agreement between the Authorized Insurer and Citizens
      are covered by this Contract.

(15)  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, howsoever 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.

(16)  Any liability of the Company for loss or damage caused by or resulting
      from nuclear reaction, nuclear radiation, or radioactive contamination
      from any cause, whether direct or indirect, proximate or remote, and
      regardless of any other cause or event contributing concurrently or in any
      other sequence to the loss.

(17)  The FHCF does not provide coverage for water damage which is generally
      excluded under property insurance contracts and has been defined to mean
      flood, surface water, waves, tidal water, overflow of a body of water, or
      spray from any of these, whether or not driven by wind.

ARTICLE VII - MANAGEMENT OF CLAIMS AND LOSSES

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

ARTICLE VIII - LOSS REIMBURSEMENT ADJUSTMENTS

(1)   OFFSETS

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

(2)   REIMBURSEMENT ADJUSTMENTS

      Section 215.555(4)(d) and (e), Florida Statutes, provides the SBA with the
      right to seek the return of excess loss reimbursements or advances which
      have been paid to the Company along with interest thereon. Excess loss
      reimbursements or advances are those payments or advances made to the
      Company by the SBA on the basis of incorrect exposure submissions or
      resubmissions, incorrect calculations of Reimbursement Premiums or
      Retentions, payments in excess of the projected payout, incorrect Proof of
      Loss Reports, incorrect calculation of reinsurance recoveries, or
      subsequent readjustment of policyholder claims, including subrogation and
      salvage, or any combination of the foregoing. The Company will be sent an
      invoice showing the due date for adjustments along with the interest due
      thereon through the due date. The applicable interest rate for interest
      credits, and for interest charges for adjustments beyond the Company's
      control, will be the average rate earned by the SBA for the FHCF for the
      first five months of the Contract Year. The applicable interest rate for
      interest charges due to adjustments resulting from incorrect exposure
      submissions or Proof of Loss Reports will accrue at this rate plus 3%.
      Interest will continue to accrue if not paid by the due date.

ARTICLE IX - REIMBURSEMENT PREMIUM

                                       18                                  FHCF-
                                      2004K



(1)   The Company shall, in a timely manner, pay the SBA its Reimbursement
      Premium for the Contract Year. The Reimbursement Premium for the Contract
      Year shall be calculated in accordance with Section 215.555, Florida
      Statutes, with any rules promulgated thereunder, and with Article X(2).

(2)   Since the calculation of the Actuarially Indicated Premium assumes that
      the Companies will pay their Reimbursement Premiums timely, interest
      charges will accrue under the following circumstances. A Company may
      choose to estimate its own Premium installments. However, if the Company's
      estimation is less than the provisional Premium billed, an interest charge
      will accrue on the difference between the estimated Premium and the final
      Premium. If a Company estimates its first installment, the Administrator
      shall bill that estimated Premium as the second installment as well, which
      will be considered as an estimate by the Company. No interest will accrue
      regarding any provisional Premium if paid as billed by the FHCF's
      Administrator, except in the case of an estimated second installment as
      set forth in this Article. Also, if a Company makes an estimation that is
      higher than the provisional Premium billed but is less than the final
      Premium, interest will not accrue. If the Premium payment is not received
      from a Company when it is due, an interest charge will accrue on a daily
      basis until the payment is received. Interest will also accrue on Premiums
      resulting from submissions or resubmissions finalized after December 1 of
      the Contract Year. An interest credit will be applied for any Premium
      which is overpaid as either an estimate or as a provisional Premium.
      Interest shall not be credited past December 1 of the Contract Year. The
      applicable interest rate for interest credits will be the average rate
      earned by the SBA for the FHCF for the first five months of the Contract
      Year. The applicable interest rate for interest charges will accrue at
      this rate plus 3%.

ARTICLE X - REPORTS AND REMITTANCES

(1)   EXPOSURES

      (a)   If the Company writes Covered Policies on or before June 1 of the
            Contract Year, the Company shall report to the SBA, unless otherwise
            provided in Rule 19ER04-2 (19-8.029), F.A.C., no later than the
            statutorily required date of September 1 of the Contract Year, by
            ZIP Code or other limited geographical area as specified by the SBA,
            its insured values under Covered Policies as of June 30 of the
            Contract Year as outlined in the Data Call adopted for the Contract
            Year under Rule 19ER04-2 (19-8.029), F.A.C., and other data or
            information in the format specified by the SBA.

      (b)   If the Company first begins writing Covered Policies after June 1
            but prior to December 1 of the Contract Year, the Company shall
            report to the SBA, no later than March 1 of the Contract Year, by
            ZIP Code or other limited geographical area as specified by the SBA,
            its insured values under Covered Policies as of December 31 of the
            Contract Year as outlined in the Supplemental Instructions for New
            Participants section of the Data Call adopted for the Contract Year
            under Rule 19ER04-2 (19-8.029), F.A.C., and other data or
            information in the format specified by the SBA.

      (c)   If the Company first begins writing Covered Policies on or after
            December 1 but through and including May 31 of the Contract Year,
            the Company shall not report its exposure data for the Contract Year
            to the SBA.

      (d)   The requirement that a report is due on a certain date means that
            the report shall be in the physical possession of the FHCF's
            Administrator in Minneapolis no later than 5 p.m. on the due date.
            If the applicable due date is a Saturday, Sunday or legal holiday,
            then the actual due date will be the day immediately following the
            applicable due date which is not a Saturday, Sunday or legal
            holiday. For purposes of the timeliness of the submission, neither
            the United States Postal Service postmark nor a postage meter date
            is in any way determinative. Reports sent to the SBA in

                                       18                                  FHCF-
                                      2004K



            Tallahassee, Florida, will be returned to the sender. Reports not in
            the physical possession of the FHCF's Administrator by 5 p.m.,
            Central Time, on the applicable due date are late.

      (e)   Pursuant to the provisions of Section 215.557, Florida Statutes, the
            reports of insured values under Covered Policies by ZIP Code
            submitted to the SBA pursuant to Section 215.555, Florida Statutes,
            are confidential and exempt from the provisions of Section
            119.07(1), Florida Statutes, and Section 24(a), Art. I of the State
            Constitution.

      (2)   REIMBURSEMENT PREMIUM

      (a)   If the Company writes Covered Policies on or before June 1 of the
            Contract Year, the Company shall pay the FHCF its Reimbursement
            Premium in installments due on or before August 1, October 1, and
            December 1 of the Contract Year in amounts to be determined by the
            FHCF. However, if the Company's Reimbursement Premium for the prior
            Contract Year was less than $5,000, the Company's full provisional
            Reimbursement Premium, in an amount equal to the Reimbursement
            Premium paid in the prior year, shall be due in full on or before
            August 1 of the Contract Year. The Company will be invoiced for
            amounts due, if any, beyond the provisional Reimbursement Premium
            payment, on or before December 1 of the Contract Year. In addition,
            if a company has been placed under regulatory supervision by a State
            or control of the Company has been transferred through any legal or
            regulatory proceeding to a state regulator or court appointed
            receiver or rehabilitator (referred to in the aggregate as "State
            action"), the full annual provisional Reimbursement Premium as
            billed and any outstanding balances will be due on August 1, or the
            date that such State action occurs after August 1 and before May 31
            of the Contract Year.

      (b)   A New Participant that first begins writing Covered Policies prior
            to December 1 of the Contract Year shall pay the FHCF a provisional
            Reimbursement Premium of $1,000 upon execution of this Contract. The
            Administrator shall calculate the Company's actual Reimbursement
            Premium for the period based on its actual exposure as of December
            31 of the Contract Year, as reported on or before March 1. To
            recognize that New Participants have limited exposure during this
            period, the actual Premium as determined by processing the Company's
            exposure data shall then be divided in half, the provisional Premium
            shall be credited, and the resulting amount shall be the total
            Premium due for the Company for the remainder of the Contract Year.
            However, if that amount is less than $1,000, then the Company shall
            pay $1,000. The Premium payment is due no later than May 1 of the
            Contract Year. The Company's Retention and coverage will be
            determined based on the total Premium due as calculated above.

      (c)   A New Participant that first begins writing Covered Policies on or
            after December 1 but through and including May 31 of the Contract
            Year shall pay the FHCF a final Reimbursement Premium of $1,000 upon
            execution of this Contract.

      (d)   The requirement that the Reimbursement Premium is due on a certain
            date means that the Premium shall be in the physical possession of
            the FHCF no later than 5 p.m., Eastern Time, on the due date
            applicable to the particular installment. If remitted by check to
            the FHCF's Post Office Box, the check shall be physically in the
            Post Office Box 550261, Tampa, FL 33655-0261, as set out on the
            invoice sent to the Company. If remitted by check by hand delivery,
            the check shall be physically on the premises of the FHCF's bank in
            Tampa, Florida, as set out on the invoice sent to the Company. If
            remitted electronically, the wire transfer shall have been completed
            to the FHCF's account at its bank in Tampa, Florida, as set out on
            the invoice sent to the Company. If the applicable due date is a
            Saturday, Sunday or legal holiday, then the actual due date will be
            the day immediately following the applicable due date which is not a
            Saturday, Sunday or legal holiday. For purposes of the timeliness of
            the remittance, neither the United States Postal Service postmark
            nor a postage meter date is in any way

                                       18                                  FHCF-
                                      2004K



            determinative. Premium checks sent to the SBA in Tallahassee,
            Florida, or to the FHCF's Administrator in Minneapolis, Minnesota,
            will be returned to the sender. Reimbursement Premiums not in the
            physical possession of the FHCF by 5 p.m., Eastern Time, on the
            applicable due date are late.

(3)   CLAIMS AND LOSSES

      (a)   IN GENERAL

            1.    Claims and losses resulting from Loss Occurrences commencing
                  during the Contract Year shall be reported by the Company and
                  reimbursed by the FHCF as provided herein and in accordance
                  with the Statute, this Contract, and any rules adopted
                  pursuant to the Statute. For a Company participating in a
                  quota share primary insurance agreement(s) with Citizens
                  Property Insurance Corporation High Risk Account, Citizens and
                  the Company shall report only their respective portion of
                  losses under the quota share primary insurance agreement(s).
                  Pursuant to Section 215.555(4)(c), Florida Statutes, the SBA
                  is obligated to pay for losses not to exceed the Actual
                  Claims-Paying Capacity of the FHCF, up to the limit in
                  accordance with Section 215.555(4)(c)1., Florida Statutes, for
                  any one Contract Year.

      (b)   LOSS REPORTS

            1.    At the direction of the SBA, the Company shall report its
                  projected Ultimate Net Loss from each Loss Occurrence to
                  provide information to the SBA in determining any potential
                  liability for possible reimbursable losses under the Contract
                  on the Interim Loss Report, Form FHCF-L1A, as adopted in Rule
                  19ER04-2 (19-8.029), F.A.C.

            2.    No later than December 31 of the Contract Year, the Company
                  shall report to the FHCF its Ultimate Net Loss, incurred and
                  paid, with respect to each Loss Occurrence during the Contract
                  Year on the Proof of Loss Report, Form FHCF-L1B, as adopted in
                  Rule 19ER04-2 (19-8.029), F.A.C.

            3.    Quarterly thereafter until all claims and losses resulting
                  from the Loss Occurrence(s) are fully discharged, the Company
                  shall render to the FHCF revised Proof of Loss Reports with
                  respect to each Loss Occurrence. If the Company's Retention
                  must be recalculated as the result of an exposure
                  resubmission, and if the recalculated Retention changes the
                  FHCF's reimbursement obligations, then the Company shall
                  submit additional Proof of Loss Reports for recalculation of
                  the FHCF's obligations.

            4.    The SBA will determine and pay, as soon as practicable after
                  receiving Proof of Loss Reports described and adopted in Rule
                  19ER04-2 (19-8.029), F.A.C. the reimbursement amount due based
                  on losses paid by the Company to date and adjustments to this
                  amount based on subsequent quarterly information. The
                  adjustments to reimbursement amounts shall require the SBA to
                  pay, or the Company to return, amounts reflecting the most
                  recent determination of losses.

            5.    Initial or quarterly reports received on or before the due
                  date for that report will be reimbursed within 30 days
                  following the due date or as soon as practicable after the
                  receipt of the report and verification of the reported losses.
                  Those received after the initial or quarterly reporting due
                  date will be reimbursed within 30 days following the due date
                  or as soon as practicable after the receipt of the report and
                  verification of the reported losses.

            6.    If a Covered Event occurs during the Contract Year, but after
                  December 31, at the direction of the SBA, Companies shall file
                  an Interim Loss Report within 30 days after the Covered Event
                  and Proof of Loss Reports quarterly thereafter. Subparagraphs
                  3-6 above regarding Proof of Loss Reports shall apply.

                                       18                                  FHCF-
                                      2004K



            7.    All loss reports received will be compared with the FHCF's
                  exposure data to establish the facial reasonableness of the
                  reports. Preliminarily, the FHCF will examine the reported
                  losses to determine whether reported losses exceed reported
                  exposure in the affected counties; whether the Company has
                  reported a low concentration of exposure in the affected
                  counties; and whether the Ultimate Net Loss as a percentage of
                  exposure in affected counties is significantly higher than the
                  average. Companies meeting these tests for reasonableness will
                  be scheduled for reimbursement. Companies not meeting these
                  tests for reasonableness will be handled on a case-by-case
                  basis and will be contacted to provide specific information
                  regarding their individual book of business.

      (c)   LOSS REIMBURSEMENT CALCULATIONS

            1.    In general, the Company's paid Ultimate Net Losses must exceed
                  its FHCF Retention before any reimbursement is payable from
                  the FHCF. Each Company sustaining reimbursable losses will
                  receive the amount of reimbursement due under the Contract up
                  to the amount of the Company's payout. If more than one
                  Covered Event occurs in any one Contract Year, any
                  reimbursements due from the FHCF shall take into account the
                  Company's Retention for each Covered Event. However, the
                  Company's reimbursements from the FHCF for all Covered Events
                  occurring during the Contract Year shall not exceed, in
                  aggregate, the Projected Payout Multiple or Payout Multiple,
                  as applicable, times the individual Company's Reimbursement
                  Premium for the Contract Year.

            2.    In determining reimbursements under this Contract, the SBA
                  shall:

                  a.    First, reimburse Companies qualified as limited
                        apportionment companies under Section 627.351(2)(b)3.,
                        Florida Statutes, for the amount (if any) of
                        reimbursement due under the individual Company's
                        Contract, but not to exceed the lesser of $10 million or
                        an amount equal to 10 times the individual Company's
                        Reimbursement Premium for the Contract Year. This
                        provision does not apply if the projected Balance of the
                        Fund as of December 31 of the Contract Year, exclusive
                        of any bonding capacity of the FHCF, exceeds $2 billion.
                        Further, if the Company is a member of an NAIC group,
                        the Company may not receive reimbursement under this
                        provision if any other member of the NAIC group has
                        received reimbursement under this provision.

                  b.    Next, reimburse each of the Companies for the amount (if
                        any) of reimbursement due under the individual Company's
                        Contract, but not to exceed for all Loss Occurrences, an
                        amount equal to the Projected Payout Multiple or the
                        Payout Multiple, as applicable, times the individual
                        Company's Reimbursement Premium for the Contract Year.
                        For a limited apportionment company, any amount payable
                        under this provision shall be reduced by the amount (if
                        any) payable under (a) above.

                  c.    Thereafter, pursuant to Section 215.555(4)(d)2.c.,
                        Florida Statutes, establish the prorated reimbursement
                        level at the highest level for which any remaining fund
                        balance or bond proceeds (as limited by Section
                        215.555(4)(c), Florida Statutes) are sufficient to
                        reimburse entities created pursuant to Section
                        627.351(6), Florida Statutes, for reimbursable losses
                        exceeding the amounts payable pursuant to (b) above for
                        the Contract Year. The proration shall be determined
                        based on each entity's share of their aggregate
                        reimbursable losses exceeding the amounts payable
                        pursuant to (b) above. Any additional reimbursements
                        pursuant to this paragraph shall not include losses
                        under an entity's FHCF Retention and will be at the 90%
                        Reimbursement Percentage. In order to determine the
                        amount available for additional reimbursements, the SBA
                        will review reported loss information from all Companies
                        and determine

                                       18                                  FHCF-
                                      2004K



                        that all Companies which received payments for
                        reimbursable losses but which did not exceed their
                        projected payout have settled all, or substantially all,
                        of their claims eligible for reimbursement. The SBA will
                        then determine the remaining amount of Claims-Paying
                        Capacity available for such additional reimbursements.
                        Such additional reimbursement amounts shall not be
                        limited due to the transitional provision created for
                        the 2004-2005 Contract Year.

      3.    Reserve established. When a Covered Event occurs in a subsequent
            Contract Year when reimbursable losses are still being paid for a
            Covered Event in a previous Contract Year, the SBA will establish a
            reserve for the outstanding reimbursable losses for the previous
            Contract Year, based on the length of time the losses have been
            outstanding, the amount of losses already paid, the percentage of
            incurred losses still unpaid, and any other factors specific to the
            loss development of the Covered Events involved.

(D)   COMMUTATION

      1.    Not less than 36 months or more than 60 months after the end of the
            Contract Year, the Company shall report to the FHCF all claims and
            losses, both reported and unreported, for the Contract Year which
            are not finally settled and which may be reimbursable losses under
            this Contract. The Company and the SBA or their respective
            representatives may, by mutual agreement, determine the capitalized
            value of all claims and losses, both reported and unreported,
            resulting from Loss Occurrences commencing during the Contract Year,
            and the Company shall provide the SBA with a copy of a written
            opinion on such capitalized value by the Company's certifying
            actuary. Payment by the SBA of its portion of any amount or amounts
            so mutually agreed and certified by the Company's certifying actuary
            shall constitute a complete and final release of the SBA in respect
            of all claims and losses, both reported and unreported, under this
            Contract.

      2.    If agreement on capitalized value cannot be reached within 60 days
            after the Company reports its claims and losses to the FHCF, the
            Company and the SBA may mutually appoint an actuary or appraiser to
            investigate, determine and capitalize such claims or losses. If both
            parties then agree, the SBA shall pay its portion of the amount so
            determined to be the capitalized value of such claims or losses.

      3.    If the parties fail to agree, then any difference shall be settled
            by a panel of three actuaries, one to be chosen by each party and
            the third by the two so chosen. If either party does not appoint an
            actuary within 30 days, the other party may appoint two actuaries.
            If the two actuaries fail to agree on the selection of a third
            actuary within 30 days of their appointment, each of them shall name
            two, of whom the other shall decline one and the decision shall be
            made by drawing lots. All the actuaries shall be regularly engaged
            in the valuation of property claims and losses and shall be members
            of the Casualty Actuarial Society and of the American Academy of
            Actuaries. None of the actuaries shall be under the control of
            either party to this Contract. Each party shall submit its case to
            its actuary within 30 days of the appointment of the third actuary.
            The decision in writing of any two actuaries, when filed with the
            parties hereto, shall be final and binding on both parties.

      4.    The reasonable and customary expense of the actuaries and of the
            commutation (as a result of 2. and 3. above) shall be equally
            divided between the two parties. Said commutation shall take place
            in Tallahassee, Florida, unless some other place is mutually agreed
            upon by the Company and the SBA.

(4)   ADVANCES

                                       18                                  FHCF-
                                      2004K



      (a)   The SBA may make advances for loss reimbursements as defined herein,
            at market interest rates, to the Company in accordance with Section
            215.555(4)(e), Florida Statutes. The market interest rate shall be
            the average rate earned by the SBA for the FHCF for the first five
            months of the Contract Year. All interest charged will commence on
            the date the SBA issues a check for an advance and will cease at
            midnight on the date upon which the FHCF has received the Company's
            Proof of Loss Report for the Covered Event for which the advance was
            issued qualifying the Company for reimbursement equal to or
            exceeding the amount(s) of the advance(s). If it is determined that
            the Company received funds in excess of those to which it was
            entitled, the interest as to those sums will not cease on the date
            of the receipt of the Proof of Loss Report but will continue until
            the Company reimburses the FHCF for the overpayment. The Company's
            final reimbursement shall be reduced by an amount equal to the
            amount of the advance(s) and the interest thereon. The specific type
            of advances enumerated in the Statute follow.

            1.    Advances to Companies to prevent insolvency.

                  a.    Section 215.555(4)(e)1., Florida Statutes, provides that
                        the SBA shall advance to the Company amounts necessary
                        to maintain the solvency of the Company, up to 50
                        percent of the SBA's estimate of the reimbursement due
                        to the Company. In determining insolvency for this
                        advance, a Company will be considered insolvent if it is
                        unable to pay its policyholders for justifiable claims.

                  b.    The requirements for an advance to a Company to prevent
                        insolvency are that the Company demonstrates that it is
                        likely to qualify for reimbursement, that the Company
                        demonstrates that the immediate receipt of moneys from
                        the SBA is likely to prevent the Company from becoming
                        insolvent, and that the Company provides the information
                        in (4)(b) below to aid in the SBA's determination to
                        grant an advance.

                  c.    The SBA's final decision regarding an application for an
                        advance to prevent insolvency shall be based on whether
                        or not, considering the totality of the circumstances,
                        including the SBA's obligations to provide reimbursement
                        for all Covered Events occurring during the Contract
                        Year, granting an advance is essential to allowing the
                        entity to continue to pay additional claims for a
                        Covered Event in a timely manner.

            2.    Advances to entities created pursuant to Section 627.351(6),
                  Florida Statutes.

                  a.    Section 215.555(4)(e)2., Florida Statutes, provides that
                        the SBA may advance to an entity created pursuant to
                        Section 627.351(6), Florida Statutes, up to 90% of the
                        lesser of the SBA's estimate of the reimbursement due or
                        the entity's share of the actual aggregate Reimbursement
                        Premium for that Contract Year, multiplied by the
                        current available liquid assets of the FHCF.

                  b.    The requirements for an advance to entities created
                        pursuant to Section 627.351(6), Florida Statutes are
                        that the entity must demonstrate to the SBA that the
                        advance is essential to allow the entity to pay claims
                        for a Covered Event and that the entity provides the
                        information in (4)(b) below to aid in the SBA's
                        determination to grant an advance.

                  c.    The SBA must determine that its assets are sufficient
                        and sufficiently liquid to fulfill its obligations to
                        other Companies under the Contract prior to granting an
                        advance.

            3.    Advances to limited apportionment companies.

                  a.    Section 215.555(4)(e)3., Florida Statutes, provides that
                        the SBA may advance the amount of estimated
                        reimbursement payable to limited apportionment
                        companies.

                                       18                                  FHCF-
                                      2004K



                  b.    The requirement for an advance to limited apportionment
                        companies is that they make an application to the SBA
                        and provide the SBA with a report of their exposures and
                        losses in order to determine Retention levels and loss
                        reimbursements payable.

                  c.    The SBA must determine that its assets are sufficient
                        and sufficiently liquid to fulfill its obligations to
                        other Companies under the Contract prior to granting an
                        advance.

      (b)   Companies shall request a specific amount for the advance from the
            SBA and, for those Companies or entities designated in (4)(a)1. and
            (4)(a)2. above, shall provide the SBA with the following
            information, determined in accordance with statutory accounting
            principles, which are the rules and procedures governing insurer
            financial reporting for regulatory purposes:

            1.    Current assets;

            2.    Current liabilities other than liabilities due to the Covered
                  Event;

            3.    Current liabilities due to the Covered Event, paid and unpaid,
                  submitted on the Proof of Loss Report, Form FHCF-L1B, as
                  adopted in Rule 19ER04-2 (19-8.029), F.A.C.;

            4.    Evidence of estimated Retention breached by payment of paid
                  losses from the Covered Event;

            5.    Current surplus as to policyholders;

            6.    Estimate of expected liabilities due to the Covered Event;

            7.    Estimate of other expected liabilities not due to the Covered
                  Event;

            8.    Amount of reinsurance available to pay claims for the Covered
                  Event under other reinsurance treaties;

            9.    Estimated amount of payout from the FHCF, determined in
                  accordance with Section 215.555(4)(b), Florida Statutes. This
                  estimate is necessarily predicated on the Company's Premium
                  which in turn is predicated on its exposure. Therefore, if the
                  Covered Event occurs in June, July, or August, the Company
                  will need to provide its exposure data prior to September 1 in
                  order that the appropriate calculations may be made.

      (c)   The information outlined herein shall be supplied in the form of a
            letter, signed by two executive officers of the Company, with the
            supporting information attached.

      (d)   In determining whether or not to grant an advance, the SBA shall:

            1.    Carefully review and consider all the information submitted by
                  such Companies;

            2.    Consult with all relevant regulatory agencies seeking all
                  relevant information about the Company's financial and
                  solvency condition;

            3.    Carefully review its currently available liquid assets; and

            4.    Review the damage caused by the Covered Event and when that
                  Covered Event occurred.

      (e)   Any amount advanced by the SBA shall be used by the Company only to
            pay claims of its policyholders for the Covered Event or Covered
            Events which have precipitated the immediate need to continue to pay
            additional claims as they become due. The advance is a reimbursement
            which allows the Company to continue to pay claims in a timely
            manner.

(5)   DELINQUENT PREMIUM PAYMENTS

      Failure to submit a Premium or Premium installment when due is a violation
      of the terms of this Contract and Section 215.555, Florida Statutes.
      Interest on late payments shall be due as set forth in Article IX(2) of
      this Contract.

(6)   INADEQUATE DATA SUBMISSIONS

      If exposure data or other information required to be reported by the
      Company under the terms of this Contract is not received by the FHCF in
      the format specified by the FHCF and

                                       18                                  FHCF-
                                      2004K



      is inadequate to the extent that the FHCF requires resubmission of data,
      the Company will be required to pay the FHCF a resubmission fee of $1,000.
      The $1,000 fee is also applicable to exposure resubmissions made as a
      result of examinations of the Company's exposure and claims data.

(7)   DELINQUENT SUBMISSIONS

      Failure to submit an exposure submission or resubmission when due is a
      violation of the terms of this Contract and Section 215.555, Florida
      Statutes.

ARTICLE XI - TAXES

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

ARTICLE XII - ERRORS AND OMISSIONS

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

ARTICLE XIII - INSPECTION OF RECORDS

The Company shall allow the SBA to inspect, examine, and verify, at reasonable
times, all records of the Company relating to the Covered Policies under this
Contract, including Company files concerning claims, losses, or legal
proceedings regarding subrogation or claims recoveries which involve this
Contract, including premium, loss records and reports involving exposure data on
Covered Policies and applicable ceded reinsurance contracts. All discovered
errors, inadvertent omissions, and typographical errors associated with the data
reporting of insured values shall be corrected to reflect the proper values.
This right shall survive the termination of this Contract. The Company shall
retain its records in accordance with the requirements for records retention
regarding exposure reports and claims reports outlined herein, and in any
administrative rules adopted pursuant to Section 215.555, Florida Statutes.
Companies writing covered collateral protection policies, as defined in
definition (10) of Article V herein, must be able to provide documentation that
the policy covers personal residences, protects both the borrower's and lender's
interest, and that the coverage is in an amount at least equal to the coverage
for the dwelling in place under the lapsed homeowner's policy.

(1)   EXAMINATION REQUIREMENTS FOR EXPOSURE VERIFICATION

      The Company shall retain complete and accurate records, in policy level
      detail, of all exposure data submitted to the SBA in any Contract Year
      until the SBA has completed its examination of the Company's exposure
      submissions. The Company shall also retain complete and accurate records
      of any completed exposure examination for any Contract Year in which the
      Company incurred losses until the completion of the loss reimbursement
      examination for that Contract Year. The records to be retained shall
      include the exam file which supports the exposure reported to the SBA and
      any other information which would allow for a complete examination of the
      Company's reported exposure data. The exam file shall be prepared
      according to the SBA Exam File Specifications outlined in the Data Call.
      The Company must also have available, at the time of the examination, a
      copy of its underwriting manual, a copy of its rating manual, and staff to
      respond to the questions of the SBA or its agents. The Company is also
      required to retain declarations pages and policy applications to support
      reported exposure. To meet the requirement that the application

                                       18                                  FHCF-
                                      2004K



      must be retained, the Company may retain either the actual application or
      may retain the actual application in an electronic format.

(2)   EXAMINATION REQUIREMENTS FOR LOSS REPORTS

      The Company shall retain complete and accurate records of all reported
      losses and/or advances submitted to the SBA until the SBA has completed
      its examination of the Company's reimbursable losses. The records to be
      retained are set forth as part of the Proof of Loss Report, Form FHCF-L1B,
      adopted in Rule 19ER04-2 (19-8.029), F.A.C. The Company must also retain
      the required exposure exam file for the Contract Year in which the loss
      occurred, and must have available any other information which would allow
      for a complete examination of the Company's losses.

(3)   EXAMINATION PROCEDURES

      (a)   The FHCF will send an examination notice to the Company providing
            the commencement date of the examination, the site of the
            examination, any accommodation requirements of the examiner, and the
            reports and data which must be assembled by the Company and
            forwarded to the FHCF upon request. The Company shall be prepared to
            choose one location in which to be examined, unless otherwise
            specified by the SBA.

      (b)   The reports and data are required to be forwarded to the FHCF as set
            forth in an examination notice letter. The information is then
            forwarded to the examiner. If the FHCF receives accurate and
            complete records as requested, the examiner will contact the Company
            to inform the Company as to what policies or other documentation
            will be required once the examiner is on site. Any records not
            required to be provided to the examiner in advance shall be made
            available at the time the examiner arrives on site.

      (c)   At the conclusion of the examiner's work and the management review
            of the examiner's report, findings, recommendations, and work
            papers, the FHCF will forward a preliminary draft of the examination
            report to the Company and require a response from the Company by a
            date certain as to the examination findings and recommendations.

      (d)   If the Company accepts the examination findings and recommendations,
            and there is no recommendation for resubmission of the Company's
            exposure data, the examination report will be finalized and the exam
            file closed.

      (e)   If the Company disputes the examiner's findings, the areas in
            dispute will be resolved by a meeting or a conference call between
            the Company and FHCF management.

      (f)1. The recommendation of a loss reimbursement examination could require
            the Company to resubmit its loss reports or exposure data.

         2. If the recommendation of the examiner is to resubmit the Company's
            exposure data for the Contract Year in question, then the FHCF will
            send the Company a letter outlining the process for resubmission and
            including a deadline to resubmit. The resubmission will include a
            data file to be submitted to the FHCF's Administrator and an exam
            file to be submitted to the offices of the SBA. The resubmission is
            also required to be accompanied by a detailed written description of
            the specific changes made to the resubmitted data. Once the
            resubmission is received by the FHCF's Administrator, the FHCF's
            Administrator calculates a revised Reimbursement Premium for the
            Contract Year which has been examined. The SBA shall then review the
            resubmission with respect to the examiner's findings, and accept the
            resubmission or contact the Company with any questions regarding the
            resubmission. Once the SBA has accepted the resubmission as a
            sufficient response to the examiner's findings, the FHCF's
            Administrator will send the Company an invoice for any Reimbursement
            Premium and interest due or to refund Reimbursement Premium, as the
            case may be. Once the resubmission has been approved, the exam file
            is closed.

                                       18                                  FHCF-
                                      2004K



      3.    If the recommendation of the examiner is either to resubmit the
            Company's exposure data for the Contract Year in question or giving
            the option to pay the estimated Premium difference, then the FHCF
            will send the Company a letter outlining the process for
            resubmission or for paying the estimated Premium difference and
            including a deadline for the resubmission or the payment to be
            received by the FHCF's Administrator. If the Company chooses to
            resubmit, the same procedures outlined in Article XIII(3)(f)2.
            apply.

      (g)   If the Company continues to dispute the examiner's findings and/or
            recommendations and no resolution of the disputed matters is
            obtained through discussions between the Company and FHCF
            management, then the process within the SBA is at an end and further
            administrative remedies may be obtained under Chapter 120, Florida
            Statutes.

      (h)   The examiner's list of errors is made available in the examination
            report sent to the Company. Given that the examination was based on
            a sample of the Company's policies rather than the whole universe of
            the Company's Covered Policy exposure, the error list is not
            intended to provide a complete list of errors but is intended to
            indicate what Covered Policy information needs to be reviewed and
            corrected throughout the Company's book of Covered Policy business
            to ensure more complete and accurate reporting in the resubmission
            if required and for any future submissions.

(4)   COSTS OF THE EXAMINATIONS

      The costs of the examinations shall be borne by the SBA. However, in order
      to remove any incentive for a Company to delay preparations for an
      examination, the SBA shall be reimbursed by the Company for any
      examination expenses incurred in addition to the usual and customary
      costs, which additional expenses were incurred as a result of the
      Company's failure, despite proper notice, to be prepared for the
      examination or as a result of a Company's failure to provide requested
      information. All requested information must be complete and accurate. The
      Company shall be notified of any administrative remedies which may be
      obtained under Chapter 120, Florida Statutes.

ARTICLE XIV - INSOLVENCY OF THE COMPANY

Participating insurers must notify the FHCF immediately upon becoming insolvent.
Pursuant to Section 215.555(4)(g), Florida Statutes, the FHCF is required to pay
the "net amount of all reimbursement moneys" due an insolvent insurer to the
Florida Insurance Guaranty Association for the benefit of Florida policyholders.

ARTICLE XV - TERMINATION

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

ARTICLE XVI - VIOLATIONS

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

ARTICLE XVII - APPLICABLE LAW

                                       18                                  FHCF-
                                      2004K



(1)   APPLICABLE LAW: This Contract shall be governed by and construed according
      to the laws of the State of Florida in respect of any matter relating to
      or arising out of this Contract.

(2)   NOTICE OF RIGHTS: Pursuant to Chapter 120, Florida Statutes, and the
      Uniform Rules of Procedure, codified as Chapters 28-101 through 28-111,
      F.A.C., a person whose substantial interests are affected by a decision of
      the SBA regarding the FHCF may request a hearing within 21 days shall have
      waived his or her right to a hearing. The hearing may be a formal hearing
      or an informal hearing pursuant to the provisions of Sections 120.569 and
      120.57, Florida Statutes. The petition must be filed (received) in the
      office of the Agency Clerk, General Counsel's Office, State Board of
      Administration of Florida, P.O. Box 13300, Tallahassee, FL 32317-3300,
      within the 21 day period.

ARTICLE XVIII - REIMBURSEMENT CONTRACT ELECTIONS

REIMBURSEMENT PERCENTAGE

For purposes of determining reimbursement (if any) due the Company under this
Contract and in accordance with the Statute, the Company has the option to elect
a 45% or 75% or 90% reimbursement percentage under this Contract. If the Company
is a member of an NAIC group, all members must elect the same reimbursement
percentage, and the individual executing this Contract on behalf of the Company,
by placing his or her initials in the box under (a) below, affirms that the
Company has elected the same reimbursement percentage as all members of its NAIC
group. If the Company is an entity created pursuant to Section 627.351, Florida
Statutes, the Company must elect the 90% reimbursement percentage. The Company
shall not be permitted to change its reimbursement percentage during the
Contract Year. The Company shall be permitted to change its reimbursement
percentage at the beginning of a new Contract Year, but may not reduce its
reimbursement percentage if a Covered Event required the issuance of revenue
bonds, until the bonds have been fully repaid.

The Reimbursement Percentage elected by the Company for the prior Contract Year
effective June 1, 2003 was as follows: Philadelphia Indemnity Insurance Company
- - 90%

(a) NAIC GROUP AFFIRMATION: Initial the following box if the Company is part of
an NAIC Group:

                                       [TBM]

(b)   REIMBURSEMENT PERCENTAGE ELECTION: The Company hereby elects the following
      Reimbursement Percentage for the Contract Year from 12:01 a.m., Eastern
      Time, June 1, 2004, to 12:01 a.m., Eastern Time, June 1, 2005, (the
      individual executing this Contract on behalf of the Company shall place
      his or her initials in the box to the left of the percentage elected for
      the Company):

      [ ]45%       OR [ ]          [ ]  75%       OR  [ ]     [TBM]90%

                                       18                                  FHCF-
                                      2004K



REPORTING EXPOSURE FOR A SINGLE STRUCTURE, WITH A MIX OF COMMERCIAL HABITATIONAL
AND COMMERCIAL NON-HABITATIONAL EXPOSURE, WRITTEN ON A COMMERCIAL POLICY

This section is applicable to all Companies with exposure for single structures
with a mix of commercial habitational and commercial non-habitational exposure
written under a Commercial Policy. If the Company does not write this type of
exposure and this section DOES not apply, please initial the N/A box below which
completes this ARTICLE. If the Company DOES write this type of exposure, please
read and complete the remainder of this ARTICLE.

                                     [TBM]
                                     [N/A]

COMMERCIAL-RESIDENTIAL CLASS CODE

If a single structure is used for both habitational and non-habitational
purposes and the structure has a commercial-residential class code (based on a
classification plan on file with and reviewed by the Administrator), the entire
exposure for the structure should be reported to the FHCF under the Data Call,
and the FHCF will reimburse losses for the entire structure as well.

COMMERCIAL  NON-RESIDENTIAL/BUSINESS CLASS CODE

If a single structure is used for both habitational and non-habitational
purposes and the structure has a commercial non-residential or business class
code (based on a classification plan on file with and reviewed by the
Administrator), the habitational portion of that structure should be identified
and reported to the FHCF under the Data Call.

However, in recognition of the unusual nature of commercial structures with
incidental habitational exposure and the hardship some companies may face in
having to carve out such incidental habitational exposure, as well as the losses
to such structures, the FHCF will accommodate these companies by allowing them
to exclude the entire exposure for the single structure from their Data Call
submission, providing the following two conditions are met:

(1)   The decision to not carve out and report the incidental habitational
      exposure shall apply to all such structures insured by the Company; and

(2)   If the incidental habitational exposure is not reported to the FHCF, the
      Company agrees it shall not report losses to the structure and the FHCF
      shall not reimburse any losses to the structure.

Initial the CARVING box below if the Company is able to carve out and report its
incidental habitational exposure, OR, if this requirement presents a hardship,
the Company must communicate its decision to not carve out and to not report the
incidental exposure by having the individual executing this Contract on behalf
of the Company placing his or her initials in the NOT CARVING bow below.


                             [ ]         OR                  [ ]
                           CARVING                       NOT CARVING

By initialing the CARVING OR NOT CARVING box above, the Company is making an
irrevocable decision for the corresponding Contract Year Data Call submission
and any subsequent submissions.

                                       18                                  FHCF-
                                      2004K



IMPORTANT NOTE: SINCE THIS ELECTION WILL IMPACT YOUR DATA CALL SUBMISSION,
PLEASE SHARE THIS DECISION WITH THE INDIVIDUAL(s) RESPONSIBLE FOR COMPILING YOUR
DATA CALL S

ARTICLE XIX - SIGNATURES

APPROVED BY:

Florida Hurricane Catastrophe Fund
By: State Board of Administration of the State of Florida

By: Linda Letta, General Counsel for                                  7/12/2004
    Coleman Stipanovich                                                  Date
    Executive Director

Approved as to legality:

By: Thomas A. Bink, General Counsel                                    7/12/2004
    Linda Lettera                                                         Date
    General Counsel
    FL Bar ID#311911

Mobile USA Insurance Company

                   COMPANY

By: T. Bruce Meyer, Treasurer                                          5/17/2004
                   Name/Title                                             Date

                                       18                                  FHCF-
                                      2004K

EX-10.8

                                                                    EXHIBIT 10.8

                     EXCESS CATASTROPHE REINSURANCE CONTRACT
                             EFFECTIVE: JUNE 1, 2004

                                    issued to

                         Philadelphia Insurance Company
                            Bala Cynwyd, Pennsylvania
                    Philadelphia Indemnity Insurance Company
                            Bala Cynwyd, Pennsylvania
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                        Philadelphia Insurance Companies

                                                                 [BENFIELD LOGO]



                                TABLE OF CONTENTS



 ARTICLE                                                                                           PAGE
 -------                                                                                           ----
                                                                                                
     I         Classes of Business Reinsured                                                        1
    II         Term                                                                                 1
   III         Territory (BRMA 51A)                                                                 1
    IV         Exclusions                                                                           2
     V         Retention and Limit                                                                  4
    VI         Reinstatement                                                                        4
   VII         Definitions                                                                          5
  VIII         Other Reinsurance                                                                    6
    IX         Florida Hurricane Catastrophe Fund                                                   7
     X         Loss Occurrence                                                                      7
    XI         Loss Notices and Settlements                                                         8
   XII         Salvage and Subrogation                                                              9
  XIII         Reinsurance Premium                                                                  9
   XIV         Late Payments                                                                       10
    XV         Offset (BRMA 36D)                                                                   11
   XVI         Access to Records (BRMA 1D)                                                         11
  XVII         Liability of the Reinsurer                                                          11
 XVIII         Net Retained Lines (BRMA 32E)                                                       11
   XIX         Errors and Omissions (BRMA 14F)                                                     12
    XX         Currency (BRMA 12A)                                                                 12
   XXI         Taxes (BRMA 50C)                                                                    12
  XXII         Federal Excise Tax (BRMA 17A)                                                       12
 XXIII         Reserve Requirements                                                                13
  XXIV         Insolvency                                                                          14
   XXV         Arbitration                                                                         15
  XXVI         Service of Suit                                                                     16
 XXVII         Agency Agreement                                                                    16
XXVIII         Governing Law                                                                       17
  XXIX         Confidentiality                                                                     17
   XXX         Severability                                                                        17
  XXXI         Intermediary (BRMA 23A)                                                             17
               Schedule A


                                                                 [BENFIELD LOGO]



                     EXCESS CATASTROPHE REINSURANCE CONTRACT
                             EFFECTIVE: JUNE 1, 2004

                                    issued to

                         Philadelphia Insurance Company
                            Bala Cynwyd, Pennsylvania
                    Philadelphia Indemnity Insurance Company
                            Bala Cynwyd, Pennsylvania
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                        Philadelphia Insurance Companies
             (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 Property 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 - TERM

A.    This Contract shall become effective on June 1, 2004, with respect to
      losses arising out of loss occurrences commencing on or after that date,
      and shall remain in force until May 31, 2005, both days inclusive.

B.    If this Contract expires while a loss occurrence covered hereunder is in
      progress, the Reinsurer's liability hereunder shall, subject to the other
      terms and conditions of this Contract, be determined as if the entire loss
      occurrence had occurred prior to the expiration of this Contract, provided
      that no part of such loss occurrence is claimed against any renewal or
      replacement of this Contract.

ARTICLE III - TERRITORY (BRMA 51A)

The territorial limits of this Contract shall be identical with those of the
Company's policies.

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                                     Page 1



ARTICLE IV - EXCLUSIONS

This Contract does not apply to and specifically excludes the following:

      1.    Assumed reinsurance except for a 50.0% quota share of the First
            American Property and Casualty Insurance Company Florida Homeowners
            Program produced and underwritten by Mobile Homeowners Insurance
            Agencies, Inc.

      2.    Financial guarantee and insolvency.

      3.    Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
            Physical Damage - Reinsurance (U.S.A.)" and the "Nuclear Incident
            Exclusion Clause - Physical Damage - Reinsurance (Canada)" attached
            to and forming part of this Contract.

      4.    Loss or damage caused by or resulting from 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, but
            this exclusion shall not apply to loss or damage covered under a
            standard policy with a standard War Exclusion Clause.

      5.    Loss or liability excluded under the provisions of the "Pools,
            Associations and Syndicates Exclusion Clause" attached to and
            forming part of this Contract.

      6.    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.

      7.    Losses in respect of overhead transmission and distribution lines
            and their supporting structures other than those on or within 300
            meters (or 1,000 feet) of the insured premises. It is understood and
            agreed that public utilities extension and/or suppliers extension
            and/or contingent business interruption coverages are not subject to
            this exclusion, provided that these are not part of a transmitters'
            or distributors' policy.

      8.    Accident and Health, Casualty, Fidelity and/or Surety business.

      9.    Pollution and seepage coverages excluded under the provisions of the
            "Pollution and Seepage Exclusion Clause (BRMA 39A)" attached to and
            forming part of this Contract.

      10.   Notwithstanding any other provision to the contrary within this
            Contract or any amendment thereto, it is agreed that this Contract
            excludes loss, damage, cost or expense directly or indirectly caused
            by, contributed to by, resulting from, or arising

                                                                 [BENFIELD LOGO]

                                     Page 2



            out of or in connection with any act of terrorism, as defined
            herein, regardless of any other cause or event contributing
            concurrently or in any other sequence to the loss.

            An "act of terrorism" includes any act, or preparation in respect of
            action, or threat of action, designed to influence the government de
            jure or de facto of any nation or any political division thereof, or
            in pursuit of political, religious, ideological, or similar purposes
            to intimidate the public or a section of the public of any nation by
            any person or group(s) of persons, whether acting alone or on behalf
            of or in connection with any organization(s) or government(s) de
            jure or de facto, and which:

            a.    Involves violence against one or more persons; or

            b.    Involves damage to property; or

            c.    Endangers life other than that of the person committing the
                  action; or

            d.    Creates a risk to health or safety of the public or a section
                  of the public; or

            e.    Is designed to interfere with or to disrupt an electronic
                  system.

            This Contract also excludes loss, damage, cost or expense directly
            or indirectly caused by, contributed to by, resulting from, or
            arising out of or in connection with any action in controlling,
            preventing, suppressing, retaliating against or responding to any
            act of terrorism.

            Notwithstanding the above and subject otherwise to the terms,
            conditions, and limitations of this Contract, in respect only of
            personal lines this Contract will pay actual loss or damage (but not
            related cost or expense) caused by any act of terrorism provided
            such act is not directly or indirectly caused by, contributed to by,
            resulting from, or arising out of or in connection with biological,
            chemical, or nuclear pollution or contamination.

      11.   Loss or liability in any way or to any extent arising out of the
            actual or alleged presence or actual, alleged or threatened presence
            of fungi including, but not limited to, mold, mildew, mycotoxins,
            microbial volatile organic compounds or other "microbial
            contaminations." This includes:

            a.    Any supervision, instruction, recommendations, warnings or
                  advice given or which should have been given in connection
                  with the above; and

            b.    Any obligation to share damages with or repay someone else who
                  must pay damages because of such injury or damage.

            For purposes of this exclusion, "microbial contamination" means any
            contamination, either airborne or surface, which arises out of or is
            related to the presence of fungi, mold, mildew, mycotoxins,
            microbial volatile organic compounds or spores, including, without
            limitation, Penicillium, Aspergillus, Fusarium, Aspergillus Flavus
            and Stachybotrys chartarum.

                                                                 [BENFIELD LOGO]

                                     Page 3



            Losses resulting from the above causes do not in and of themselves
            constitute an event unless arising out of one or more of the
            following perils, in which case this exclusion does not apply:

                  Fire, lightning, explosion, aircraft or vehicle impact,
                  falling objects, windstorm, hail, tornado, cyclone, hurricane,
                  earthquake, volcano, tsunami, flood, freeze or weight of snow.

            Notice of any claims for mold-related losses must be given by the
            Company to the Reinsurer, in writing, within 24 months after the
            commencement date of the loss occurrence to which such claims
            relate.

      12.   Loss or liability excluded under the provisions of the "Electronic
            Data Endorsement B" (N.M.A. 2915) attached to and forming part of
            this Contract.

ARTICLE V - 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 each loss 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
      loss occurrence.

B.    No claim shall be made under any excess layer of reinsurance coverage
      provided by this Contract as respects any one loss occurrence unless at
      least two risks insured or reinsured by the Company are involved in such
      loss occurrence. For purposes of this Contract, the Company shall be the
      sole judge of what constitutes one risk.

C.    Notwithstanding the provisions above, the ultimate net loss (including
      loss in excess of policy limits, extra contractual obligations, and loss
      adjustment expense) as respects any one loss occurrence with regard to the
      50.0% quota share of the First American Property and Casualty Insurance
      Company Florida Homeowners Program produced and underwritten by Mobile
      Homeowners Insurance Agencies, Inc. shall not exceed the Company's pro
      rata share of the 250-year Probable Maximum Loss as modeled in RMS as of
      the date on which the loss occurrence commences.

ARTICLE VI - 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
      loss 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

                                                                 [BENFIELD LOGO]

                                     Page 4



      2.    The final adjusted reinsurance premium, as calculated in accordance
            with Article XIII, for the excess layer reinstated for the term of
            this Contract (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 final adjusted reinsurance premium for any excess layer for
      the term of this Contract has not been 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 final adjusted reinsurance premium
      for that excess layer for the term of this Contract has been 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 either 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 loss occurrence; or

      2.    The amount, shown as "Reinsurer's Term Limit" for that excess layer
            in Schedule A attached hereto, in all during the term of this
            Contract.

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 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 any action against its
            insured or reinsured or in the preparation or prosecution of an
            appeal consequent upon such an action.

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                                     Page 5



      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.

      Notwithstanding anything stated herein, the amount included in the
      ultimate net loss for any one loss occurrence as respects loss in excess
      of policy limits and extra contractual obligations shall not exceed 25.0%
      of the Company's indemnity loss hereunder arising out of that loss
      occurrence.

      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.

      If any provision of this paragraph B 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.

C.    "Loss adjustment expense" as used herein shall mean expenses assignable to
      the investigation, appraisal, adjustment, settlement, litigation, defense
      and/or appeal of specific claims, regardless of how such expenses are
      classified for statutory reporting purposes. Loss adjustment expense shall
      include, but not be limited to, declaratory judgments, interest on
      judgments, expenses of outside adjusters, and a pro rata share of the
      salaries and expenses of the Company's field employees according to the
      time occupied adjusting such losses and expenses of the Company's
      officials incurred in connection with the losses, but shall not include
      office expenses or salaries of the Company's regular employees.

ARTICLE VIII - OTHER REINSURANCE

A.    The Company shall be permitted to carry excess reinsurance, recoveries
      under which shall inure to the benefit of this Contract.

B.    The Company shall be permitted to carry quota share reinsurance and
      underlying excess catastrophe reinsurance, recoveries under which shall
      inure solely to the benefit of the Company.

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                                     Page 6



ARTICLE IX - FLORIDA HURRICANE CATASTROPHE FUND

A.    Any loss reimbursement paid or payable to the Company under the Florida
      Hurricane Catastrophe Fund ("FHCF") as a result of loss occurrences
      commencing during the term of this Contract shall inure to the benefit of
      this Contract. Further, any FHCF loss reimbursement shall be deemed to be
      paid to the Company in accordance with the reimbursement contract between
      the Company and the State Board of Administration of the State of Florida
      at the full payout level set forth therein and will be deemed not to be
      reduced by any reduction or exhaustion of the FHCF's claims paying
      capacity.

B.    Prior to the determination of the Company's FHCF retention and payout, if
      any, under the reimbursement contract, the Reinsurer's liability hereunder
      will be determined provisionally based on the projected payout, determined
      in accordance with the provisions of the reimbursement contract. Following
      determination of the payout under the reimbursement contract, the ultimate
      net loss under this Contract will be recalculated. If, as a result of such
      calculation, the loss to the Reinsurer under any excess layer of this
      Contract in any one loss occurrence is less than the amount previously
      paid by the Reinsurer under that excess layer, the Company shall promptly
      remit the difference to the Reinsurer. If the loss to the Reinsurer under
      any excess layer in any one loss occurrence is greater than the amount
      previously paid by the Reinsurer, the Reinsurer shall promptly remit the
      difference to the Company.

C.    If an FHCF reimbursement amount is based on the Company's losses in more
      than one loss occurrence and the FHCF does not designate the amount
      allocable to each loss occurrence, the FHCF reimbursement amount shall be
      prorated in the proportion that the Company's losses in each loss
      occurrence bear to the Company's total losses arising out of all loss
      occurrences to which the FHCF reimbursement applies.

D.    Any reimbursement premiums or emergency assessment paid by the Company
      under the FHCF shall be deemed to be premiums paid for inuring
      reinsurance.

ARTICLE X - LOSS OCCURRENCE

A.    The term "loss occurrence" shall mean the sum of all individual losses
      directly occasioned by any one disaster, accident or loss or series of
      disasters, accidents or losses arising out of one event which occurs
      within the area of one state of the United States or province of Canada
      and states or provinces contiguous thereto and to one another. However,
      the duration and extent of any one "loss occurrence" shall be limited to
      all individual losses sustained by the Company occurring during any period
      of 168 consecutive hours arising out of and directly occasioned by the
      same event, except that the term "loss occurrence" shall be further
      defined as follows:

      1.    As regards windstorm, hail, tornado, hurricane, cyclone, including
            ensuing collapse and water damage, all individual losses sustained
            by the Company occurring during any period of 72 consecutive hours
            arising out of and directly occasioned by the same event. However,
            the event need not be limited to one state or province or states or
            provinces contiguous thereto.

      2.    As regards riot, riot attending a strike, civil commotion, vandalism
            and malicious mischief, all individual losses sustained by the
            Company occurring during any period

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                                     Page 7



            of 72 consecutive hours within the area of one municipality or
            county and the municipalities or counties contiguous thereto arising
            out of and directly occasioned by the same event. The maximum
            duration of 72 consecutive hours may be extended in respect of
            individual losses which occur beyond such 72 consecutive hours
            during the continued occupation of an insured's premises by
            strikers, provided such occupation commenced during the aforesaid
            period.

      3.    As regards earthquake (the epicentre of which need not necessarily
            be within the territorial confines referred to in the introductory
            portion of this paragraph) and fire following directly occasioned by
            the earthquake, only those individual fire losses which commence
            during the period of 168 consecutive hours may be included in the
            Company's "loss occurrence."

      4.    As regards "freeze," only individual losses directly occasioned by
            collapse, breakage of glass and water damage (caused by bursting
            frozen pipes and tanks) may be included in the Company's "loss
            occurrence."

      5.    As regards firestorms, brush fires, and other fires or series of
            fires, irrespective of origin (except as provided in subparagraphs 2
            and 3 above), which spread through trees, grassland or other
            vegetation, all individual losses sustained by the Company which
            occur during any period of 168 consecutive hours within a 100-mile
            radius of any one fixed point selected by the Company may be
            included in the Company's "loss occurrence." However, an individual
            loss subject to this subparagraph cannot be included in more than
            one "loss occurrence."

B.    For all those "loss occurrences," other than those referred to in
      subparagraph 2 of paragraph A above, the Company may choose the date and
      time when any such period of consecutive hours commences, provided that it
      is not earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss, and provided that only one such period of 168
      consecutive hours shall apply with respect to one event, except for any
      "loss occurrence" referred to in subparagraph 1 of paragraph A above where
      only one such period of 72 consecutive hours shall apply with respect to
      one event, regardless of the duration of the event.

C.    As respects those "loss occurrences" referred to in subparagraph 2 of
      paragraph A above, if the disaster, accident or loss occasioned by the
      event is of greater duration than 72 consecutive hours, then the Company
      may divide that disaster, accident or loss into two or more "loss
      occurrences," provided no two periods overlap and no individual loss is
      included in more than one such period and provided that no period
      commences earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss.

D.    No individual losses occasioned by an event that would be covered by 72
      hours clauses may be included in any "loss occurrence" claimed under the
      168 hours provision.

ARTICLE XI - LOSS NOTICES AND SETTLEMENTS

A.    Whenever losses sustained by the Company appear likely to result in a
      claim hereunder, the Company shall notify the Reinsurer, and the Reinsurer
      shall have the right to participate in the adjustment of such losses at
      its own expense.

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B.    All loss settlements made by the Company, provided they are within the
      terms of this Contract, shall be binding upon the Reinsurer, and the
      Reinsurer agrees to pay all amounts for which it may be liable upon
      receipt of reasonable evidence of the amount paid (or scheduled to be
      paid) by the Company.

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) on account of claims
and settlements involving reinsurance hereunder. Salvage 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 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 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 "Minimum Premium" for that excess layer in
            Schedule A attached hereto; or

      2.    The percentage, shown as "Premium Rate" for that excess layer in
            Schedule A attached hereto, of the Company's gross earned premium
            for Property business during the term of this Contract.

B.    The Company shall pay the Reinsurer a deposit premium for each excess
      layer of the amount, shown as "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 June 1, September 1 and December 1 of 2004 and March
      1, 2005.

C.    Within 45 days after the expiration of this Contract, 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 such excess layer shall be remitted promptly.

D.    "Gross earned premium" as used herein is defined as earned premium of the
      Company for the classes of business reinsured hereunder, before the
      deduction of any premiums ceded by the Company for reinsurance which
      inures to the benefit of this Contract. Gross earned premium will not
      include the Company's earned premium for Homeowners, Manufactured
      Homeowners and Condominium policies that include a "No Wind/No Water"
      exclusion. It is understood that gross earned premium shall include
      catastrophe fees, but shall exclude MGA fees, DRST fees and policy
      surcharges to recoup residual market deficit assessments.

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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 XXXI (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 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 10 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 10 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.

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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 36D)

The Company and the Reinsurer, each at its option, may offset any balance or
balances, whether on account of premiums, claims and losses, loss expenses or
salvages due from one party to the other under this Contract; provided, however,
that in the event of the insolvency of a party hereto, offsets shall only be
allowed in accordance with applicable statutes and regulations.

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. However, in no event shall this be construed
      in any way to provide coverage outside the terms and conditions set forth
      in this Contract.

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

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                                     Page 11



      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 - CURRENCY (BRMA 12A)

A.    Whenever the word "Dollars" or the "$" sign appears in this Contract, they
      shall be construed to mean United States Dollars and all transactions
      under this Contract shall be in United States Dollars.

B.    Amounts paid or received by the Company in any other currency shall be
      converted to United States Dollars at the rate of exchange at the date
      such transaction is entered on the books of the Company.

ARTICLE XXI - TAXES (BRMA 50C)

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, the District of Columbia or Canada.

ARTICLE XXII - FEDERAL EXCISE TAX (BRMA 17A)

(Applicable to those reinsurers, excepting Underwriters at Lloyd's London and
other reinsurers exempt from Federal Excise Tax, who are domiciled outside the
United States of America.)

A.    The Reinsurer has agreed to allow for the purpose of paying the Federal
      Excise Tax the applicable percentage of the premium payable hereon as
      imposed under Section 4371 of the Internal Revenue Code to the extent such
      premium is subject to the Federal Excise Tax.

B.    In the event of any return of premium becoming due hereunder the Reinsurer
      will deduct the applicable percentage from the return premium payable
      hereon and the Company or its agent should take steps to recover the tax
      from the United States Government.

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                                     Page 12



ARTICLE XXIII - RESERVE REQUIREMENTS

A.    If the Reinsurer is unauthorized in any state of the United States of
      America or the District of Columbia, the Reinsurer agrees to fund, on or
      before December 31, 2004, its share of the Company's ceded United States
      unearned premium and outstanding loss and loss adjustment expense reserves
      (including all case reserves plus any reasonable amount estimated to be
      unreported, as determined by the Company, from known loss occurrences) by:

      1.    Clean, irrevocable and unconditional letters of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a bank or banks meeting the NAIC Securities
            Valuation Office credit standards for issuers of letters of credit
            and acceptable to said insurance regulatory authorities; and/or

      2.    Escrow accounts for the benefit of the Company; and/or

      3.    Cash advances;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved. The Reinsurer, at its sole option, may fund in other
      than cash if its method and form of funding are acceptable to the
      insurance regulatory authorities involved.

B.    If the Reinsurer is unauthorized in any province or jurisdiction of
      Canada, the Reinsurer agrees to fund, on or before December 31, 2004, 115%
      of its share of the Company's ceded Canadian unearned premium and
      outstanding loss and loss adjustment expense reserves (including all case
      reserves plus any reasonable amount estimated to be unreported, as
      determined by the Company, from known loss occurrences) by:

      1.    A clean, irrevocable and unconditional letter of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a Canadian bank or banks meeting the NAIC
            Securities Valuation Office credit standards for issuers of letters
            of credit and acceptable to said insurance regulatory authorities,
            for no more than 15/115ths of the total funding required; and/or

      2.    Cash advances for the remaining balance of the funding required;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved.

C.    With regard to funding in whole or in part by letters of credit, it is
      agreed that each letter of credit will be in a form acceptable to
      insurance regulatory authorities involved, will be issued for a term of at
      least one year and will include an "evergreen clause," which automatically
      extends the term for at least one additional year at each expiration date
      unless written notice of non-renewal is given to the Company not less than
      30 days prior to said expiration date or longer where required by
      insurance regulatory authorities. The Company and the Reinsurer further
      agree, notwithstanding anything to the contrary in this Contract, that
      said letters of credit may be drawn upon by the Company or its successors
      in interest at any

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                                     Page 13



      time, without diminution because of the insolvency of the Company or the
      Reinsurer, but only for one or more of the following purposes:

      1.    To reimburse itself for the Reinsurer's share of unearned premiums
            returned to insureds on account of policy cancellations, unless paid
            in cash by the Reinsurer;

      2.    To reimburse itself for the Reinsurer's share of losses and/or loss
            adjustment expense paid under the terms of policies reinsured
            hereunder, unless paid in cash by the Reinsurer;

      3.    To reimburse itself for the Reinsurer's share of any other amounts
            claimed to be due hereunder, unless paid in cash by the Reinsurer;

      4.    To fund a cash account in an amount equal to the Reinsurer's share
            of any ceded unearned premium and/or outstanding loss and loss
            adjustment expense reserves (including all case reserves plus any
            reasonable amount estimated to be unreported, as determined by the
            Company, from known loss occurrences) funded by means of a letter of
            credit which is under non-renewal notice, if said letter of credit
            has not been renewed or replaced by the Reinsurer 10 days prior to
            its expiration date;

      5.    To refund to the Reinsurer any sum in excess of the actual amount
            required to fund the Reinsurer's share of the Company's ceded
            unearned premium and/or outstanding loss and loss adjustment expense
            reserves (including all case reserves plus any reasonable amount
            estimated to be unreported, as determined by the Company, from known
            loss occurrences), if so requested by the Reinsurer.

      In the event the amount drawn by the Company on any letter of credit is in
      excess of the actual amount required for C(1) or C(2) or C(4), in the case
      of C(3), the actual amount determined to be due, the Company shall
      promptly return to the Reinsurer the excess amount so drawn.

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.

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                                     Page 14



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

A.    As a condition precedent to any right of action hereunder, any dispute or
      difference between the Company and any Reinsurer relating to the
      interpretation or performance of this Contract, including its formation or
      validity, or any transaction under this Contract, whether arising before
      or after termination, shall be submitted to arbitration.

B.    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 provided that communication shall be made by the Company to each
      of the reinsurers constituting the one party, and provided, however, that
      nothing therein 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 Reinsurer under the terms of this Contract
      from several to joint.

C.    Upon written request of any party, each party shall choose an arbitrator
      and the two chosen shall select a third arbitrator. If either party
      refuses or neglects to appoint an arbitrator within 30 days after receipt
      of the written request for arbitration, the requesting party may appoint a
      second arbitrator. If the two arbitrators fail to agree on the selection
      of a third arbitrator within 30 days of their appointment, the Company
      shall petition the American Arbitration Association to appoint the third
      arbitrator. If the American Arbitration Association fails to appoint the
      third arbitrator within 30 days after it has been requested to do so,
      either party may request a justice of a court of general jurisdiction of
      the state in which the arbitration is to be held to appoint the third
      arbitrator. All arbitrators shall be active or retired officers of
      insurance or reinsurance companies, or Lloyd's London Underwriters, and
      disinterested in the outcome of the arbitration. Each party shall submit
      its case to the arbitrators within 30 days of the appointment of the third
      arbitrator.

D.    The parties hereby waive all objections to the method of selection of the
      arbitrators, it being the intention of both sides that all the arbitrators
      be chosen from those submitted by the parties.

E.    The arbitrators shall have the power to determine all procedural rules for
      the holding of the arbitration including but not limited to inspection of
      documents, examination of witnesses and any other matter relating to the
      conduct of the arbitration. The arbitrators shall interpret this Contract
      as an honorable engagement and not as merely a legal obligation; they are

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      relieved of all judicial formalities and may abstain from following the
      strict rules of law. The arbitrators may award interest and costs. Each
      party shall bear the expense of its own arbitrator and shall share equally
      with the other party the expenses of the third arbitrator and of the
      arbitration.

F.    The decision in writing of the majority of the arbitrators shall be final
      and binding upon both parties. Judgment may be entered upon the final
      decision of the arbitrators in any court having jurisdiction. The
      arbitration shall take place in Bala Cynwyd, Pennsylvania, unless
      otherwise mutually agreed between the Company and the Reinsurer.

G.    This Article shall remain in full force and effect in the event any other
      provision of this Contract shall be found invalid or non-binding.

H.    All time limitations stated in this Article may be amended by mutual
      consent of the parties, and will be amended automatically to the extent
      made necessary by any circumstances beyond the control of the parties.

ARTICLE XXVI - SERVICE OF SUIT

(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. This
Article is not intended to conflict with or override the parties obligations to
arbitrate their disputes in accordance with Article XXV.)

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 - 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.

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                                     Page 16



ARTICLE XXVIII - GOVERNING LAW

This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Pennsylvania exclusive of the rules
with respect to conflicts of law, except as to rules with respect to credit for
reinsurance in which case the applicable rules of all the states shall apply.

ARTICLE XXIX - CONFIDENTIALITY

The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly communicate, disclose or divulge to any third
party any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company's books, records and
papers. The restrictions as outlined in this Article shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, retrocessionaires, legal counsel, arbitrators involved in
any arbitration procedures under this Contract or disclosures required upon
subpoena or other duly-issued order of a court or other governmental agency or
regulatory authority.

ARTICLE XXX - SEVERABILITY

If any provision of this Contract should be invalid under applicable laws, the
latter shall control but only to the extent of the conflict without affecting
the remaining provisions of this Contract.

ARTICLE XXXI - 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., 3600 West
80th Street, Minneapolis, Minnesota 55431. 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:

Bala Cynwyd, Pennsylvania, this ________ day of ____________ in the year ______.

           ---------------------------------------------------------------------
           Philadelphia Insurance Companies (for and on behalf of the "Company")

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                                     Page 17


                                   SCHEDULE A

                     EXCESS CATASTROPHE REINSURANCE CONTRACT
                             EFFECTIVE: JUNE 1, 2004

                                    issued to

                         Philadelphia Insurance Company
                            Bala Cynwyd, Pennsylvania
                    Philadelphia Indemnity Insurance Company
                            Bala Cynwyd, Pennsylvania
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                        Philadelphia Insurance Companies



                               FIRST                SECOND               THIRD             FOURTH
                              EXCESS                EXCESS              EXCESS             EXCESS
                            -----------           -----------        -----------        -----------
                                                                           
Company's Retention         $10,000,000           $20,000,000        $40,000,000       $ 65,000,000
Reinsurer's Per             $10,000,000           $20,000,000        $25,000,000       $ 50,000,000
Occurrence Limit
Reinsurer's Term Limit      $20,000,000           $40,000,000        $50,000,000       $100,000,000
Minimum Premium             $ 1,680,000           $ 2,000,000        $ 1,350,000       $  1,600,000
Premium Rate                      1.00%                 1.19%              0.81%              0.96%
Deposit Premium             $ 2,100,000           $ 2,500,000        $ 1,687,500       $  2,000,000
Quarterly                   $   525,000           $   625,000        $   421,875       $    500,000
Deposit Premium


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.

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   NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (U.S.A.)

1.    This Reinsurance does not cover any loss or liability accruing to the
      Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph (1) of this
      Clause, this Reinsurance does not cover any loss or liability accruing to
      the Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      I.    Nuclear reactor power plants including all auxiliary property on the
            site, or

      II.   Any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and "critical facilities" as such, or

      III.  Installations for fabricating complete fuel elements or for
            processing substantial quantities of "special nuclear material," and
            for reprocessing, salvaging, chemically separating, storing or
            disposing of "spent" nuclear fuel or waste materials, or

      IV.   Installations other than those listed in paragraph (2) III above
            using substantial quantities of radioactive isotopes or other
            products of nuclear fission.

3.    Without in any way restricting the operations of paragraphs (1) and (2)
      hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, from any insurance on
      property which is on the same site as a nuclear reactor power plant or
      other nuclear installation and which normally would be insured therewith
      except that this paragraph (3) shall not operate

      (a)   where Reassured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused. However on and after 1st January 1960
            this sub-paragraph (b) shall only apply provided the said
            radioactive contamination exclusion provision has been approved by
            the Governmental Authority having jurisdiction thereof.

4.    Without in any way restricting the operations of paragraphs (1), (2) and
      (3) hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    It is understood and agreed that this Clause shall not extend to risks
      using radioactive isotopes in any form where the nuclear exposure is not
      considered by the Reassured to be the primary hazard.

6.    The term "special nuclear material" shall have the meaning given it in the
      Atomic Energy Act of 1954 or by any law amendatory thereof.

7.    Reassured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

Note.-Without in any way restricting the operation of paragraph (1) hereof, it
is understood and agreed that

      (a)   all policies issued by the Reassured on or before 31st December 1957
            shall be free from the application of the other provisions of this
            Clause until expiry date or 31st December 1960 whichever first
            occurs whereupon all the provisions of this Clause shall apply.

      (b)   with respect to any risk located in Canada policies issued by the
            Reassured on or before 31st December 1958 shall be free from the
            application of the other provisions of this Clause until expiry date
            or 31st December 1960 whichever first occurs whereupon all the
            provisions of this Clause shall apply.

12/12/57
N.M.A. 1119
BRMA 35B



   NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (CANADA)

1.    This Agreement does not cover any loss or liability accruing to the
      Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph 1 of this
      clause, this Agreement does not cover any loss or liability accruing to
      the Reinsured, directly or indirectly, and whether as Insurer or
      Reinsurer, from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      (a)   nuclear reactor power plants including all auxiliary property on the
            site, or

      (b)   any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and critical facilities as such, or

      (c)   installations for fabricating complete fuel elements or for
            processing substantial quantities of prescribed substances, and for
            reprocessing, salvaging, chemically separating, storing or disposing
            of spent nuclear fuel or waste materials, or

      (d)   installations other than those listed in (c) above using substantial
            quantities of radioactive isotopes or other products of nuclear
            fission.

3.    Without in any way restricting the operation of paragraphs 1 and 2 of this
      clause, this Agreement does not cover any loss or liability by radioactive
      contamination accruing to the Reinsured, directly or indirectly, and
      whether as Insurer or Reinsurer, from any insurance on property which is
      on the same site as a nuclear reactor power plant or other nuclear
      installation and which normally would be insured therewith, except that
      this paragraph 3 shall not operate:

      (a)   where the Reinsured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where the said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused.

4.    Without in any way restricting the operation of paragraphs 1, 2 and 3 of
      this clause, this Agreement does not cover any loss or liability by
      radioactive contamination accruing to the Reinsured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    This clause shall not extend to risks using radioactive isotopes in any
      form where the nuclear exposure is not considered by the Reinsured to be
      the primary hazard.

6.    The term "prescribed substances" shall have the meaning given to it by the
      Atomic Energy Control Act R.S.C. 1985(c), A-16 or by any law amendatory
      thereof.

7.    Reinsured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

8.    Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, this Agreement does not cover any loss or liability
      accruing to the Reinsured, directly or indirectly, and whether as Insurer
      or Reinsurer, caused:

      (1)   by any nuclear incident, as defined in the Nuclear Liability Act or
            any other nuclear liability act, law or statute, or any law
            amendatory thereof or nuclear explosion, except for ensuing loss or
            damage which results directly from fire, lightning or explosion of
            natural, coal or manufactured gas;

      (2)   by contamination by radioactive material.

NOTE: Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, paragraph 8 of this clause shall only apply to all
      original contracts of the Reinsured, whether new, renewal or replacement,
      which become effective on or after December 31, 1992.

N.M.A. 1980 (2/19/93)



               POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE

SECTION A:

Excluding:

      (a)   All business derived directly or indirectly from any Pool,
            Association or Syndicate which maintains its own reinsurance
            facilities.

      (b)   Any Pool or Scheme (whether voluntary or mandatory) formed after
            March 1, 1968 for the purpose of insuring property whether on a
            country-wide basis or in respect of designated areas. This exclusion
            shall not apply to so-called Automobile Insurance Plans or other
            Pools formed to provide coverage for Automobile Physical Damage.

SECTION B:

It is agreed that business written by the Company for the same perils, which is
known at the time to be insured by, or in excess of underlying amounts placed in
the following Pools, Associations or Syndicates, whether by way of insurance or
reinsurance, is excluded hereunder:

         Industrial Risk Insurers,
         Associated Factory Mutuals,
         Improved Risk Mutuals,
         Any Pool, Association or Syndicate formed for the purpose of writing
              Oil, Gas or Petro-Chemical Plants and/or Oil or Gas Drilling Rigs,
         United States Aircraft Insurance Group,
         Canadian Aircraft Insurance Group,
         Associated Aviation Underwriters,
         American Aviation Underwriters.

Section B does not apply:

      (a)   Where The Total Insured Value over all interests of the risk in
            question is less than $250,000,000.

      (b)   To interests traditionally underwritten as Inland Marine or stock
            and/or contents written on a blanket basis.

      (c)   To Contingent Business Interruption, except when the Company is
            aware that the key location is known at the time to be insured in
            any Pool, Association or Syndicate named above, other than as
            provided for under Section B(a).

      (d)   To risks as follows:

            Offices, Hotels, Apartments, Hospitals, Educational Establishments,
            Public Utilities (other than railroad schedules) and builder's risks
            on the classes of risks specified in this subsection (d) only.

Where this clause attaches to Catastrophe Excesses, the following Section C is
added:

SECTION C:

Nevertheless the Reinsurer specifically agrees that liability accruing to the
Company from its participation in residual market mechanisms including but not
limited to:

      (1) The following so-called "Coastal Pools":

            Alabama Insurance Underwriting Association
            Louisiana Insurance Underwriting Association
            Mississippi Windstorm Underwriting Association
            North Carolina Insurance Underwriting Association
            South Carolina Windstorm and Hail Underwriting Association
            Texas Windstorm Insurance Association

AND

      (2)   All "Fair Plan" and "Rural Risk Plan" business

                                  Page 1 of 2



AND

      (3)   Citizens Property Insurance Corporation ("CPIC") and the California
            Earthquake Authority ("CEA")

for all perils otherwise protected hereunder shall not be excluded, except,
however, that this reinsurance does not include any increase in such liability
resulting from:

      (i)   The inability of any other participant in such "Coastal Pool" and/or
            "Fair Plan" and/or "Rural Risk Plan" and/or Residual Market
            Mechanisms to meet its liability.

      (ii)  Any claim against such "Coastal Pool" and/or "Fair Plan" and/or
            "Rural Risk Plan" and/or Residual Market Mechanisms, or any
            participant therein, including the Company, whether by way of
            subrogation or otherwise, brought by or on behalf of any insolvency
            fund (as defined in the Insolvency Fund Exclusion Clause
            incorporated in this Contract).

SECTION D:

      (1)   Notwithstanding Section C above, in respect of the CEA, where an
            assessment is made against the Company by the CEA, the Company may
            include in its Ultimate Net Loss only that assessment directly
            attributable to each separate loss occurrence covered hereunder. The
            Company's initial capital contribution to the CEA shall not be
            included in the Ultimate Net Loss.

      (2)   Notwithstanding Section C above, in respect of CPIC, where an
            assessment is made against the Company by CPIC, the maximum loss
            that the Company may include in the Ultimate Net Loss in respect of
            any loss occurrence hereunder shall not exceed the lesser of:

            (a)   The Company's assessment from CPIC for the accounting year in
                  which the loss occurrence commenced, or

            (b)   The product of the following:

                  (i)   The Company's percentage participation in CPIC for the
                        accounting year in which the loss occurrence commenced;
                        and

                  (ii)  CPIC's total losses in such loss occurrence.

Any assessments for accounting years subsequent to that in which the loss
occurrence commenced may not be included in the Ultimate Net Loss hereunder.
Moreover, notwithstanding Section C above, in respect of CPIC, the Ultimate Net
Loss hereunder shall not include any monies expended to purchase or retire bonds
as a consequence of being a member of CPIC. For the purposes of this Contract,
the Company may not include in the Ultimate Net Loss any assessment or any
percentage assessment levied by CPIC to meet the obligations of an insolvent
insurer member or other party, or to meet any obligations arising from the
deferment by CPIC of the collection of monies.

NOTES: Wherever used herein the terms:

           "Company"    shall be understood to mean "Company," "Reinsured,"
                        "Reassured" or whatever other term is used in the
                        attached reinsurance document to designate the
                        reinsured company or companies.

           "Agreement"  shall be understood to mean "Agreement," "Contract,"
                        "Policy" or whatever other term is used to designate
                        the attached reinsurance document.

           "Reinsurers" shall be understood to mean "Reinsurers,"
                        "Underwriters" or whatever other term is used in the
                        attached reinsurance document to designate the
                        reinsurer or reinsurers.

                                  Page 2 of 2



                     POLLUTION AND SEEPAGE EXCLUSION CLAUSE

This Contract excludes loss and/or damage and/or costs and/or expenses arising
from seepage and/or pollution and/or contamination, other than contamination
from smoke. Nevertheless, this exclusion does not preclude payment of the cost
of removing debris of property damaged by a loss otherwise covered hereunder,
subject always to a limit of 25% of the Company's property loss under the
applicable original policy.

BRMA 39A



                          ELECTRONIC DATA ENDORSEMENT B

1.    ELECTRONIC DATA EXCLUSION

      Notwithstanding any provision to the contrary within the Contract or any
      endorsement thereto, it is understood and agreed as follows:-

      a)    This Contract does not insure loss, damage, destruction, distortion,
            erasure, corruption or alteration of ELECTRONIC DATA from any cause
            whatsoever (including but not limited to COMPUTER VIRUS) or loss of
            use, reduction in functionality, cost, expense of whatsoever nature
            resulting therefrom, regardless of any other cause or event
            contributing concurrently or in any other sequence to the loss.

            ELECTRONIC DATA means facts, concepts and information converted to a
            form useable for communications, interpretation or processing by
            electronic and electromechanical data processing or electronically
            controlled equipment and includes programs, software and other coded
            instructions for the processing and manipulation of data or the
            direction and manipulation of such equipment.

            COMPUTER VIRUS means a set of corrupting, harmful or otherwise
            unauthorized instructions or code including a set of maliciously
            introduced unauthorized instructions or code, programmatic or
            otherwise, that propagate themselves through a computer system or
            network of whatsoever nature. COMPUTER VIRUS includes but is not
            limited to "Trojan Horses," "worms" and "time or logic bombs."

      b)    However, in the event that a peril listed below results from any of
            the matters described in paragraph a) above, this Contract, subject
            to all its terms, conditions and exclusions, will cover physical
            damage occurring during the Contract period to property insured by
            this Contract directly caused by such listed peril.

            Listed Perils

            Fire
            Explosion

2.    ELECTRONIC DATA PROCESSING MEDIA VALUATION

      Notwithstanding any provision to the contrary within the Contract or any
      endorsement thereto, it is understood and agreed as follows:-

      Should electronic data processing media insured by this Contract suffer
      physical loss or damage insured by this Contract, then the basis of
      valuation shall be the cost of the blank media plus the costs of copying
      the ELECTRONIC DATA from back-up or from originals of a previous
      generation. These costs will not include research and engineering nor any
      costs of recreating, gathering or assembling such ELECTRONIC DATA. If the
      media is not repaired, replaced or restored the basis of valuation shall
      be the cost of the blank media. However this Contract does not insure any
      amount pertaining to the value of such ELECTRONIC DATA to the Assured or
      any other party, even if such ELECTRONIC DATA cannot be recreated,
      gathered or assembled.

N.M.A. 2915 (25.1.01)

EX-10.9

                                                                    EXHIBIT 10.9

              FLORIDA ONLY EXCESS CATASTROPHE REINSURANCE CONTRACT
                             EFFECTIVE: JUNE 1, 2004

                                    issued to

                       Liberty American Insurance Company
                             Pinellas Park, Florida
                          Mobile USA Insurance Company
                             Pinellas Park, Florida
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                     Liberty American Insurance Group, Inc.

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                                TABLE OF CONTENTS



 ARTICLE                                                                    PAGE
                                                                         
     I     Classes of Business Reinsured                                     1
    II     Term                                                              1
   III     Territory                                                         2
    IV     Exclusions                                                        2
     V     Retention and Limit                                               4
    VI     Reinstatement                                                     4
   VII     Definitions                                                       5
  VIII     Other Reinsurance                                                 6
    IX     Loss Occurrence                                                   6
     X     Loss Notices and Settlements                                      8
    XI     Salvage and Subrogation                                           8
   XII     Florida Hurricane Catastrophe Fund                                8
  XIII     Reinsurance Premium                                               9
   XIV     Late Payments                                                    10
    XV     Offset (BRMA 36D)                                                11
   XVI     Access to Records (BRMA 1D)                                      11
  XVII     Liability of the Reinsurer                                       11
 XVIII     Net Retained Lines (BRMA 32E)                                    11
   XIX     Errors and Omissions (BRMA 14F)                                  12
    XX     Currency (BRMA 12A)                                              12
   XXI     Taxes (BRMA 50C)                                                 12
  XXII     Federal Excise Tax (BRMA 17A)                                    12
 XXIII     Reserve Requirements                                             13
  XXIV     Insolvency                                                       14
   XXV     Arbitration                                                      15
  XXVI     Service of Suit                                                  16
 XXVII     Agency Agreement                                                 16
XXVIII     Governing Law                                                    16
  XXIX     Confidentiality                                                  17
   XXX     Severability                                                     17
  XXXI     Intermediary (BRMA 23A)                                          17
           Schedule A


                                                                 [BENFIELD LOGO]



              FLORIDA ONLY EXCESS CATASTROPHE REINSURANCE CONTRACT
                             EFFECTIVE: JUNE 1, 2004

                                    issued to

                       Liberty American Insurance Company
                             Pinellas Park, Florida
                          Mobile USA Insurance Company
                             Pinellas Park, Florida
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                     Liberty American Insurance Group, Inc.
             (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 Property 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 - TERM

A.    This Contract shall become effective on June 1, 2004, with respect to
      losses arising out of loss occurrences commencing on or after that date,
      and shall remain in force until May 31, 2005, both days inclusive.

B.    If this Contract expires while a loss occurrence covered hereunder is in
      progress, the Reinsurer's liability hereunder shall, subject to the other
      terms and conditions of this Contract, be determined as if the entire loss
      occurrence had occurred prior to the expiration of this Contract, provided
      that no part of such loss occurrence is claimed against any renewal or
      replacement of this Contract.

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                                     Page 1



ARTICLE III - TERRITORY

The liability of the Reinsurer shall be limited to losses under policies
covering property located within the territorial limits of the State of Florida
or extra territorial limits of the Company's policies.

ARTICLE IV - EXCLUSIONS

This Contract does not apply to and specifically excludes the following:

      1.    Financial guarantee and insolvency.

      2.    Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
            Physical Damage - Reinsurance (U.S.A.)" and the "Nuclear Incident
            Exclusion Clause - Physical Damage - Reinsurance (Canada)" attached
            to and forming part of this Contract.

      3.    Loss or damage caused by or resulting from 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, but
            this exclusion shall not apply to loss or damage covered under a
            standard policy with a standard War Exclusion Clause.

      4.    Loss or liability excluded under the provisions of the "Pools,
            Associations and Syndicates Exclusion Clause" attached to and
            forming part of this Contract.

      5.    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.

      6.    Losses in respect of overhead transmission and distribution lines
            and their supporting structures other than those on or within 300
            meters (or 1,000 feet) of the insured premises. It is understood and
            agreed that public utilities extension and/or suppliers extension
            and/or contingent business interruption coverages are not subject to
            this exclusion, provided that these are not part of a transmitters'
            or distributors' policy.

      7.    Accident and Health, Casualty, Fidelity and/or Surety business.

      8.    Pollution and seepage coverages excluded under the provisions of the
            "Pollution and Seepage Exclusion Clause (BRMA 39A)" attached to and
            forming part of this Contract.

      9.    Notwithstanding any other provision to the contrary within this
            Contract or any amendment thereto, it is agreed that this Contract
            excludes loss, damage, cost or expense directly or indirectly caused
            by, contributed to by, resulting from, or arising

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                                     Page 2



            out of or in connection with any act of terrorism, as defined
            herein, regardless of any other cause or event contributing
            concurrently or in any other sequence to the loss.

            An "act of terrorism" includes any act, or preparation in respect of
            action, or threat of action, designed to influence the government de
            jure or de facto of any nation or any political division thereof, or
            in pursuit of political, religious, ideological or similar purposes
            to intimidate the public or a section of the public of any nation by
            any person or group(s) of persons whether acting alone or on behalf
            of or in connection with any organization(s) or government(s) de
            jure or de facto, and which:

            a.    Involves violence against one or more persons, or

            b.    Involves damage to property; or

            c.    Endangers life other than that of the person committing the
                  action; or

            d.    Creates a risk to health or safety of the public or a section
                  of the public; or

            e.    Is designed to interfere with or to disrupt an electronic
                  system.

            This Contract also excludes loss, damage, cost or expense directly
            or indirectly caused by, contributed to by, resulting from, or
            arising out of or in connection with any action in controlling,
            preventing, suppressing, retaliating against, or responding to any
            act of terrorism.

            Notwithstanding the above and subject otherwise to the terms,
            conditions and limitations of this Contract, in respect only of
            personal lines this Contract will pay actual loss or damage (but not
            related cost or expense) caused by any act of terrorism provided
            such act is not directly or indirectly caused by, contributed to by,
            resulting from, or arising out of or in connection with biological,
            chemical or nuclear pollution or contamination.

      10.   Loss or liability in any way or to any extent arising out of the
            actual or alleged presence or actual, alleged or threatened presence
            of fungi including, but not limited to, mold, mildew, mycotoxins,
            microbial volatile organic compounds or other "microbial
            contamination." This includes:

            a.    Any supervision, instruction, recommendations, warnings or
                  advice given or which should have been given in connection
                  with the above; and

            b.    Any obligation to share damages with or repay someone else who
                  must pay damages because of such injury or damage.

            For purposes of this exclusion, "microbial contamination" means any
            contamination, either airborne or surface, which arises out of or is
            related to the presence of fungi, mold, mildew, mycotoxins,
            microbial volatile organic compounds or spores, including, without
            limitation, Penicillium, Aspergillus, Fusarium, Aspergillus Flavus
            and Stachybotrys chartarum.

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                                     Page 3



            Losses resulting from the above causes do not in and of themselves
            constitute an event unless arising out of one or more of the
            following perils, in which case this exclusion does not apply:

                  Fire, lightning, explosion, aircraft or vehicle impact,
                  falling objects, windstorm, hail, tornado, cyclone, hurricane,
                  earthquake, volcano, tsunami, flood, freeze or weight of snow.

            Notice of any claims for mold-related losses must be given by the
            Company to the Reinsurer, in writing, within 24 months after the
            commencement date of the loss occurrence to which such claims
            relate.

      11.   Loss or liability excluded under the provisions of the "Electronic
            Data Endorsement B" (N.M.A. 2915) attached to and forming part of
            this Contract.

ARTICLE V - 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 each loss 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
      loss occurrence.

B.    No claim shall be made under any excess layer of reinsurance coverage
      provided by this Contract as respects any one loss occurrence unless at
      least two risks insured or reinsured by the Company are involved in such
      loss occurrence. For purposes of this Contract, the Company shall be the
      sole judge of what constitutes one risk.

ARTICLE VI - 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
      loss 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 final adjusted reinsurance premium, as calculated in accordance
            with Article XIII, for the excess layer reinstated for the term of
            this Contract (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 final adjusted reinsurance premium for any excess layer for
      the term of this Contract has not been determined as of the date of

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                                     Page 4



      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 final adjusted reinsurance premium
      for that excess layer for the term of this Contract has been 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 either 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 loss occurrence; or

      2.    The amount, shown as "Reinsurer's Term Limit" for that excess layer
            in Schedule A attached hereto, in all during the term of this
            Contract.

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 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 any 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

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                                     Page 5



            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.

      Notwithstanding anything stated herein, the amount included in the
      ultimate net loss for any one loss occurrence as respects loss in excess
      of policy limits and extra contractual obligations shall not exceed 25.0%
      of the Company's indemnity loss hereunder arising out of that loss
      occurrence.

      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.

      If any provision of this paragraph B 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.

C.    "Loss adjustment expense" as used herein shall mean expenses assignable to
      the investigation, appraisal, adjustment, settlement, litigation, defense
      and/or appeal of specific claims, regardless of how such expenses are
      classified for statutory reporting purposes. Loss adjustment expense shall
      include, but not be limited to, declaratory judgments, interest on
      judgments, expenses of outside adjusters, and a pro rata share of the
      salaries and expenses of the Company's field employees according to the
      time occupied adjusting such losses and expenses of the Company's
      officials incurred in connection with the losses, but shall not include
      office expenses or salaries of the Company's regular employees.

ARTICLE VIII - OTHER REINSURANCE

The Company shall be permitted to carry underlying excess catastrophe
reinsurance, recoveries under which shall inure solely to the benefit of the
Company. The Company shall also carry 15.0% quota share reinsurance on its
direct personal lines business, recoveries under which shall inure to the
benefit of this Contract, or so deemed.

ARTICLE IX - LOSS OCCURRENCE

A.    The term "loss occurrence" shall mean the sum of all individual losses
      directly occasioned by any one disaster, accident or loss or series of
      disasters, accidents or losses arising out of one event which occurs
      within the area of one state of the United States or province of Canada
      and states or provinces contiguous thereto and to one another. However,
      the duration and extent of any one "loss occurrence" shall be limited to
      all individual losses sustained by the Company occurring during any period
      of 168 consecutive hours arising out of and directly occasioned by the
      same event, except that the term "loss occurrence" shall be further
      defined as follows:

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      1.    As regards windstorm, hail, tornado, hurricane, cyclone, including
            ensuing collapse and water damage, all individual losses sustained
            by the Company occurring during any period of 72 consecutive hours
            arising out of and directly occasioned by the same event. However,
            the event need not be limited to one state or province or states or
            provinces contiguous thereto.

      2.    As regards riot, riot attending a strike, civil commotion, vandalism
            and malicious mischief, all individual losses sustained by the
            Company occurring during any period of 72 consecutive hours within
            the area of one municipality or county and the municipalities or
            counties contiguous thereto arising out of and directly occasioned
            by the same event. The maximum duration of 72 consecutive hours may
            be extended in respect of individual losses which occur beyond such
            72 consecutive hours during the continued occupation of an insured's
            premises by strikers, provided such occupation commenced during the
            aforesaid period.

      3.    As regards earthquake (the epicentre of which need not necessarily
            be within the territorial confines referred to in the introductory
            portion of this paragraph) and fire following directly occasioned by
            the earthquake, only those individual fire losses which commence
            during the period of 168 consecutive hours may be included in the
            Company's "loss occurrence."

      4.    As regards "freeze," only individual losses directly occasioned by
            collapse, breakage of glass and water damage (caused by bursting
            frozen pipes and tanks) may be included in the Company's "loss
            occurrence."

      5.    As regards firestorms, brush fires, and other fires or series of
            fires, irrespective of origin (except as provided in subparagraphs 2
            and 3 above), which spread through trees, grassland or other
            vegetation, all individual losses sustained by the Company which
            occur during any period of 168 consecutive hours within a 100-mile
            radius of any one fixed point selected by the Company may be
            included in the Company's "loss occurrence." However, an individual
            loss subject to this subparagraph cannot be included in more than
            one "loss occurrence."

B.    For all those "loss occurrences," other than those referred to in
      subparagraph 2 of paragraph A above, the Company may choose the date and
      time when any such period of consecutive hours commences, provided that it
      is not earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss, and provided that only one such period of 168
      consecutive hours shall apply with respect to one event, except for any
      "loss occurrence" referred to in subparagraph 1 of paragraph A above where
      only one such period of 72 consecutive hours shall apply with respect to
      one event, regardless of the duration of the event.

C.    As respects those "loss occurrences" referred to in subparagraph 2 of
      paragraph A above, if the disaster, accident or loss occasioned by the
      event is of greater duration than 72 consecutive hours, then the Company
      may divide that disaster, accident or loss into two or more "loss
      occurrences," provided no two periods overlap and no individual loss is
      included in more than one such period and provided that no period
      commences earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss.

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D.    No individual losses occasioned by an event that would be covered by 72
      hours clauses may be included in any "loss occurrence" claimed under the
      168 hours provision.

ARTICLE X - LOSS NOTICES AND SETTLEMENTS

A.    Whenever losses sustained by the Company appear likely to result in a
      claim hereunder, the Company shall notify the Reinsurer, and the Reinsurer
      shall have the right to participate in the adjustment of such losses at
      its own expense.

B.    All loss settlements made by the Company, provided they are within the
      terms of this Contract, shall be binding upon the Reinsurer, and the
      Reinsurer agrees to pay all amounts for which it may be liable upon
      receipt of reasonable evidence of the amount paid (or scheduled to be
      paid) by the Company.

ARTICLE XI - 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) on account of claims
and settlements involving reinsurance hereunder. Salvage 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 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 XII - FLORIDA HURRICANE CATASTROPHE FUND

A.    Any loss reimbursement paid or payable to the Company under the Florida
      Hurricane Catastrophe Fund (FHCF) as a result of loss occurrences
      commencing during the term of this Contract shall inure to the benefit of
      this Contract. Further, any FHCF loss reimbursement shall be deemed to be
      paid to the Company in accordance with the reimbursement contract between
      the Company and the State Board of Administration of the State of Florida
      at the full payout level set forth therein and will be deemed not to be
      reduced by any reduction or exhaustion of the FHCF's claims paying
      capacity.

B.    Prior to the determination of the Company's FHCF retention and payout, if
      any, under the reimbursement contract, the Reinsurer's liability hereunder
      will be determined provisionally based on the projected payout, determined
      in accordance with the provisions of the reimbursement contract. Following
      determination of the payout under the reimbursement contract, the ultimate
      net loss under this Contract will be recalculated. If, as a result of such
      calculation, the loss to the Reinsurer under any excess layer of this
      Contract in any one loss occurrence is less than the amount previously
      paid by the Reinsurer under that excess layer, the Company shall promptly
      remit the difference to the Reinsurer. If the loss to the Reinsurer under
      any excess layer in any one loss occurrence is greater than the amount
      previously paid by the Reinsurer, the Reinsurer shall promptly remit the
      difference to the Company.

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C.    If an FHCF reimbursement amount is based on the Company's losses in more
      than one loss occurrence and the FHCF does not designate the amount
      allocable to each loss occurrence, the FHCF reimbursement amount shall be
      prorated in the proportion that the Company's losses in each loss
      occurrence bear to the Company's total losses arising out of all loss
      occurrences to which the FHCF reimbursement applies.

D.    Any reimbursement premiums or emergency assessment paid by the Company
      under the FHCF shall be deemed to be premiums paid for inuring
      reinsurance.

ARTICLE XIII - 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 "Minimum Premium" for that excess layer in
            Schedule A attached hereto; or

      2.    The sum of the following:

            a.    The percentage, shown as "Condominium, Dwelling and Homeowners
                  Premium Rate" for that excess layer in Schedule A attached
                  hereto, of the Company's gross earned premium for Condominium,
                  Dwelling and Homeowners business during the term of this
                  Contract; and

            b.    The percentage, shown as "Manufactured Homeowners Premium
                  Rate" for that excess layer in Schedule A attached hereto, of
                  the Company's gross earned premium for Manufactured Homeowners
                  business during the term of this Contract.

B.    The Company shall pay the Reinsurer a deposit premium for each excess
      layer of the amount, shown as "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 June 1, September 1 and December 1 of 2004 and March
      1, 2005.

C.    Within 45 days after the expiration of this Contract, 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 such excess layer shall be remitted promptly.

D.    "Gross earned premium" as used herein is defined as earned premium of the
      Company for the classes of business reinsured hereunder, before the
      deduction of any premiums ceded by the Company for reinsurance which
      inures to the benefit of this Contract. Gross earned premium will not
      include the Company's earned premium for Homeowners, Manufactured
      Homeowners, Dwelling and Condominium policies that include a "No Wind/No
      Water" exclusion. It is understood that gross earned premium shall include
      catastrophe fees, but shall exclude MGA fees, DRST fees and policy
      surcharges to recoup residual market deficit assessments.

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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 XXXI (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 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 10 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 10 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.

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                                    Page 10



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 or control 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 36D)

The Company and the Reinsurer, each at its option, may offset any balance or
balances, whether on account of premiums, claims and losses, loss expenses or
salvages due from one party to the other under this Contract; provided, however,
that in the event of the insolvency of a party hereto, offsets shall only be
allowed in accordance with applicable statutes and regulations.

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. However, in no event shall this be construed
      in any way to provide coverage outside the terms and conditions set forth
      in this Contract.

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

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                                    Page 11



      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 - CURRENCY (BRMA 12A)

A.    Whenever the word "Dollars" or the "$" sign appears in this Contract, they
      shall be construed to mean United States Dollars and all transactions
      under this Contract shall be in United States Dollars.

B.    Amounts paid or received by the Company in any other currency shall be
      converted to United States Dollars at the rate of exchange at the date
      such transaction is entered on the books of the Company.

ARTICLE XXI - TAXES (BRMA 50C)

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, the District of Columbia or Canada.

ARTICLE XXII - FEDERAL EXCISE TAX (BRMA 17A)

(Applicable to those reinsurers, excepting Underwriters at Lloyd's London and
other reinsurers exempt from Federal Excise Tax, who are domiciled outside the
United States of America.)

A.    The Reinsurer has agreed to allow for the purpose of paying the Federal
      Excise Tax the applicable percentage of the premium payable hereon as
      imposed under Section 4371 of the Internal Revenue Code to the extent such
      premium is subject to the Federal Excise Tax.

B.    In the event of any return of premium becoming due hereunder the Reinsurer
      will deduct the applicable percentage from the return premium payable
      hereon and the Company or its agent should take steps to recover the tax
      from the United States Government.

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                                    Page 12



ARTICLE XXIII - RESERVE REQUIREMENTS

A.    If the Reinsurer is unauthorized in any state of the United States of
      America or the District of Columbia, the Reinsurer agrees to fund its
      share of the Company's ceded United States unearned premium and
      outstanding loss and loss adjustment expense reserves (including all case
      reserves plus any reasonable amount estimated to be unreported from known
      loss occurrences) by:

      1.    Clean, irrevocable and unconditional letters of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a bank or banks meeting the NAIC Securities
            Valuation Office credit standards for issuers of letters of credit
            and acceptable to said insurance regulatory authorities; and/or

      2.    Escrow accounts for the benefit of the Company; and/or

      3.    Cash advances;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved. The Reinsurer, at its sole option, may fund in other
      than cash if its method and form of funding are acceptable to the
      insurance regulatory authorities involved.

B.    If the Reinsurer is unauthorized in any province or jurisdiction of
      Canada, the Reinsurer agrees to fund 115% of its share of the Company's
      ceded Canadian unearned premium and outstanding loss and loss adjustment
      expense reserves (including all case reserves plus any reasonable amount
      estimated to be unreported from known loss occurrences) by:

      1.    A clean, irrevocable and unconditional letter of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a Canadian bank or banks meeting the NAIC
            Securities Valuation Office credit standards for issuers of letters
            of credit and acceptable to said insurance regulatory authorities,
            for no more than 15/115ths of the total funding required; and/or

      2.    Cash advances for the remaining balance of the funding required;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved.

C.    With regard to funding in whole or in part by letters of credit, it is
      agreed that each letter of credit will be in a form acceptable to
      insurance regulatory authorities involved, will be issued for a term of at
      least one year and will include an "evergreen clause," which automatically
      extends the term for at least one additional year at each expiration date
      unless written notice of non-renewal is given to the Company not less than
      30 days prior to said expiration date. The Company and the Reinsurer
      further agree, notwithstanding anything to the contrary in this Contract,
      that said letters of credit may be drawn upon by the Company or its
      successors in interest at any time, without diminution because of the
      insolvency of the Company or the Reinsurer, but only for one or more of
      the following purposes:

      1.    To reimburse itself for the Reinsurer's share of unearned premiums
            returned to insureds on account of policy cancellations, unless paid
            in cash by the Reinsurer;

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                                    Page 13



      2.    To reimburse itself for the Reinsurer's share of losses and/or loss
            adjustment expense paid under the terms of policies reinsured
            hereunder, unless paid in cash by the Reinsurer;

      3.    To reimburse itself for the Reinsurer's share of any other amounts
            claimed to be due hereunder, unless paid in cash by the Reinsurer;

      4.    To fund a cash account in an amount equal to the Reinsurer's share
            of any ceded unearned premium and/or outstanding loss and loss
            adjustment expense reserves (including all case reserves plus any
            reasonable amount estimated to be unreported from known loss
            occurrences) funded by means of a letter of credit which is under
            non-renewal notice, if said letter of credit has not been renewed or
            replaced by the Reinsurer 10 days prior to its expiration date;

      5.    To refund to the Reinsurer any sum in excess of the actual amount
            required to fund the Reinsurer's share of the Company's ceded
            unearned premium and/or outstanding loss and loss adjustment expense
            reserves (including all case reserves plus any reasonable amount
            estimated to be unreported from known loss occurrences), if so
            requested by the Reinsurer.

      In the event the amount drawn by the Company on any letter of credit is in
      excess of the actual amount required for C(1) or C(2) or C(4), in the case
      of C(3), the actual amount determined to be due, the Company shall
      promptly return to the Reinsurer the excess amount so drawn.

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.

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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

A.    As a condition precedent to any right of action hereunder, any dispute or
      difference between the Company and any Reinsurer relating to the
      interpretation or performance of this Contract, including its formation or
      validity, or any transaction under this Contract, whether arising before
      or after termination, shall be submitted to arbitration.

B.    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 provided that communication shall be made by the Company to each
      of the reinsurers constituting the one party, and provided, however, that
      nothing therein 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 Reinsurer under the terms of this Contract
      from several to joint.

C.    Upon written request of any party, each party shall choose an arbitrator
      and the two chosen shall select a third arbitrator. If either party
      refuses or neglects to appoint an arbitrator within 30 days after receipt
      of the written request for arbitration, the requesting party may appoint a
      second arbitrator. If the two arbitrators fail to agree on the selection
      of a third arbitrator within 30 days of their appointment, the Company
      shall petition the American Arbitration Association to appoint the third
      arbitrator. If the American Arbitration Association fails to appoint the
      third arbitrator within 30 days after it has been requested to do so,
      either party may request a justice of a court of general jurisdiction of
      the state in which the arbitration is to be held to appoint the third
      arbitrator. All arbitrators shall be active or retired officers of
      insurance or reinsurance companies, or Lloyd's London Underwriters, and
      disinterested in the outcome of the arbitration. Each party shall submit
      its case to the arbitrators within 30 days of the appointment of the third
      arbitrator.

D.    The parties hereby waive all objections to the method of selection of the
      arbitrators, it being the intention of both sides that all the arbitrators
      be chosen from those submitted by the parties.

E.    The arbitrators shall have the power to determine all procedural rules for
      the holding of the arbitration including but not limited to inspection of
      documents, examination of witnesses and any other matter relating to the
      conduct of the arbitration. The arbitrators shall interpret this Contract
      as an honorable engagement and not as merely a legal obligation; they are
      relieved of all judicial formalities and may abstain from following the
      strict rules of law. The arbitrators may award interest and costs. Each
      party shall bear the expense of its own arbitrator and shall share equally
      with the other party the expenses of the third arbitrator and of the
      arbitration.

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F.    The decision in writing of the majority of the arbitrators shall be final
      and binding upon both parties. Judgment may be entered upon the final
      decision of the arbitrators in any court having jurisdiction. The
      arbitration shall take place in Pinellas Park, Florida, unless otherwise
      mutually agreed between the Company and the Reinsurer.

G.    This Article shall remain in full force and effect in the event any other
      provision of this Contract shall be found invalid or non-binding.

H.    All time limitations stated in this Article may be amended by mutual
      consent of the parties, and will be amended automatically to the extent
      made necessary by any circumstances beyond the control of the parties.

ARTICLE XXVI - SERVICE OF SUIT

(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. This
Article is not intended to conflict with or override the parties obligations to
arbitrate their disputes in accordance with Article XXV.)

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 - 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 - GOVERNING LAW

This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Florida exclusive of the rules with
respect to conflicts of law, except as to rules with respect to credit for
reinsurance in which case the applicable rules of all the states shall apply.

                                                                 [BENFIELD LOGO]

                                    Page 16



ARTICLE XXIX - CONFIDENTIALITY

The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly communicate, disclose or divulge to any third
party any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company's books, records and
papers. The restrictions as outlined in this Article shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, retrocessionaires, legal counsel, arbitrators involved in
any arbitration procedures under this Contract or disclosures required upon
subpoena or other duly-issued order of a court or other governmental agency or
regulatory authority.

ARTICLE XXX - SEVERABILITY

If any provision of this Contract should be invalid under applicable laws, the
latter shall control but only to the extent of the conflict without affecting
the remaining provisions of this Contract.

ARTICLE XXXI - 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., 3600 West
80th Street, Minneapolis, Minnesota 55431. 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:

Pinellas Park, Florida, this ________ day of ______________ in the year________.

     ___________________________________________________________________________
     Liberty American Insurance Group, Inc. (for and on behalf of the "Company")

                                                                 [BENFIELD LOGO]

                                    Page 17


                                   SCHEDULE A

              FLORIDA ONLY EXCESS CATASTROPHE REINSURANCE CONTRACT
                             EFFECTIVE: JUNE 1, 2004

                                    issued to

                       Liberty American Insurance Company
                             Pinellas Park, Florida
                          Mobile USA Insurance Company
                             Pinellas Park, Florida
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                     Liberty American Insurance Group, Inc.



                               FIRST          SECOND         THIRD          FOURTH
                               EXCESS         EXCESS         EXCESS         EXCESS
                                                             
Company's Retention         $ 7,000,000    $20,000,000    $35,000,000    $50,000,000

Reinsurer's Per             $13,000,000    $15,000,000    $15,000,000    $40,000,000
Occurrence Limit

Reinsurer's Term Limit      $26,000,000    $30,000,000    $30,000,000    $80,000,000

Minimum Premium             $ 2,808,000    $ 2,220,000    $ 1,200,000    $ 1,280,000

Condominium, Dwelling and         4.203%         3.323%         1.796%         1.916%
Homeowners Premium Rate

Manufactured Homeowners           5.046%         3.990%         2.157%         2.300%
Premium Rate

Deposit Premium             $ 3,510,000    $ 2,775,000    $ 1,500,000    $ 1,600,000

Quarterly                   $   877,500    $   693,750    $   375,000    $   400,000
Deposit Premium


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.

                                                                 [BENFIELD LOGO]


   NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (U.S.A.)

1.    This Reinsurance does not cover any loss or liability accruing to the
      Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph (1) of this
      Clause, this Reinsurance does not cover any loss or liability accruing to
      the Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      I.    Nuclear reactor power plants including all auxiliary property on the
            site, or

      II.   Any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and "critical facilities" as such, or

      III.  Installations for fabricating complete fuel elements or for
            processing substantial quantities of "special nuclear material," and
            for reprocessing, salvaging, chemically separating, storing or
            disposing of "spent" nuclear fuel or waste materials, or

      IV.   Installations other than those listed in paragraph (2) III above
            using substantial quantities of radioactive isotopes or other
            products of nuclear fission.

3.    Without in any way restricting the operations of paragraphs (1) and (2)
      hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, from any insurance on
      property which is on the same site as a nuclear reactor power plant or
      other nuclear installation and which normally would be insured therewith
      except that this paragraph (3) shall not operate

      (a)   where Reassured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused. However on and after 1st January 1960
            this sub-paragraph (b) shall only apply provided the said
            radioactive contamination exclusion provision has been approved by
            the Governmental Authority having jurisdiction thereof.

4.    Without in any way restricting the operations of paragraphs (1), (2) and
      (3) hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    It is understood and agreed that this Clause shall not extend to risks
      using radioactive isotopes in any form where the nuclear exposure is not
      considered by the Reassured to be the primary hazard.

6.    The term "special nuclear material" shall have the meaning given it in the
      Atomic Energy Act of 1954 or by any law amendatory thereof.

7.    Reassured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

Note.-Without in any way restricting the operation of paragraph (1) hereof, it
is understood and agreed that

      (a)   all policies issued by the Reassured on or before 31st December 1957
            shall be free from the application of the other provisions of this
            Clause until expiry date or 31st December 1960 whichever first
            occurs whereupon all the provisions of this Clause shall apply.

      (b)   with respect to any risk located in Canada policies issued by the
            Reassured on or before 31st December 1958 shall be free from the
            application of the other provisions of this Clause until expiry date
            or 31st December 1960 whichever first occurs whereupon all the
            provisions of this Clause shall apply.

12/12/57
N.M.A 1119
BRMA 35B


   NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (CANADA)

1.    This Agreement does not cover any loss or liability accruing to the
      Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph 1 of this
      clause, this Agreement does not cover any loss or liability accruing to
      the Reinsured, directly or indirectly, and whether as Insurer or
      Reinsurer, from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      (a)   nuclear reactor power plants including all auxiliary property on the
            site, or

      (b)   any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and critical facilities as such, or

      (c)   installations for fabricating complete fuel elements or for
            processing substantial quantities of radioactive materials, and for
            reprocessing, salvaging, chemically separating, storing or disposing
            of spent nuclear fuel or waste materials, or

      (d)   installations other than those listed in (c) above using substantial
            quantities of radioactive isotopes or other products of nuclear
            fission.

3.    Without in any way restricting the operation of paragraphs 1 and 2 of this
      clause, this Agreement does not cover any loss or liability by radioactive
      contamination accruing to the Reinsured, directly or indirectly, and
      whether as Insurer or Reinsurer, from any insurance on property which is
      on the same site as a nuclear reactor power plant or other nuclear
      installation and which normally would be insured therewith, except that
      this paragraph 3 shall not operate:

      (a)   where the Reinsured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where the said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused.

4.    Without in any way restricting the operation of paragraphs 1, 2 and 3 of
      this clause, this Agreement does not cover any loss or liability by
      radioactive contamination accruing to the Reinsured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    This clause shall not extend to risks using radioactive isotopes in any
      form where the nuclear exposure is not considered by the Reinsured to be
      the primary hazard.

6.    The term "radioactive material" means uranium, thorium, plutonium,
      neptunium, their respective derivatives and compounds, radioactive
      isotopes of other elements and any other substances which may be
      designated by or pursuant to any law, act or statute, or any law
      amendatory thereof as being prescribed substances capable of releasing
      atomic energy, or as being requisite for the production, use or
      application of atomic energy.

7.    Reinsured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

8.    Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, this Agreement does not cover any loss or liability
      accruing to the Reinsured, directly or indirectly, and whether as Insurer
      or Reinsurer, caused:

      (1)   by any nuclear incident, as defined in or pursuant to the Nuclear
            Liability Act or any other nuclear liability act, law or statute, or
            any law amendatory thereof or nuclear explosion, except for ensuing
            loss or damage which results directly from fire, lightning or
            explosion of natural, coal or manufactured gas;

      (2)   by contamination by radioactive material.

NOTE: Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, paragraph 8 of this clause shall only apply to all
      original contracts of the Reinsured, whether new, renewal or replacement,
      which become effective on or after December 31, 1992.

N.M.A. 1980a (1/4/96)


               POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE

SECTION A:

Excluding:

      (a)   All business derived directly or indirectly from any Pool,
            Association or Syndicate which maintains its own reinsurance
            facilities.

      (b)   Any Pool or Scheme (whether voluntary or mandatory) formed after
            March 1, 1968 for the purpose of insuring property whether on a
            country-wide basis or in respect of designated areas. This exclusion
            shall not apply to so-called Automobile Insurance Plans or other
            Pools formed to provide coverage for Automobile Physical Damage.

SECTION B:

It is agreed that business written by the Company for the same perils, which is
known at the time to be insured by, or in excess of underlying amounts placed in
the following Pools, Associations or Syndicates, whether by way of insurance or
reinsurance, is excluded hereunder:

            Industrial Risk Insurers,
            Associated Factory Mutuals,
            Improved Risk Mutuals,
            Any Pool, Association or Syndicate formed for the purpose of writing
              Oil, Gas or Petro-Chemical Plants and/or Oil or Gas Drilling Rigs,
            United States Aircraft Insurance Group,
            Canadian Aircraft Insurance Group,
            Associated Aviation Underwriters,
            American Aviation Underwriters.

Section B does not apply:

      (a)   Where The Total Insured Value over all interests of the risk in
            question is less than $250,000,000.

      (b)   To interests traditionally underwritten as Inland Marine or stock
            and/or contents written on a blanket basis.

      (c)   To Contingent Business Interruption, except when the Company is
            aware that the key location is known at the time to be insured in
            any Pool, Association or Syndicate named above, other than as
            provided for under Section B(a).

      (d)   To risks as follows:

            Offices, Hotels, Apartments, Hospitals, Educational Establishments,
            Public Utilities (other than railroad schedules) and builder's risks
            on the classes of risks specified in this subsection (d) only.

Where this clause attaches to Catastrophe Excesses, the following Section C is
added:

SECTION C:

Nevertheless the Reinsurer specifically agrees that liability accruing to the
Company from its participation in residual market mechanisms including but not
limited to:

      (1)   The following so-called "Coastal Pools":

            Alabama Insurance Underwriting Association
            Louisiana Insurance Underwriting Association
            Mississippi Windstorm Underwriting Association
            North Carolina Insurance Underwriting Association
            South Carolina Windstorm and Hail Underwriting Association
            Texas Windstorm Insurance Association

AND

      (2)   All "Fair Plan" and "Rural Risk Plan" business

                                  Page 1 of 2



AND

      (3)   Citizens Property Insurance Corporation ("CPIC") and the California
            Earthquake Authority ("CEA")

for all perils otherwise protected hereunder shall not be excluded, except,
however, that this reinsurance does not include any increase in such liability
resulting from:

      (i)   The inability of any other participant in such "Coastal Pool" and/or
            "Fair Plan" and/or "Rural Risk Plan" and/or Residual Market
            Mechanisms to meet its liability.

      (ii)  Any claim against such "Coastal Pool" and/or "Fair Plan" and/or
            "Rural Risk Plan" and/or Residual Market Mechanisms, or any
            participant therein, including the Company, whether by way of
            subrogation or otherwise, brought by or on behalf of any insolvency
            fund (as defined in the Insolvency Fund Exclusion Clause
            incorporated in this Contract).

SECTION D:

      (1)   Notwithstanding Section C above, in respect of the CEA, where an
            assessment is made against the Company by the CEA, the Company may
            include in its Ultimate Net Loss only that assessment directly
            attributable to each separate loss occurrence covered hereunder. The
            Company's initial capital contribution to the CEA shall not be
            included in the Ultimate Net Loss.

      (2)   Notwithstanding Section C above, in respect of CPIC, where an
            assessment is made against the Company by CPIC, the maximum loss
            that the Company may include in the Ultimate Net Loss in respect of
            any loss occurrence hereunder shall not exceed the lesser of:

            (a)   The Company's assessment from CPIC for the accounting year in
                  which the loss occurrence commenced, or

            (b)   The product of the following:

                  (i)   The Company's percentage participation in CPIC for the
                        accounting year in which the loss occurrence commenced;
                        and

                  (ii)  CPIC's total losses in such loss occurrence.

Any assessments for accounting years subsequent to that in which the loss
occurrence commenced may not be included in the Ultimate Net Loss hereunder.
Moreover, notwithstanding Section C above, in respect of CPIC, the Ultimate Net
Loss hereunder shall not include any monies expended to purchase or retire bonds
as a consequence of being a member of CPIC. For the purposes of this Contract,
the Company may not include in the Ultimate Net Loss any assessment or any
percentage assessment levied by CPIC to meet the obligations of an insolvent
insurer member or other party, or to meet any obligations arising from the
deferment by CPIC of the collection of monies.

NOTES:       Wherever used herein the terms:

             "Company"         shall be understood to mean "Company,"
                               "Reinsured," "Reassured" or whatever other term
                               is used in the attached reinsurance document to
                               designate the reinsured company or companies.

             "Agreement"       shall be understood to mean "Agreement,"
                               "Contract," "Policy" or whatever other term is
                               used to designate the attached reinsurance
                               document.

             "Reinsurers"      shall be understood to mean "Reinsurers,"
                               "Underwriters" or whatever other term is used in
                               the attached reinsurance document to designate
                               the reinsurer or reinsurers.

                                  Page 2 of 2



                     POLLUTION AND SEEPAGE EXCLUSION CLAUSE

This Contract excludes loss and/or damage and/or costs and/or expenses arising
from seepage and/or pollution and/or contamination, other than contamination
from smoke. Nevertheless, this exclusion does not preclude payment of the cost
of removing debris of property damaged by a loss otherwise covered hereunder,
subject always to a limit of 25% of the Company's property loss under the
applicable original policy.

BRMA 39A


                          ELECTRONIC DATA ENDORSEMENT B

1.    ELECTRONIC DATA EXCLUSION

      Notwithstanding any provision to the contrary within the Contract or any
      endorsement thereto, it is understood and agreed as follows:-

      a)    This Contract does not insure loss, damage, destruction, distortion,
            erasure, corruption or alteration of ELECTRONIC DATA from any cause
            whatsoever (including but not limited to COMPUTER VIRUS) or loss of
            use, reduction in functionality, cost, expense of whatsoever nature
            resulting therefrom, regardless of any other cause or event
            contributing concurrently or in any other sequence to the loss.

            ELECTRONIC DATA means facts, concepts and information converted to a
            form useable for communications, interpretation or processing by
            electronic and electromechanical data processing or electronically
            controlled equipment and includes programs, software and other coded
            instructions for the processing and manipulation of data or the
            direction and manipulation of such equipment.

            COMPUTER VIRUS means a set of corrupting, harmful or otherwise
            unauthorized instructions or code including a set of maliciously
            introduced unauthorized instructions or code, programmatic or
            otherwise, that propagate themselves through a computer system or
            network of whatsoever nature. COMPUTER VIRUS includes but is not
            limited to "Trojan Horses," "worms" and "time or logic bombs."

      b)    However, in the event that a peril listed below results from any of
            the matters described in paragraph a) above, this Contract, subject
            to all its terms, conditions and exclusions, will cover physical
            damage occurring during the Contract period to property insured by
            this Contract directly caused by such listed peril.

            Listed Perils

            Fire
            Explosion

2.    ELECTRONIC DATA PROCESSING MEDIA VALUATION

      Notwithstanding any provision to the contrary within the Contract or any
      endorsement thereto, it is understood and agreed as follows:-

      Should electronic data processing media insured by this Contract suffer
      physical loss or damage insured by this Contract, then the basis of
      valuation shall be the cost of the blank media plus the costs of copying
      the ELECTRONIC DATA from back-up or from originals of a previous
      generation. These costs will not include research and engineering nor any
      costs of recreating, gathering or assembling such ELECTRONIC DATA. If the
      media is not repaired, replaced or restored the basis of valuation shall
      be the cost of the blank media. However this Contract does not insure any
      amount pertaining to the value of such ELECTRONIC DATA to the Assured or
      any other party, even if such ELECTRONIC DATA cannot be recreated,
      gathered or assembled.

N.M.A. 2915 (25.1.0)
Form approved by Lloyd's Underwriters' Non-Marine Association Limited

EX-10.10

                                                                   EXHIBIT 10.10

             $50,000,000 EXCESS $90,000,000 FLORIDA ONLY CATASTROPHE
                              REINSURANCE CONTRACT
                             EFFECTIVE: JUNE 1, 2004

                                    issued to

                       Liberty American Insurance Company
                             Pinellas Park, Florida
                          Mobile USA Insurance Company
                             Pinellas Park, Florida
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                     Liberty American Insurance Group, Inc.

                                                                 [BENFIELD LOGO]


                           TABLE OF CONTENTS



ARTICLE                                                 PAGE
                                                     
     I   Classes of Business Reinsured                    1
    II   Term                                             1
   III   Territory                                        2
    IV   Exclusions                                       2
     V   Retention and Limit                              4
    VI   Reinstatement                                    4
   VII   Definitions                                      5
  VIII   Other Reinsurance                                6
    IX   Loss Occurrence                                  6
     X   Loss Notices and Settlements                     7
    XI   Salvage and Subrogation                          8
   XII   Florida Hurricane Catastrophe Fund               8
  XIII   Reinsurance Premium                              8
   XIV   Late Payments                                    9
    XV   Offset (BRMA 36D)                               10
   XVI   Access to Records (BRMA 1D)                     11
  XVII   Liability of the Reinsurer                      11
 XVIII   Net Retained Lines (BRMA 32E)                   11
   XIX   Errors and Omissions (BRMA 14F)                 11
    XX   Currency (BRMA 12A)                             11
   XXI   Taxes (BRMA 50C)                                12
  XXII   Federal Excise Tax (BRMA 17A)                   12
 XXIII   Reserve Requirements                            12
  XXIV   Insolvency                                      14
   XXV   Arbitration                                     14
  XXVI   Service of Suit                                 15
 XXVII   Agency Agreement                                16
XXVIII   Governing Law                                   16
  XXIX   Confidentiality                                 16
   XXX   Severability                                    16
  XXXI   Intermediary (BRMA 23A)                         17


                                                                 [BENFIELD LOGO]


             $50,000,000 EXCESS $90,000,000 FLORIDA ONLY CATASTROPHE
                              REINSURANCE CONTRACT
                             EFFECTIVE: JUNE 1, 2004

                                    issued to

                       Liberty American Insurance Company
                             Pinellas Park, Florida
                          Mobile USA Insurance Company
                             Pinellas Park, Florida
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                     Liberty American Insurance Group, Inc.
             (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 Property business, subject to the terms, conditions and limitations
hereinafter set forth.

ARTICLE II - TERM

A.    This Contract shall become effective on June 1, 2004, with respect to
      losses arising out of loss occurrences commencing on or after that date,
      and shall remain in force until May 31, 2005, both days inclusive.

B.    If this Contract expires while a loss occurrence covered hereunder is in
      progress, the Reinsurer's liability hereunder shall, subject to the other
      terms and conditions of this Contract, be determined as if the entire loss
      occurrence had occurred prior to the expiration of this Contract, provided
      that no part of such loss occurrence is claimed against any renewal or
      replacement of this Contract.

                                                                 [BENFIELD LOGO]

                                     Page 1



ARTICLE III - TERRITORY

The liability of the Reinsurer shall be limited to losses under policies
covering property located within the territorial limits of the State of Florida
or extra territorial limits of the Company's policies.

ARTICLE IV - EXCLUSIONS

This Contract does not apply to and specifically excludes the following:

      1.    Financial guarantee and insolvency.

      2.    Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
            Physical Damage - Reinsurance (U.S.A.)" and the "Nuclear Incident
            Exclusion Clause - Physical Damage - Reinsurance (Canada)" attached
            to and forming part of this Contract.

      3.    Loss or damage caused by or resulting from 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, but
            this exclusion shall not apply to loss or damage covered under a
            standard policy with a standard War Exclusion Clause.

      4.    Loss or liability excluded under the provisions of the "Pools,
            Associations and Syndicates Exclusion Clause" attached to and
            forming part of this Contract.

      5.    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.

      6.    Losses in respect of overhead transmission and distribution lines
            and their supporting structures other than those on or within 300
            meters (or 1,000 feet) of the insured premises. It is understood and
            agreed that public utilities extension and/or suppliers extension
            and/or contingent business interruption coverages are not subject to
            this exclusion, provided that these are not part of a transmitters'
            or distributors' policy.

      7.    Accident and Health, Casualty, Fidelity and/or Surety business.

      8.    Pollution and seepage coverages excluded under the provisions of the
            "Pollution and Seepage Exclusion Clause (BRMA 39A)" attached to and
            forming part of this Contract.

      9.    Notwithstanding any other provision to the contrary within this
            Contract or any amendment thereto, it is agreed that this Contract
            excludes loss, damage, cost or expense directly or indirectly caused
            by, contributed to by, resulting from, or arising

                                                                 [BENFIELD LOGO]

                                     Page 2



            out of or in connection with any act of terrorism, as defined
            herein, regardless of any other cause or event contributing
            concurrently or in any other sequence to the loss.

            An "act of terrorism" includes any act, or preparation in respect of
            action, or threat of action, designed to influence the government de
            jure or de facto of any nation or any political division thereof, or
            in pursuit of political, religious, ideological, or similar purposes
            to intimidate the public or a section of the public of any nation by
            any person or group(s) of persons, whether acting alone or on behalf
            of or in connection with any organization(s) or government(s) de
            jure or de facto, and which:

            a.    Involves violence against one or more persons; or

            b.    Involves damage to property; or

            c.    Endangers life other than that of the person committing the
                  action; or

            d.    Creates a risk to health or safety of the public or a section
                  of the public; or

            e.    Is designed to interfere with or to disrupt an electronic
                  system.

            This Contract also excludes loss, damage, cost or expense directly
            or indirectly caused by, contributed to by, resulting from, or
            arising out of or in connection with any action in controlling,
            preventing, suppressing, retaliating against or responding to any
            act of terrorism.

            Notwithstanding the above and subject otherwise to the terms,
            conditions, and limitations of this Contract, in respect only of
            personal lines this Contract will pay actual loss or damage (but not
            related cost or expense) caused by any act of terrorism provided
            such act is not directly or indirectly caused by, contributed to by,
            resulting from, or arising out of or in connection with biological,
            chemical, or nuclear pollution or contamination.

      10.   Loss or liability in any way or to any extent arising out of the
            actual or alleged presence or actual, alleged or threatened presence
            of fungi including, but not limited to, mold, mildew, mycotoxins,
            microbial volatile organic compounds or other "microbial
            contamination." This includes:

            a.    Any supervision, instruction, recommendations, warnings or
                  advice given or which should have been given in connection
                  with the above; and

            b.    Any obligation to share damages with or repay someone else who
                  must pay damages because of such injury or damage.

            For purposes of this exclusion, "microbial contamination" means any
            contamination, either airborne or surface, which arises out of or is
            related to the presence of fungi, mold, mildew, mycotoxins,
            microbial volatile organic compounds or spores, including, without
            limitation, Penicillium, Aspergillus, Fusarium, Aspergillus Flavus
            and Stachybotrys chartarum.

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                                     Page 3



            Losses resulting from the above causes do not in and of themselves
            constitute an event unless arising out of one or more of the
            following perils, in which case this exclusion does not apply:

                  Fire, lightning, explosion, aircraft or vehicle impact,
                  falling objects, windstorm, hail, tornado, cyclone, hurricane,
                  earthquake, volcano, tsunami, flood, freeze or weight of snow.

            Notice of any claims for mold-related losses must be given by the
            Company to the Reinsurer, in writing, within 24 months after the
            commencement date of the loss occurrence to which such claims
            relate.

      11.   Loss or liability excluded under the provisions of the "Electronic
            Data Endorsement B" (N.M.A. 2915) attached to and forming part of
            this Contract.

ARTICLE V - RETENTION AND LIMIT

A.    The Company shall retain and be liable for the first $90,000,000 of
      ultimate net loss arising out of each loss 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
      $50,000,000 as respects any one loss occurrence.

B.    No claim shall be made as respects any one loss occurrence unless at least
      two risks insured or reinsured by the Company are involved in such loss
      occurrence. For purposes of this Contract, the Company shall be the sole
      judge of what constitutes one risk.

ARTICLE VI - 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 loss 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 final adjusted reinsurance premium, as calculated in accordance
            with Article XIII, for the term of this Contract (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 final adjusted reinsurance
      premium for the term of this Contract has not been 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 final adjusted reinsurance premium for the term of this Contract has
      been 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

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      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 $50,000,000 as respects loss or losses arising
      out of any one loss occurrence, nor shall it exceed $100,000,000 in all
      during the term of this Contract.

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 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 any 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.

      Notwithstanding anything stated herein, the amount included in the
      ultimate net loss for any one loss occurrence as respects loss in excess
      of policy limits and extra contractual obligations shall not exceed 25.0%
      of the Company's indemnity loss hereunder arising out of that loss
      occurrence.

      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

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      organization or party involved in the presentation, defense or settlement
      of any claim covered hereunder.

      If any provision of this paragraph B 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.

C.    "Loss adjustment expense" as used herein shall mean expenses assignable to
      the investigation, appraisal, adjustment, settlement, litigation, defense
      and/or appeal of specific claims, regardless of how such expenses are
      classified for statutory reporting purposes. Loss adjustment expense shall
      include, but not be limited to, declaratory judgments, interest on
      judgments, expenses of outside adjusters, and a pro rata share of the
      salaries and expenses of the Company's field employees according to the
      time occupied adjusting such losses and expenses of the Company's
      officials incurred in connection with the losses, but shall not include
      office expenses or salaries of the Company's regular employees.

ARTICLE VIII - OTHER REINSURANCE

The Company shall be permitted to carry underlying excess catastrophe
reinsurance, recoveries under which shall inure solely to the benefit of the
Company. The Company shall also carry 15.0% quota share reinsurance on its
direct personal lines business, recoveries under which shall inure to the
benefit of this Contract, or so deemed.

ARTICLE IX - LOSS OCCURRENCE

A.    The term "loss occurrence" shall mean the sum of all individual losses
      directly occasioned by any one disaster, accident or loss or series of
      disasters, accidents or losses arising out of one event which occurs
      within the area of one state of the United States or province of Canada
      and states or provinces contiguous thereto and to one another. However,
      the duration and extent of any one "loss occurrence" shall be limited to
      all individual losses sustained by the Company occurring during any period
      of 168 consecutive hours arising out of and directly occasioned by the
      same event, except that the term "loss occurrence" shall be further
      defined as follows:

      1.    As regards windstorm, hail, tornado, hurricane, cyclone, including
            ensuing collapse and water damage, all individual losses sustained
            by the Company occurring during any period of 72 consecutive hours
            arising out of and directly occasioned by the same event. However,
            the event need not be limited to one state or province or states or
            provinces contiguous thereto.

      2.    As regards riot, riot attending a strike, civil commotion, vandalism
            and malicious mischief, all individual losses sustained by the
            Company occurring during any period of 72 consecutive hours within
            the area of one municipality or county and the municipalities or
            counties contiguous thereto arising out of and directly occasioned
            by the same event. The maximum duration of 72 consecutive hours may
            be extended in respect of individual losses which occur beyond such
            72 consecutive hours during the continued occupation of an insured's
            premises by strikers, provided such occupation commenced during the
            aforesaid period.

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      3.    As regards earthquake (the epicentre of which need not necessarily
            be within the territorial confines referred to in the introductory
            portion of this paragraph) and fire following directly occasioned by
            the earthquake, only those individual fire losses which commence
            during the period of 168 consecutive hours may be included in the
            Company's "loss occurrence."

      4.    As regards "freeze," only individual losses directly occasioned by
            collapse, breakage of glass and water damage (caused by bursting
            frozen pipes and tanks) may be included in the Company's "loss
            occurrence."

      5.    As regards firestorms, brush fires, and other fires or series of
            fires, irrespective of origin (except as provided in subparagraphs 2
            and 3 above), which spread through trees, grassland or other
            vegetation, all individual losses sustained by the Company which
            occur during any period of 168 consecutive hours within a 100-mile
            radius of any one fixed point selected by the Company may be
            included in the Company's "loss occurrence." However, an individual
            loss subject to this subparagraph cannot be included in more than
            one "loss occurrence."

B.    For all those "loss occurrences," other than those referred to in
      subparagraph 2 of paragraph A above, the Company may choose the date and
      time when any such period of consecutive hours commences, provided that it
      is not earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss, and provided that only one such period of 168
      consecutive hours shall apply with respect to one event, except for any
      "loss occurrence" referred to in subparagraph 1 of paragraph A above where
      only one such period of 72 consecutive hours shall apply with respect to
      one event, regardless of the duration of the event.

C.    As respects those "loss occurrences" referred to in subparagraph 2 of
      paragraph A above, if the disaster, accident or loss occasioned by the
      event is of greater duration than 72 consecutive hours, then the Company
      may divide that disaster, accident or loss into two or more "loss
      occurrences," provided no two periods overlap and no individual loss is
      included in more than one such period and provided that no period
      commences earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss.

D.    No individual losses occasioned by an event that would be covered by 72
      hours clauses may be included in any "loss occurrence" claimed under the
      168 hours provision.

ARTICLE X - LOSS NOTICES AND SETTLEMENTS

A.    Whenever losses sustained by the Company appear likely to result in a
      claim hereunder, the Company shall notify the Reinsurer, and the Reinsurer
      shall have the right to participate in the adjustment of such losses at
      its own expense.

B.    All loss settlements made by the Company, provided they are within the
      terms of this Contract, shall be binding upon the Reinsurer, and the
      Reinsurer agrees to pay all amounts for which it may be liable upon
      receipt of reasonable evidence of the amount paid (or scheduled to be
      paid) by the Company.

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ARTICLE XI - 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) on account of claims
and settlements involving reinsurance hereunder. Salvage 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 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 XII - FLORIDA HURRICANE CATASTROPHE FUND

A.    Any loss reimbursement paid or payable to the Company under the Florida
      Hurricane Catastrophe Fund (FHCF) as a result of loss occurrences
      commencing during the term of this Contract shall inure to the benefit of
      this Contract. Further, any FHCF loss reimbursement shall be deemed to be
      paid to the Company in accordance with the reimbursement contract between
      the Company and the State Board of Administration of the State of Florida
      at the full payout level set forth therein and will be deemed not to be
      reduced by any reduction or exhaustion of the FHCF's claims paying
      capacity.

B.    Prior to the determination of the Company's FHCF retention and payout, if
      any, under the reimbursement contract, the Reinsurer's liability hereunder
      will be determined provisionally based on the projected payout, determined
      in accordance with the provisions of the reimbursement contract. Following
      determination of the payout under the reimbursement contract, the ultimate
      net loss under this Contract will be recalculated. If, as a result of such
      calculation, the loss to the Reinsurer in any one loss occurrence is less
      than the amount previously paid by the Reinsurer, the Company shall
      promptly remit the difference to the Reinsurer. If the loss to the
      Reinsurer in any one loss occurrence is greater than the amount previously
      paid by the Reinsurer, the Reinsurer shall promptly remit the difference
      to the Company.

C.    If an FHCF reimbursement amount is based on the Company's losses in more
      than one loss occurrence and the FHCF does not designate the amount
      allocable to each loss occurrence, the FHCF reimbursement amount shall be
      prorated in the proportion that the Company's losses in each loss
      occurrence bear to the Company's total losses arising out of all loss
      occurrences to which the FHCF reimbursement applies.

D.    Any reimbursement premiums or emergency assessment paid by the Company
      under the FHCF shall be deemed to be premiums paid for inuring
      reinsurance.

ARTICLE XIII - REINSURANCE PREMIUM

A.    As premium for the reinsurance provided hereunder, the Company shall pay
      the Reinsurer the greater of the following:

      1.    A minimum premium of $1,240,000; or

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      2.    The sum of the following:

            a.    1.856% of the Company's gross earned premium for Condominium,
                  Dwelling and Homeowners business during the term of this
                  Contract; and

            b.    2.228% of the Company's gross earned premium for Manufactured
                  Homeowners business during the term of this Contract.

B.    The Company shall pay the Reinsurer a deposit premium of $1,550,000,
      payable in four equal installments of $387,500 on June 1, September 1 and
      December 1 of 2004 and March 1, 2005.

C.    Within 45 days after the expiration of this Contract, the Company shall
      provide a report to the Reinsurer setting forth the premium due hereunder,
      computed in accordance with paragraph A, and any additional premium due
      the Reinsurer or return premium due the Company shall be remitted
      promptly.

D.    "Gross earned premium" as used herein is defined as earned premium of the
      Company for the classes of business reinsured hereunder, before the
      deduction of any premiums ceded by the Company for reinsurance which
      inures to the benefit of this Contract. Gross earned premium will not
      include the Company's earned premium for Homeowners, Manufactured
      Homeowners, Dwelling and Condominium policies that include a "No Wind/No
      Water" exclusion. It is understood that gross earned premium shall include
      catastrophe fees, but shall exclude MGA fees, DRST fees and policy
      surcharges to recoup residual market deficit assessments.

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 XXXI (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 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.

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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 10 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 10 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 or control 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 36D)

The Company and the Reinsurer, each at its option, may offset any balance or
balances, whether on account of premiums, claims and losses, loss expenses or
salvages due from one party to the other under this Contract; provided, however,
that in the event of the insolvency of a

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party hereto, offsets shall only be allowed in accordance with applicable
statutes and regulations.

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. However, in no event shall this be construed
      in any way to provide coverage outside the terms and conditions set forth
      in this Contract.

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 - CURRENCY (BRMA 12A)

A.    Whenever the word "Dollars" or the "$" sign appears in this Contract, they
      shall be construed to mean United States Dollars and all transactions
      under this Contract shall be in United States Dollars.

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B.    Amounts paid or received by the Company in any other currency shall be
      converted to United States Dollars at the rate of exchange at the date
      such transaction is entered on the books of the Company.

ARTICLE XXI - TAXES (BRMA 50C)

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, the District of Columbia or Canada.

ARTICLE XXII - FEDERAL EXCISE TAX (BRMA 17A)

(Applicable to those reinsurers, excepting Underwriters at Lloyd's London and
other reinsurers exempt from Federal Excise Tax, who are domiciled outside the
United States of America.)

A.    The Reinsurer has agreed to allow for the purpose of paying the Federal
      Excise Tax the applicable percentage of the premium payable hereon as
      imposed under Section 4371 of the Internal Revenue Code to the extent such
      premium is subject to the Federal Excise Tax.

B.    In the event of any return of premium becoming due hereunder the Reinsurer
      will deduct the applicable percentage from the return premium payable
      hereon and the Company or its agent should take steps to recover the tax
      from the United States Government.

ARTICLE XXIII - RESERVE REQUIREMENTS

A.    If the Reinsurer is unauthorized in any state of the United States of
      America or the District of Columbia, the Reinsurer agrees to fund its
      share of the Company's ceded United States unearned premium and
      outstanding loss and loss adjustment expense reserves (including all case
      reserves plus any reasonable amount estimated to be unreported from known
      loss occurrences) by:

      1.    Clean, irrevocable and unconditional letters of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a bank or banks meeting the NAIC Securities
            Valuation Office credit standards for issuers of letters of credit
            and acceptable to said insurance regulatory authorities; and/or

      2.    Escrow accounts for the benefit of the Company; and/or

      3.    Cash advances;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved. The Reinsurer, at its sole option, may fund in other
      than cash if its method and form of funding are acceptable to the
      insurance regulatory authorities involved.

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B.    If the Reinsurer is unauthorized in any province or jurisdiction of
      Canada, the Reinsurer agrees to fund 115% of its share of the Company's
      ceded Canadian unearned premium and outstanding loss and loss adjustment
      expense reserves (including all case reserves plus any reasonable amount
      estimated to be unreported from known loss occurrences) by:

      1.    A clean, irrevocable and unconditional letter of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a Canadian bank or banks meeting the NAIC
            Securities Valuation Office credit standards for issuers of letters
            of credit and acceptable to said insurance regulatory authorities,
            for no more than 15/115ths of the total funding required; and/or

      2.    Cash advances for the remaining balance of the funding required;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved.

C.    With regard to funding in whole or in part by letters of credit, it is
      agreed that each letter of credit will be in a form acceptable to
      insurance regulatory authorities involved, will be issued for a term of at
      least one year and will include an "evergreen clause," which automatically
      extends the term for at least one additional year at each expiration date
      unless written notice of non-renewal is given to the Company not less than
      30 days prior to said expiration date. The Company and the Reinsurer
      further agree, notwithstanding anything to the contrary in this Contract,
      that said letters of credit may be drawn upon by the Company or its
      successors in interest at any time, without diminution because of the
      insolvency of the Company or the Reinsurer, but only for one or more of
      the following purposes:

      1.    To reimburse itself for the Reinsurer's share of unearned premiums
            returned to insureds on account of policy cancellations, unless paid
            in cash by the Reinsurer;

      2.    To reimburse itself for the Reinsurer's share of losses and/or loss
            adjustment expense paid under the terms of policies reinsured
            hereunder, unless paid in cash by the Reinsurer;

      3.    To reimburse itself for the Reinsurer's share of any other amounts
            claimed to be due hereunder, unless paid in cash by the Reinsurer;

      4.    To fund a cash account in an amount equal to the Reinsurer's share
            of any ceded unearned premium and/or outstanding loss and loss
            adjustment expense reserves (including all case reserves plus any
            reasonable amount estimated to be unreported from known loss
            occurrences) funded by means of a letter of credit which is under
            non-renewal notice, if said letter of credit has not been renewed or
            replaced by the Reinsurer 10 days prior to its expiration date;

      5.    To refund to the Reinsurer any sum in excess of the actual amount
            required to fund the Reinsurer's share of the Company's ceded
            unearned premium and/or outstanding loss and loss adjustment expense
            reserves (including all case reserves plus any reasonable amount
            estimated to be unreported from known loss occurrences), if so
            requested by the Reinsurer.

      In the event the amount drawn by the Company on any letter of credit is in
      excess of the actual amount required for C(1) or C(2) or C(4), in the case
      of C(3), the actual amount

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      determined to be due, the Company shall promptly return to the Reinsurer
      the excess amount so drawn.

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

A.    As a condition precedent to any right of action hereunder, any dispute or
      difference between the Company and any Reinsurer relating to the
      interpretation or performance of this Contract, including its formation or
      validity, or any transaction under this Contract, whether arising before
      or after termination, shall be submitted to arbitration.

B.    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 provided that communication shall be made by the Company to each
      of the reinsurers constituting the one party, and provided, however, that
      nothing therein shall impair the rights of such reinsurers to assert

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                                    Page 14



      several, rather than joint, defenses or claims, nor be construed as
      changing the liability of the Reinsurer under the terms of this Contract
      from several to joint.

C.    Upon written request of any party, each party shall choose an arbitrator
      and the two chosen shall select a third arbitrator. If either party
      refuses or neglects to appoint an arbitrator within 30 days after receipt
      of the written request for arbitration, the requesting party may appoint a
      second arbitrator. If the two arbitrators fail to agree on the selection
      of a third arbitrator within 30 days of their appointment, the Company
      shall petition the American Arbitration Association to appoint the third
      arbitrator. If the American Arbitration Association fails to appoint the
      third arbitrator within 30 days after it has been requested to do so,
      either party may request a justice of a court of general jurisdiction of
      the state in which the arbitration is to be held to appoint the third
      arbitrator. All arbitrators shall be active or retired officers of
      insurance or reinsurance companies, or Lloyd's London Underwriters, and
      disinterested in the outcome of the arbitration. Each party shall submit
      its case to the arbitrators within 30 days of the appointment of the third
      arbitrator.

D.    The parties hereby waive all objections to the method of selection of the
      arbitrators, it being the intention of both sides that all the arbitrators
      be chosen from those submitted by the parties.

E.    The arbitrators shall have the power to determine all procedural rules for
      the holding of the arbitration including but not limited to inspection of
      documents, examination of witnesses and any other matter relating to the
      conduct of the arbitration. The arbitrators shall interpret this Contract
      as an honorable engagement and not as merely a legal obligation; they are
      relieved of all judicial formalities and may abstain from following the
      strict rules of law. The arbitrators may award interest and costs. Each
      party shall bear the expense of its own arbitrator and shall share equally
      with the other party the expenses of the third arbitrator and of the
      arbitration.

F.    The decision in writing of the majority of the arbitrators shall be final
      and binding upon both parties. Judgment may be entered upon the final
      decision of the arbitrators in any court having jurisdiction. The
      arbitration shall take place in Pinellas Park, Florida, unless otherwise
      mutually agreed between the Company and the Reinsurer.

G.    This Article shall remain in full force and effect in the event any other
      provision of this Contract shall be found invalid or non-binding.

H.    All time limitations stated in this Article may be amended by mutual
      consent of the parties, and will be amended automatically to the extent
      made necessary by any circumstances beyond the control of the parties.

ARTICLE XXVI - SERVICE OF SUIT

(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. This
Article is not intended to conflict with or override the parties obligations to
arbitrate their disputes in accordance with Article XXV.)

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

                                                                 [BENFIELD LOGO]

                                    Page 15



      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 - 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 - GOVERNING LAW

This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Florida exclusive of the rules with
respect to conflicts of law, except as to rules with respect to credit for
reinsurance in which case the applicable rules of all the states shall apply.

ARTICLE XXIX - CONFIDENTIALITY

The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly communicate, disclose or divulge to any third
party any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company's books, records and
papers. The restrictions as outlined in this Article shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, retrocessionaires, legal counsel, arbitrators involved in
any arbitration procedures under this Contract or disclosures required upon
subpoena or other duly-issued order of a court or other governmental agency or
regulatory authority.

ARTICLE XXX - SEVERABILITY

If any provision of this Contract should be invalid under applicable laws, the
latter shall control but only to the extent of the conflict without affecting
the remaining provisions of this Contract.

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                                    Page 16



ARTICLE XXXI - 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., 3600 West
80th Street, Minneapolis, Minnesota 55431. 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:

Pinellas Park, Florida, this ______ day of _________________ in the year ______.

                                 _______________________________________________
                                 Liberty American Insurance Group, Inc. (for and
                                 on behalf of the "Company")

                                                                 [BENFIELD LOGO]

                                    Page 17



   NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (U.S.A.)

1.    This Reinsurance does not cover any loss or liability accruing to the
      Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph (1) of this
      Clause, this Reinsurance does not cover any loss or liability accruing to
      the Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      I.    Nuclear reactor power plants including all auxiliary property on the
            site, or

      II.   Any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and "critical facilities" as such, or

      III.  Installations for fabricating complete fuel elements or for
            processing substantial quantities of "special nuclear material," and
            for reprocessing, salvaging, chemically separating, storing or
            disposing of "spent" nuclear fuel or waste materials, or

      IV.   Installations other than those listed in paragraph (2) III above
            using substantial quantities of radioactive isotopes or other
            products of nuclear fission.

3.    Without in any way restricting the operations of paragraphs (1) and (2)
      hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, from any insurance on
      property which is on the same site as a nuclear reactor power plant or
      other nuclear installation and which normally would be insured therewith
      except that this paragraph (3) shall not operate

      (a)   where Reassured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused. However on and after 1st January 1960
            this sub-paragraph (b) shall only apply provided the said
            radioactive contamination exclusion provision has been approved by
            the Governmental Authority having jurisdiction thereof.

4.    Without in any way restricting the operations of paragraphs (1), (2) and
      (3) hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    It is understood and agreed that this Clause shall not extend to risks
      using radioactive isotopes in any form where the nuclear exposure is not
      considered by the Reassured to be the primary hazard.

6.    The term "special nuclear material" shall have the meaning given it in the
      Atomic Energy Act of 1954 or by any law amendatory thereof.

7.    Reassured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

Note.-Without in any way restricting the operation of paragraph (1) hereof, it
is understood and agreed that

      (a)   all policies issued by the Reassured on or before 31st December 1957
            shall be free from the application of the other provisions of this
            Clause until expiry date or 31st December 1960 whichever first
            occurs whereupon all the provisions of this Clause shall apply.

      (b)   with respect to any risk located in Canada policies issued by the
            Reassured on or before 31st December 1958 shall be free from the
            application of the other provisions of this Clause until expiry date
            or 31st December 1960 whichever first occurs whereupon all the
            provisions of this Clause shall apply.

12/12/57
N.M.A. 1119
BRMA 35B


   NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (CANADA)

1.    This Agreement does not cover any loss or liability accruing to the
      Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph 1 of this
      clause, this Agreement does not cover any loss or liability accruing to
      the Reinsured, directly or indirectly, and whether as Insurer or
      Reinsurer, from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      (a)   nuclear reactor power plants including all auxiliary property on the
            site, or

      (b)   any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and critical facilities as such, or

      (c)   installations for fabricating complete fuel elements or for
            processing substantial quantities of radioactive materials, and for
            reprocessing, salvaging, chemically separating, storing or disposing
            of spent nuclear fuel or waste materials, or

      (d)   installations other than those listed in (c) above using substantial
            quantities of radioactive isotopes or other products of nuclear
            fission.

3.    Without in any way restricting the operation of paragraphs 1 and 2 of this
      clause, this Agreement does not cover any loss or liability by radioactive
      contamination accruing to the Reinsured, directly or indirectly, and
      whether as Insurer or Reinsurer, from any insurance on property which is
      on the same site as a nuclear reactor power plant or other nuclear
      installation and which normally would be insured therewith, except that
      this paragraph 3 shall not operate:

      (a)   where the Reinsured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where the said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused.

4.    Without in any way restricting the operation of paragraphs 1, 2 and 3 of
      this clause, this Agreement does not cover any loss or liability by
      radioactive contamination accruing to the Reinsured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    This clause shall not extend to risks using radioactive isotopes in any
      form where the nuclear exposure is not considered by the Reinsured to be
      the primary hazard.

6.    The term "radioactive material" means uranium, thorium, plutonium,
      neptunium, their respective derivatives and compounds, radioactive
      isotopes of other elements and any other substances which may be
      designated by or pursuant to any law, act or statute, or any law
      amendatory thereof as being prescribed substances capable of releasing
      atomic energy, or as being requisite for the production, use or
      application of atomic energy.

7.    Reinsured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

8.    Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, this Agreement does not cover any loss or liability
      accruing to the Reinsured, directly or indirectly, and whether as Insurer
      or Reinsurer, caused:

      (1)   by any nuclear incident, as defined in or pursuant to the Nuclear
            Liability Act or any other nuclear liability act, law or statute, or
            any law amendatory thereof or nuclear explosion, except for ensuing
            loss or damage which results directly from fire, lightning or
            explosion of natural, coal or manufactured gas;

      (2)   by contamination by radioactive material.

NOTE: Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, paragraph 8 of this clause shall only apply to all
      original contracts of the Reinsured, whether new, renewal or replacement,
      which become effective on or after December 31, 1992.

N.M.A. 1980a (1/4/96)


               POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE

SECTION A:

Excluding:

      (a)   All business derived directly or indirectly from any Pool,
            Association or Syndicate which maintains its own reinsurance
            facilities.

      (b)   Any Pool or Scheme (whether voluntary or mandatory) formed after
            March 1, 1968 for the purpose of insuring property whether on a
            country-wide basis or in respect of designated areas. This exclusion
            shall not apply to so-called Automobile Insurance Plans or other
            Pools formed to provide coverage for Automobile Physical Damage.

SECTION B:

It is agreed that business written by the Company for the same perils, which is
known at the time to be insured by, or in excess of underlying amounts placed in
the following Pools, Associations or Syndicates, whether by way of insurance or
reinsurance, is excluded hereunder:

            Industrial Risk Insurers,
            Associated Factory Mutuals,
            Improved Risk Mutuals,
            Any Pool, Association or Syndicate formed for the purpose of writing
              Oil, Gas or Petro-Chemical Plants and/or Oil or Gas Drilling Rigs,
            United States Aircraft Insurance Group,
            Canadian Aircraft Insurance Group,
            Associated Aviation Underwriters,
            American Aviation Underwriters.

Section B does not apply:

      (a)   Where The Total Insured Value over all interests of the risk in
            question is less than $250,000,000.

      (b)   To interests traditionally underwritten as Inland Marine or stock
            and/or contents written on a blanket basis.

      (c)   To Contingent Business Interruption, except when the Company is
            aware that the key location is known at the time to be insured in
            any Pool, Association or Syndicate named above, other than as
            provided for under Section B(a).

      (d)   To risks as follows:

            Offices, Hotels, Apartments, Hospitals, Educational Establishments,
            Public Utilities (other than railroad schedules) and builder's risks
            on the classes of risks specified in this subsection (d) only.

Where this clause attaches to Catastrophe Excesses, the following Section C is
added:

SECTION C:

Nevertheless the Reinsurer specifically agrees that liability accruing to the
Company from its participation in residual market mechanisms including but not
limited to:

      (1)   The following so-called "Coastal Pools":

            Alabama Insurance Underwriting Association
            Louisiana Insurance Underwriting Association
            Mississippi Windstorm Underwriting Association
            North Carolina Insurance Underwriting Association
            South Carolina Windstorm and Hail Underwriting Association
            Texas Windstorm Insurance Association

AND

      (2)   All "Fair Plan" and "Rural Risk Plan" business

                                  Page 1 of 2



AND

      (3)   Citizens Property Insurance Corporation ("CPIC") and the California
            Earthquake Authority ("CEA")

for all perils otherwise protected hereunder shall not be excluded, except,
however, that this reinsurance does not include any increase in such liability
resulting from:

      (i)   The inability of any other participant in such "Coastal Pool" and/or
            "Fair Plan" and/or "Rural Risk Plan" and/or Residual Market
            Mechanisms to meet its liability.

      (ii)  Any claim against such "Coastal Pool" and/or "Fair Plan" and/or
            "Rural Risk Plan" and/or Residual Market Mechanisms, or any
            participant therein, including the Company, whether by way of
            subrogation or otherwise, brought by or on behalf of any insolvency
            fund (as defined in the Insolvency Fund Exclusion Clause
            incorporated in this Contract).

SECTION D:

      (1)   Notwithstanding Section C above, in respect of the CEA, where an
            assessment is made against the Company by the CEA, the Company may
            include in its Ultimate Net Loss only that assessment directly
            attributable to each separate loss occurrence covered hereunder. The
            Company's initial capital contribution to the CEA shall not be
            included in the Ultimate Net Loss.

      (2)   Notwithstanding Section C above, in respect of CPIC, where an
            assessment is made against the Company by CPIC, the maximum loss
            that the Company may include in the Ultimate Net Loss in respect of
            any loss occurrence hereunder shall not exceed the lesser of:

            (a)   The Company's assessment from CPIC for the accounting year in
                  which the loss occurrence commenced, or

            (b)   The product of the following:

                  (i)   The Company's percentage participation in CPIC for the
                        accounting year in which the loss occurrence commenced;
                        and

                  (ii)  CPIC's total losses in such loss occurrence.

Any assessments for accounting years subsequent to that in which the loss
occurrence commenced may not be included in the Ultimate Net Loss hereunder.
Moreover, notwithstanding Section C above, in respect of CPIC, the Ultimate Net
Loss hereunder shall not include any monies expended to purchase or retire bonds
as a consequence of being a member of CPIC. For the purposes of this Contract,
the Company may not include in the Ultimate Net Loss any assessment or any
percentage assessment levied by CPIC to meet the obligations of an insolvent
insurer member or other party, or to meet any obligations arising from the
deferment by CPIC of the collection of monies.

NOTES:       Wherever used herein the terms:

             "Company"         shall be understood to mean "Company,"
                               "Reinsured," "Reassured" or whatever other term
                               is used in the attached reinsurance document to
                               designate the reinsured company or companies.

             "Agreement"       shall be understood to mean "Agreement,"
                               "Contract," "Policy" or whatever other term is
                               used to designate the attached reinsurance
                               document.

             "Reinsurers"      shall be understood to mean "Reinsurers,"
                               "Underwriters" or whatever other term is used in
                               the attached reinsurance document to designate
                               the reinsurer or reinsurers.

                                  Page 2 of 2



                     POLLUTION AND SEEPAGE EXCLUSION CLAUSE

This Contract excludes loss and/or damage and/or costs and/or expenses arising
from seepage and/or pollution and/or contamination, other than contamination
from smoke. Nevertheless, this exclusion does not preclude payment of the cost
of removing debris of property damaged by a loss otherwise covered hereunder,
subject always to a limit of 25% of the Company's property loss under the
applicable original policy.

BRMA 39A


                          ELECTRONIC DATA ENDORSEMENT B

1.    ELECTRONIC DATA EXCLUSION

      Notwithstanding any provision to the contrary within the Contract or any
      endorsement thereto, it is understood and agreed as follows:-

      a)    This Contract does not insure loss, damage, destruction, distortion,
            erasure, corruption or alteration of ELECTRONIC DATA from any cause
            whatsoever (including but not limited to COMPUTER VIRUS) or loss of
            use, reduction in functionality, cost, expense of whatsoever nature
            resulting therefrom, regardless of any other cause or event
            contributing concurrently or in any other sequence to the loss.

            ELECTRONIC DATA means facts, concepts and information converted to a
            form useable for communications, interpretation or processing by
            electronic and electromechanical data processing or electronically
            controlled equipment and includes programs, software and other coded
            instructions for the processing and manipulation of data or the
            direction and manipulation of such equipment.

            COMPUTER VIRUS means a set of corrupting, harmful or otherwise
            unauthorized instructions or code including a set of maliciously
            introduced unauthorized instructions or code, programmatic or
            otherwise, that propagate themselves through a computer system or
            network of whatsoever nature. COMPUTER VIRUS includes but is not
            limited to "Trojan Horses," "worms" and "time or logic bombs."

      b)    However, in the event that a peril listed below results from any of
            the matters described in paragraph a) above, this Contract, subject
            to all its terms, conditions and exclusions, will cover physical
            damage occurring during the Contract period to property insured by
            this Contract directly caused by such listed peril.

            Listed Perils

            Fire
            Explosion

2.    ELECTRONIC DATA PROCESSING MEDIA VALUATION

      Notwithstanding any provision to the contrary within the Contract or any
      endorsement thereto, it is understood and agreed as follows:-

      Should electronic data processing media insured by this Contract suffer
      physical loss or damage insured by this Contract, then the basis of
      valuation shall be the cost of the blank media plus the costs of copying
      the ELECTRONIC DATA from back-up or from originals of a previous
      generation. These costs will not include research and engineering nor any
      costs of recreating, gathering or assembling such ELECTRONIC DATA. If the
      media is not repaired, replaced or restored the basis of valuation shall
      be the cost of the blank media. However this Contract does not insure any
      amount pertaining to the value of such ELECTRONIC DATA to the Assured or
      any other party, even if such ELECTRONIC DATA cannot be recreated,
      gathered or assembled.

N.M.A. 2915 (25.1.01)
Form approved by Lloyd's Underwriters' Non-Marine Association Limited

EX-10.11

                                                                   EXHIBIT 10.11

               UNDERLYING EXCESS CATASTROPHE REINSURANCE CONTRACT
                             EFFECTIVE: JULY 1, 2004

                                    issued to

                         Philadelphia Insurance Company
                            Bala Cynwyd, Pennsylvania
                    Philadelphia Indemnity Insurance Company
                            Bala Cynwyd, Pennsylvania
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                        Philadelphia Insurance Companies

                                                                 [BENFIELD LOGO]



                                TABLE OF CONTENTS

ARTICLE                                                                     PAGE

     I        Classes of Business Reinsured                                   1
    II        Term                                                            1
   III        Territory (BRMA 51A)                                            1
    IV        Exclusions                                                      2
     V        Retention and Limit                                             4
    VI        Reinstatement                                                   4
   VII        Definitions                                                     5
  VIII        Other Reinsurance                                               6
    IX        Florida Hurricane Catastrophe Fund                              6
     X        Loss Occurrence                                                 7
    XI        Loss Notices and Settlements                                    8
   XII        Salvage and Subrogation                                         8
  XIII        Reinsurance Premium                                             9
   XIV        Late Payments                                                   9
    XV        Offset (BRMA 36D)                                              11
   XVI        Access to Records (BRMA 1D)                                    11
  XVII        Liability of the Reinsurer                                     11
 XVIII        Net Retained Lines (BRMA 32E)                                  11
   XIX        Errors and Omissions (BRMA 14F)                                11
    XX        Currency (BRMA 12A)                                            12
   XXI        Taxes (BRMA 50C)                                               12
  XXII        Federal Excise Tax (BRMA 17A)                                  12
 XXIII        Reserve Requirements                                           12
  XXIV        Insolvency                                                     14
   XXV        Arbitration                                                    14
  XXVI        Service of Suit                                                16
 XXVII        Agency Agreement                                               16
XXVIII        Governing Law                                                  16
  XXIX        Confidentiality                                                16
   XXX        Severability                                                   17
  XXXI        Intermediary (BRMA 23A)                                        17

                                                                 [BENFIELD LOGO]



               UNDERLYING EXCESS CATASTROPHE REINSURANCE CONTRACT
                             EFFECTIVE: JULY 1, 2004

                                    issued to

                         Philadelphia Insurance Company
                            Bala Cynwyd, Pennsylvania
                    Philadelphia Indemnity Insurance Company
                            Bala Cynwyd, Pennsylvania
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                        Philadelphia Insurance Companies
             (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 Property 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 - TERM

A.    This Contract shall become effective on July 1, 2004, with respect to
      losses arising out of loss occurrences commencing on or after that date,
      and shall remain in force until May 31, 2005, both days inclusive.

B.    If this Contract expires while a loss occurrence covered hereunder is in
      progress, the Reinsurer's liability hereunder shall, subject to the other
      terms and conditions of this Contract, be determined as if the entire loss
      occurrence had occurred prior to the expiration of this Contract, provided
      that no part of such loss occurrence is claimed against any renewal or
      replacement of this Contract.

ARTICLE III - TERRITORY (BRMA 51A)

The territorial limits of this Contract shall be identical with those of the
Company's policies.

                                                                 [BENFIELD LOGO]

                                     Page 1


ARTICLE IV - EXCLUSIONS

This Contract does not apply to and specifically excludes the following:

      1.    Assumed reinsurance except for a 50.0% quota share of the First
            American Property and Casualty Insurance Company Florida Homeowners
            Program produced and underwritten by Mobile Homeowners Insurance
            Agencies, Inc.

      2.    Financial guarantee and insolvency.

      3.    Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
            Physical Damage - Reinsurance (U.S.A.)" and the "Nuclear Incident
            Exclusion Clause - Physical Damage - Reinsurance (Canada)" attached
            to and forming part of this Contract.

      4.    Loss or damage caused by or resulting from 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, but
            this exclusion shall not apply to loss or damage covered under a
            standard policy with a standard War Exclusion Clause.

      5.    Loss or liability excluded under the provisions of the "Pools,
            Associations and Syndicates Exclusion Clause" attached to and
            forming part of this Contract.

      6.    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.

      7.    Losses in respect of overhead transmission and distribution lines
            and their supporting structures other than those on or within 300
            meters (or 1,000 feet) of the insured premises. It is understood and
            agreed that public utilities extension and/or suppliers extension
            and/or contingent business interruption coverages are not subject to
            this exclusion, provided that these are not part of a transmitters'
            or distributors' policy.

      8.    Accident and Health, Casualty, Fidelity and/or Surety business.

      9.    Pollution and seepage coverages excluded under the provisions of the
            "Pollution and Seepage Exclusion Clause (BRMA 39A)" attached to and
            forming part of this Contract.

      10.   Notwithstanding any other provision to the contrary within this
            Contract or any amendment thereto, it is agreed that this Contract
            excludes loss, damage, cost or expense directly or indirectly caused
            by, contributed to by, resulting from, or arising

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            out of or in connection with any act of terrorism, as defined
            herein, regardless of any other cause or event contributing
            concurrently or in any other sequence to the loss.

            An "act of terrorism" includes any act, or preparation in respect of
            action, or threat of action, designed to influence the government de
            jure or de facto of any nation or any political division thereof, or
            in pursuit of political, religious, ideological, or similar purposes
            to intimidate the public or a section of the public of any nation by
            any person or group(s) of persons, whether acting alone or on behalf
            of or in connection with any organization(s) or government(s) de
            jure or de facto, and which:

            a.    Involves violence against one or more persons; or

            b.    Involves damage to property; or

            c.    Endangers life other than that of the person committing the
                  action; or

            d.    Creates a risk to health or safety of the public or a section
                  of the public; or

            e.    Is designed to interfere with or to disrupt an electronic
                  system.

            This Contract also excludes loss, damage, cost or expense directly
            or indirectly caused by, contributed to by, resulting from, or
            arising out of or in connection with any action in controlling,
            preventing, suppressing, retaliating against or responding to any
            act of terrorism.

            Notwithstanding the above and subject otherwise to the terms,
            conditions, and limitations of this Contract, in respect only of
            personal lines this Contract will pay actual loss or damage (but not
            related cost or expense) caused by any act of terrorism provided
            such act is not directly or indirectly caused by, contributed to by,
            resulting from, or arising out of or in connection with biological,
            chemical, or nuclear pollution or contamination.

      11.   Loss or liability in any way or to any extent arising out of the
            actual or alleged presence or actual, alleged or threatened presence
            of fungi including, but not limited to, mold, mildew, mycotoxins,
            microbial volatile organic compounds or other "microbial
            contaminations." This includes:

            a.    Any supervision, instruction, recommendations, warnings or
                  advice given or which should have been given in connection
                  with the above; and

            b.    Any obligation to share damages with or repay someone else who
                  must pay damages because of such injury or damage.

            For purposes of this exclusion, "microbial contamination" means any
            contamination, either airborne or surface, which arises out of or is
            related to the presence of fungi, mold, mildew, mycotoxins,
            microbial volatile organic compounds or spores, including, without
            limitation, Penicillium, Aspergillus, Fusarium, Aspergillus Flavus
            and Stachybotrys chartarum.

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            Losses resulting from the above causes do not in and of themselves
            constitute an event unless arising out of one or more of the
            following perils, in which case this exclusion does not apply:

                  Fire, lightning, explosion, aircraft or vehicle impact,
                  falling objects, windstorm, hail, tornado, cyclone, hurricane,
                  earthquake, volcano, tsunami, flood, freeze or weight of snow.

            Notice of any claims for mold-related losses must be given by the
            Company to the Reinsurer, in writing, within 24 months after the
            commencement date of the loss occurrence to which such claims
            relate.

      12.   Loss or liability excluded under the provisions of the "Electronic
            Data Endorsement B" (N.M.A. 2915) attached to and forming part of
            this Contract.

ARTICLE V - RETENTION AND LIMIT

A.    The Company shall retain and be liable for the first $7,000,000 of
      ultimate net loss arising out of each loss 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
      $3,000,000 as respects any one loss occurrence.

B.    No claim shall be made under this Contract as respects any one loss
      occurrence unless at least two risks insured or reinsured by the Company
      are involved in such loss occurrence. For purposes of this Contract, the
      Company shall be the sole judge of what constitutes one risk.

C.    Notwithstanding the provisions above, the ultimate net loss (including
      loss in excess of policy limits, extra contractual obligations, and loss
      adjustment expense) as respects any one loss occurrence with regard to the
      50.0% quota share of the First American Property and Casualty Insurance
      Company Florida Homeowners Program produced and underwritten by Mobile
      Homeowners Insurance Agencies, Inc. shall not exceed the Company's pro
      rata share of the 250-year Probable Maximum Loss as modeled in RMS as of
      the date on which the loss occurrence commences.

ARTICLE VI - 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 loss 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 final adjusted reinsurance premium, as calculated in accordance
            with Article XIII, for the term of this Contract (exclusive of
            reinstatement premium).

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                                     Page 4


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 final adjusted reinsurance
      premium for the term of this Contract has not been determined as of the
      date of any such statement, the calculation of reinstatement premium due
      shall be based on the deposit premium and shall be readjusted when the
      final adjusted reinsurance premium for the term of this Contract has been
      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 $3,000,000 as respects loss or losses arising
      out of any one loss occurrence, nor shall it exceed $6,000,000 in all
      during the term of this Contract.

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 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 any 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.

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      Notwithstanding anything stated herein, the amount included in the
      ultimate net loss for any one loss occurrence as respects loss in excess
      of policy limits and extra contractual obligations shall not exceed 25.0%
      of the Company's indemnity loss hereunder arising out of that loss
      occurrence.

      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.

      If any provision of this paragraph B 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.

C.    "Loss adjustment expense" as used herein shall mean expenses assignable to
      the investigation, appraisal, adjustment, settlement, litigation, defense
      and/or appeal of specific claims, regardless of how such expenses are
      classified for statutory reporting purposes. Loss adjustment expense shall
      include, but not be limited to, declaratory judgments, interest on
      judgments, expenses of outside adjusters, and a pro rata share of the
      salaries and expenses of the Company's field employees according to the
      time occupied adjusting such losses and expenses of the Company's
      officials incurred in connection with the losses, but shall not include
      office expenses or salaries of the Company's regular employees.

ARTICLE VIII - OTHER REINSURANCE

A.    The Company shall be permitted to carry excess reinsurance, recoveries
      under which shall inure to the benefit of this Contract.

B.    The Company shall be permitted to carry quota share reinsurance,
      recoveries under which shall inure solely to the benefit of the Company.

ARTICLE IX - FLORIDA HURRICANE CATASTROPHE FUND

A.    Any loss reimbursement paid or payable to the Company under the Florida
      Hurricane Catastrophe Fund ("FHCF") as a result of loss occurrences
      commencing during the term of this Contract shall inure to the benefit of
      this Contract. Further, any FHCF loss reimbursement shall be deemed to be
      paid to the Company in accordance with the reimbursement contract between
      the Company and the State Board of Administration of the State of Florida
      at the full payout level set forth therein and will be deemed not to be
      reduced by any reduction or exhaustion of the FHCF's claims paying
      capacity.

B.    Prior to the determination of the Company's FHCF retention and payout, if
      any, under the reimbursement contract, the Reinsurer's liability hereunder
      will be determined provisionally based on the projected payout, determined
      in accordance with the provisions of the reimbursement contract. Following
      determination of the payout under the reimbursement contract, the ultimate
      net loss under this Contract will be recalculated. If, as a result of such

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                                     Page 6


      calculation, the loss to the Reinsurer under any excess layer of this
      Contract in any one loss occurrence is less than the amount previously
      paid by the Reinsurer under that excess layer, the Company shall promptly
      remit the difference to the Reinsurer. If the loss to the Reinsurer under
      any excess layer in any one loss occurrence is greater than the amount
      previously paid by the Reinsurer, the Reinsurer shall promptly remit the
      difference to the Company.

C.    If an FHCF reimbursement amount is based on the Company's losses in more
      than one loss occurrence and the FHCF does not designate the amount
      allocable to each loss occurrence, the FHCF reimbursement amount shall be
      prorated in the proportion that the Company's losses in each loss
      occurrence bear to the Company's total losses arising out of all loss
      occurrences to which the FHCF reimbursement applies.

D.    Any reimbursement premiums or emergency assessment paid by the Company
      under the FHCF shall be deemed to be premiums paid for inuring
      reinsurance.

ARTICLE X - LOSS OCCURRENCE

A.    The term "loss occurrence" shall mean the sum of all individual losses
      directly occasioned by any one disaster, accident or loss or series of
      disasters, accidents or losses arising out of one event which occurs
      within the area of one state of the United States or province of Canada
      and states or provinces contiguous thereto and to one another. However,
      the duration and extent of any one "loss occurrence" shall be limited to
      all individual losses sustained by the Company occurring during any period
      of 168 consecutive hours arising out of and directly occasioned by the
      same event, except that the term "loss occurrence" shall be further
      defined as follows:

      1.    As regards windstorm, hail, tornado, hurricane, cyclone, including
            ensuing collapse and water damage, all individual losses sustained
            by the Company occurring during any period of 72 consecutive hours
            arising out of and directly occasioned by the same event. However,
            the event need not be limited to one state or province or states or
            provinces contiguous thereto.

      2.    As regards riot, riot attending a strike, civil commotion, vandalism
            and malicious mischief, all individual losses sustained by the
            Company occurring during any period of 72 consecutive hours within
            the area of one municipality or county and the municipalities or
            counties contiguous thereto arising out of and directly occasioned
            by the same event. The maximum duration of 72 consecutive hours may
            be extended in respect of individual losses which occur beyond such
            72 consecutive hours during the continued occupation of an insured's
            premises by strikers, provided such occupation commenced during the
            aforesaid period.

      3.    As regards earthquake (the epicentre of which need not necessarily
            be within the territorial confines referred to in the introductory
            portion of this paragraph) and fire following directly occasioned by
            the earthquake, only those individual fire losses which commence
            during the period of 168 consecutive hours may be included in the
            Company's "loss occurrence."

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                                     Page 7


      4.    As regards "freeze," only individual losses directly occasioned by
            collapse, breakage of glass and water damage (caused by bursting
            frozen pipes and tanks) may be included in the Company's "loss
            occurrence."

      5.    As regards firestorms, brush fires, and other fires or series of
            fires, irrespective of origin (except as provided in subparagraphs 2
            and 3 above), which spread through trees, grassland or other
            vegetation, all individual losses sustained by the Company which
            occur during any period of 168 consecutive hours within a 100-mile
            radius of any one fixed point selected by the Company may be
            included in the Company's "loss occurrence." However, an individual
            loss subject to this subparagraph cannot be included in more than
            one "loss occurrence."

B.    For all those "loss occurrences," other than those referred to in
      subparagraph 2 of paragraph A above, the Company may choose the date and
      time when any such period of consecutive hours commences, provided that it
      is not earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss, and provided that only one such period of 168
      consecutive hours shall apply with respect to one event, except for any
      "loss occurrence" referred to in subparagraph 1 of paragraph A above where
      only one such period of 72 consecutive hours shall apply with respect to
      one event, regardless of the duration of the event.

C.    As respects those "loss occurrences" referred to in subparagraph 2 of
      paragraph A above, if the disaster, accident or loss occasioned by the
      event is of greater duration than 72 consecutive hours, then the Company
      may divide that disaster, accident or loss into two or more "loss
      occurrences," provided no two periods overlap and no individual loss is
      included in more than one such period and provided that no period
      commences earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss.

D.    No individual losses occasioned by an event that would be covered by 72
      hours clauses may be included in any "loss occurrence" claimed under the
      168 hours provision.

ARTICLE XI - LOSS NOTICES AND SETTLEMENTS

A.    Whenever losses sustained by the Company appear likely to result in a
      claim hereunder, the Company shall notify the Reinsurer, and the Reinsurer
      shall have the right to participate in the adjustment of such losses at
      its own expense.

B.    All loss settlements made by the Company, provided they are within the
      terms of this Contract, shall be binding upon the Reinsurer, and the
      Reinsurer agrees to pay all amounts for which it may be liable upon
      receipt of reasonable evidence of the amount paid (or scheduled to be
      paid) by the Company.

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) on account of claims
and settlements involving reinsurance hereunder. Salvage

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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 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, the Company shall pay
      the Reinsurer 0.457% of its gross earned premium for the term of this
      Contract, subject to a minimum premium of $702,000.

B.    The Company shall pay the Reinsurer a deposit premium of $877,500 in four
      equal installments of $219,375 on July 1, September 1 and December 1 of
      2004 and March 1, 2005.

C.    Within 45 days after the expiration of this Contract, the Company shall
      provide a report to the Reinsurer setting forth the premium due hereunder,
      computed in accordance with paragraph A, and any additional premium due
      the Reinsurer or return premium due the Company shall be remitted
      promptly.

D.    "Gross earned premium" as used herein is defined as earned premium of the
      Company for the classes of business reinsured hereunder, before the
      deduction of any premiums ceded by the Company for reinsurance which
      inures to the benefit of this Contract. Gross earned premium will not
      include the Company's earned premium for Homeowners, Manufactured
      Homeowners Dwelling and Condominium policies that include a "No Wind/No
      Water" exclusion. It is understood that gross earned premium shall include
      catastrophe fees, but shall exclude MGA fees, DRST fees and policy
      surcharges to recoup residual market deficit assessments.

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 XXXI (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 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

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                                     Page 9


      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 10 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 10 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.

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ARTICLE XV - OFFSET (BRMA 36D)

The Company and the Reinsurer, each at its option, may offset any balance or
balances, whether on account of premiums, claims and losses, loss expenses or
salvages due from one party to the other under this Contract; provided, however,
that in the event of the insolvency of a party hereto, offsets shall only be
allowed in accordance with applicable statutes and regulations.

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. However, in no event shall this be construed
      in any way to provide coverage outside the terms and conditions set forth
      in this Contract.

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.

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ARTICLE XX - CURRENCY (BRMA 12A)

A.    Whenever the word "Dollars" or the "$" sign appears in this Contract, they
      shall be construed to mean United States Dollars and all transactions
      under this Contract shall be in United States Dollars.

B.    Amounts paid or received by the Company in any other currency shall be
      converted to United States Dollars at the rate of exchange at the date
      such transaction is entered on the books of the Company.

ARTICLE XXI - TAXES (BRMA 50C)

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, the District of Columbia or Canada.

ARTICLE XXII - FEDERAL EXCISE TAX (BRMA 17A)

(Applicable to those reinsurers, excepting Underwriters at Lloyd's London and
other reinsurers exempt from Federal Excise Tax, who are domiciled outside the
United States of America.)

A.    The Reinsurer has agreed to allow for the purpose of paying the Federal
      Excise Tax the applicable percentage of the premium payable hereon as
      imposed under Section 4371 of the Internal Revenue Code to the extent such
      premium is subject to the Federal Excise Tax.

B.    In the event of any return of premium becoming due hereunder the Reinsurer
      will deduct the applicable percentage from the return premium payable
      hereon and the Company or its agent should take steps to recover the tax
      from the United States Government.

ARTICLE XXIII - RESERVE REQUIREMENTS

A.    If the Reinsurer is unauthorized in any state of the United States of
      America or the District of Columbia, the Reinsurer agrees to fund, on or
      before December 31, 2004, its share of the Company's ceded United States
      unearned premium and outstanding loss and loss adjustment expense reserves
      (including all case reserves plus any reasonable amount estimated to be
      unreported, as determined by the Company, from known loss occurrences) by:

      1.    Clean, irrevocable and unconditional letters of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a bank or banks meeting the NAIC Securities
            Valuation Office credit standards for issuers of letters of credit
            and acceptable to said insurance regulatory authorities; and/or

      2.    Escrow accounts for the benefit of the Company; and/or

      3.    Cash advances;

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                                    Page 12


      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved. The Reinsurer, at its sole option, may fund in other
      than cash if its method and form of funding are acceptable to the
      insurance regulatory authorities involved.

B.    If the Reinsurer is unauthorized in any province or jurisdiction of
      Canada, the Reinsurer agrees to fund, on or before December 31, 2004, 115%
      of its share of the Company's ceded Canadian unearned premium and
      outstanding loss and loss adjustment expense reserves (including all case
      reserves plus any reasonable amount estimated to be unreported, as
      determined by the Company, from known loss occurrences) by:

      1.    A clean, irrevocable and unconditional letter of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a Canadian bank or banks meeting the NAIC
            Securities Valuation Office credit standards for issuers of letters
            of credit and acceptable to said insurance regulatory authorities,
            for no more than 15/115ths of the total funding required; and/or

      2.    Cash advances for the remaining balance of the funding required;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved.

C.    With regard to funding in whole or in part by letters of credit, it is
      agreed that each letter of credit will be in a form acceptable to
      insurance regulatory authorities involved, will be issued for a term of at
      least one year and will include an "evergreen clause," which automatically
      extends the term for at least one additional year at each expiration date
      unless written notice of non-renewal is given to the Company not less than
      30 days prior to said expiration date or longer where required by
      insurance regulatory authorities. The Company and the Reinsurer further
      agree, notwithstanding anything to the contrary in this Contract, that
      said letters of credit may be drawn upon by the Company or its successors
      in interest at any time, without diminution because of the insolvency of
      the Company or the Reinsurer, but only for one or more of the following
      purposes:

      1.    To reimburse itself for the Reinsurer's share of unearned premiums
            returned to insureds on account of policy cancellations, unless paid
            in cash by the Reinsurer;

      2.    To reimburse itself for the Reinsurer's share of losses and/or loss
            adjustment expense paid under the terms of policies reinsured
            hereunder, unless paid in cash by the Reinsurer;

      3.    To reimburse itself for the Reinsurer's share of any other amounts
            claimed to be due hereunder, unless paid in cash by the Reinsurer;

      4.    To fund a cash account in an amount equal to the Reinsurer's share
            of any ceded unearned premium and/or outstanding loss and loss
            adjustment expense reserves (including all case reserves plus any
            reasonable amount estimated to be unreported, as determined by the
            Company, from known loss occurrences) funded by means of a letter of
            credit which is under non-renewal notice, if said letter of credit
            has not been renewed or replaced by the Reinsurer 10 days prior to
            its expiration date;

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                                    Page 13


      5.    To refund to the Reinsurer any sum in excess of the actual amount
            required to fund the Reinsurer's share of the Company's ceded
            unearned premium and/or outstanding loss and loss adjustment expense
            reserves (including all case reserves plus any reasonable amount
            estimated to be unreported, as determined by the Company, from known
            loss occurrences), if so requested by the Reinsurer.

      In the event the amount drawn by the Company on any letter of credit is in
      excess of the actual amount required for C(1) or C(2) or C(4), in the case
      of C(3), the actual amount determined to be due, the Company shall
      promptly return to the Reinsurer the excess amount so drawn.

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

A.    As a condition precedent to any right of action hereunder, any dispute or
      difference between the Company and any Reinsurer relating to the
      interpretation or performance of

                                                                 [BENFIELD LOGO]

                                    Page 14


      this Contract, including its formation or validity, or any transaction
      under this Contract, whether arising before or after termination, shall be
      submitted to arbitration.

B.    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 provided that communication shall be made by the Company to each
      of the reinsurers constituting the one party, and provided, however, that
      nothing therein 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 Reinsurer under the terms of this Contract
      from several to joint.

C.    Upon written request of any party, each party shall choose an arbitrator
      and the two chosen shall select a third arbitrator. If either party
      refuses or neglects to appoint an arbitrator within 30 days after receipt
      of the written request for arbitration, the requesting party may appoint a
      second arbitrator. If the two arbitrators fail to agree on the selection
      of a third arbitrator within 30 days of their appointment, the Company
      shall petition the American Arbitration Association to appoint the third
      arbitrator. If the American Arbitration Association fails to appoint the
      third arbitrator within 30 days after it has been requested to do so,
      either party may request a justice of a court of general jurisdiction of
      the state in which the arbitration is to be held to appoint the third
      arbitrator. All arbitrators shall be active or retired officers of
      insurance or reinsurance companies, or Lloyd's London Underwriters, and
      disinterested in the outcome of the arbitration. Each party shall submit
      its case to the arbitrators within 30 days of the appointment of the third
      arbitrator.

D.    The parties hereby waive all objections to the method of selection of the
      arbitrators, it being the intention of both sides that all the arbitrators
      be chosen from those submitted by the parties.

E.    The arbitrators shall have the power to determine all procedural rules for
      the holding of the arbitration including but not limited to inspection of
      documents, examination of witnesses and any other matter relating to the
      conduct of the arbitration. The arbitrators shall interpret this Contract
      as an honorable engagement and not as merely a legal obligation; they are
      relieved of all judicial formalities and may abstain from following the
      strict rules of law. The arbitrators may award interest and costs. Each
      party shall bear the expense of its own arbitrator and shall share equally
      with the other party the expenses of the third arbitrator and of the
      arbitration.

F.    The decision in writing of the majority of the arbitrators shall be final
      and binding upon both parties. Judgment may be entered upon the final
      decision of the arbitrators in any court having jurisdiction. The
      arbitration shall take place in Bala Cynwyd, Pennsylvania, unless
      otherwise mutually agreed between the Company and the Reinsurer.

G.    This Article shall remain in full force and effect in the event any other
      provision of this Contract shall be found invalid or non-binding.

H.    All time limitations stated in this Article may be amended by mutual
      consent of the parties, and will be amended automatically to the extent
      made necessary by any circumstances beyond the control of the parties.

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                                    Page 15


ARTICLE XXVI - SERVICE OF SUIT

(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. This
Article is not intended to conflict with or override the parties obligations to
arbitrate their disputes in accordance with Article XXV.)

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 - 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 - GOVERNING LAW

This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Pennsylvania exclusive of the rules
with respect to conflicts of law, except as to rules with respect to credit for
reinsurance in which case the applicable rules of all the states shall apply.

ARTICLE XXIX - CONFIDENTIALITY

The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly communicate, disclose or divulge to any third
party any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company's books, records and
papers. The restrictions as outlined in this Article shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, retrocessionaires, legal counsel, arbitrators involved in
any arbitration procedures under this Contract or disclosures required upon
subpoena or other duly-issued order of a court or other governmental agency or
regulatory authority.

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                                    Page 16


ARTICLE XXX - SEVERABILITY

If any provision of this Contract should be invalid under applicable laws, the
latter shall control but only to the extent of the conflict without affecting
the remaining provisions of this Contract.

ARTICLE XXXI - 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:

Bala Cynwyd, Pennsylvania, this ________ day of _________________ in the year
________.
           _____________________________________________________________________
           Philadelphia Insurance Companies (for and on behalf of the "Company")

                                                                 [BENFIELD LOGO]

                                    Page 17


   NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (U.S.A.)

1.    This Reinsurance does not cover any loss or liability accruing to the
      Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph (1) of this
      Clause, this Reinsurance does not cover any loss or liability accruing to
      the Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      I.    Nuclear reactor power plants including all auxiliary property on the
            site, or

      II.   Any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and "critical facilities" as such, or

      III.  Installations for fabricating complete fuel elements or for
            processing substantial quantities of "special nuclear material," and
            for reprocessing, salvaging, chemically separating, storing or
            disposing of "spent" nuclear fuel or waste materials, or

      IV.   Installations other than those listed in paragraph (2) III above
            using substantial quantities of radioactive isotopes or other
            products of nuclear fission.

3.    Without in any way restricting the operations of paragraphs (1) and (2)
      hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, from any insurance on
      property which is on the same site as a nuclear reactor power plant or
      other nuclear installation and which normally would be insured therewith
      except that this paragraph (3) shall not operate

      (a)   where Reassured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused. However on and after 1st January 1960
            this sub-paragraph (b) shall only apply provided the said
            radioactive contamination exclusion provision has been approved by
            the Governmental Authority having jurisdiction thereof.

4.    Without in any way restricting the operations of paragraphs (1), (2) and
      (3) hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    It is understood and agreed that this Clause shall not extend to risks
      using radioactive isotopes in any form where the nuclear exposure is not
      considered by the Reassured to be the primary hazard.

6.    The term "special nuclear material" shall have the meaning given it in the
      Atomic Energy Act of 1954 or by any law amendatory thereof.

7.    Reassured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

Note.-Without in any way restricting the operation of paragraph (1) hereof, it
is understood and agreed that

      (a)   all policies issued by the Reassured on or before 31st December 1957
            shall be free from the application of the other provisions of this
            Clause until expiry date or 31st December 1960 whichever first
            occurs whereupon all the provisions of this Clause shall apply.

      (b)   with respect to any risk located in Canada policies issued by the
            Reassured on or before 31st December 1958 shall be free from the
            application of the other provisions of this Clause until expiry date
            or 31st December 1960 whichever first occurs whereupon all the
            provisions of this Clause shall apply.

12/12/57
N.M.A. 1119
BRMA 35B



   NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (CANADA)

1.    This Agreement does not cover any loss or liability accruing to the
      Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph 1 of this
      clause, this Agreement does not cover any loss or liability accruing to
      the Reinsured, directly or indirectly, and whether as Insurer or
      Reinsurer, from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      (a)   nuclear reactor power plants including all auxiliary property on the
            site, or

      (b)   any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and critical facilities as such, or

      (c)   installations for fabricating complete fuel elements or for
            processing substantial quantities of prescribed substances, and for
            reprocessing, salvaging, chemically separating, storing or disposing
            of spent nuclear fuel or waste materials, or

      (d)   installations other than those listed in (c) above using substantial
            quantities of radioactive isotopes or other products of nuclear
            fission.

3.    Without in any way restricting the operation of paragraphs 1 and 2 of this
      clause, this Agreement does not cover any loss or liability by radioactive
      contamination accruing to the Reinsured, directly or indirectly, and
      whether as Insurer or Reinsurer, from any insurance on property which is
      on the same site as a nuclear reactor power plant or other nuclear
      installation and which normally would be insured therewith, except that
      this paragraph 3 shall not operate:

      (a)   where the Reinsured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where the said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused.

4.    Without in any way restricting the operation of paragraphs 1, 2 and 3 of
      this clause, this Agreement does not cover any loss or liability by
      radioactive contamination accruing to the Reinsured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    This clause shall not extend to risks using radioactive isotopes in any
      form where the nuclear exposure is not considered by the Reinsured to be
      the primary hazard.

6.    The term "prescribed substances" shall have the meaning given to it by the
      Atomic Energy Control Act R.S.C. 1985(c), A-16 or by any law amendatory
      thereof.

7.    Reinsured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

8.    Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, this Agreement does not cover any loss or liability
      accruing to the Reinsured, directly or indirectly, and whether as Insurer
      or Reinsurer, caused:

      (1)   by any nuclear incident, as defined in the Nuclear Liability Act or
            any other nuclear liability act, law or statute, or any law
            amendatory thereof or nuclear explosion, except for ensuing loss or
            damage which results directly from fire, lightning or explosion of
            natural, coal or manufactured gas;

      (2)   by contamination by radioactive material.

NOTE:    Without in any way restricting the operation of paragraphs 1, 2, 3 and
         4 of this clause, paragraph 8 of this clause shall only apply to all
         original contracts of the Reinsured, whether new, renewal or
         replacement, which become effective on or after December 31, 1992.

N.M.A. 1980 (2/19/93)



               POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE

SECTION A:

Excluding:

      (a)   All business derived directly or indirectly from any Pool,
            Association or Syndicate which maintains its own reinsurance
            facilities.

      (b)   Any Pool or Scheme (whether voluntary or mandatory) formed after
            March 1, 1968 for the purpose of insuring property whether on a
            country-wide basis or in respect of designated areas. This exclusion
            shall not apply to so-called Automobile Insurance Plans or other
            Pools formed to provide coverage for Automobile Physical Damage.

SECTION B:

It is agreed that business written by the Company for the same perils, which is
known at the time to be insured by, or in excess of underlying amounts placed in
the following Pools, Associations or Syndicates, whether by way of insurance or
reinsurance, is excluded hereunder:

         Industrial Risk Insurers,
         Associated Factory Mutuals,
         Improved Risk Mutuals,
         Any Pool, Association or Syndicate formed for the purpose of
             writing Oil, Gas or Petro-Chemical Plants and/or Oil or Gas
             Drilling Rigs,
         United States Aircraft Insurance Group,
         Canadian Aircraft Insurance Group,
         Associated Aviation Underwriters,
         American Aviation Underwriters.

Section B does not apply:

      (a)   Where The Total Insured Value over all interests of the risk in
            question is less than $250,000,000.

      (b)   To interests traditionally underwritten as Inland Marine or stock
            and/or contents written on a blanket basis.

      (c)   To Contingent Business Interruption, except when the Company is
            aware that the key location is known at the time to be insured in
            any Pool, Association or Syndicate named above, other than as
            provided for under Section B(a).

      (d)   To risks as follows:

            Offices, Hotels, Apartments, Hospitals, Educational Establishments,
            Public Utilities (other than railroad schedules) and builder's risks
            on the classes of risks specified in this subsection (d) only.

Where this clause attaches to Catastrophe Excesses, the following Section C is
added:

SECTION C:

Nevertheless the Reinsurer specifically agrees that liability accruing to the
Company from its participation in residual market mechanisms including but not
limited to:

      (1)   The following so-called "Coastal Pools":

            Alabama Insurance Underwriting Association
            Louisiana Insurance Underwriting Association
            Mississippi Windstorm Underwriting Association
            North Carolina Insurance Underwriting Association
            South Carolina Windstorm and Hail Underwriting Association
            Texas Windstorm Insurance Association

AND

      (2)   All "Fair Plan" and "Rural Risk Plan" business

                                  Page 1 of 2



AND

      (3)   Citizens Property Insurance Corporation ("CPIC") and the California
            Earthquake Authority ("CEA")

for all perils otherwise protected hereunder shall not be excluded, except,
however, that this reinsurance does not include any increase in such liability
resulting from:

      (i)   The inability of any other participant in such "Coastal Pool" and/or
            "Fair Plan" and/or "Rural Risk Plan" and/or Residual Market
            Mechanisms to meet its liability.

      (ii)  Any claim against such "Coastal Pool" and/or "Fair Plan" and/or
            "Rural Risk Plan" and/or Residual Market Mechanisms, or any
            participant therein, including the Company, whether by way of
            subrogation or otherwise, brought by or on behalf of any insolvency
            fund (as defined in the Insolvency Fund Exclusion Clause
            incorporated in this Contract).

SECTION D:

      (1)   Notwithstanding Section C above, in respect of the CEA, where an
            assessment is made against the Company by the CEA, the Company may
            include in its Ultimate Net Loss only that assessment directly
            attributable to each separate loss occurrence covered hereunder. The
            Company's initial capital contribution to the CEA shall not be
            included in the Ultimate Net Loss.

      (2)   Notwithstanding Section C above, in respect of CPIC, where an
            assessment is made against the Company by CPIC, the maximum loss
            that the Company may include in the Ultimate Net Loss in respect of
            any loss occurrence hereunder shall not exceed the lesser of:

            (a)   The Company's assessment from CPIC for the accounting year in
                  which the loss occurrence commenced, or

            (b)   The product of the following:

                  (i)   The Company's percentage participation in CPIC for the
                        accounting year in which the loss occurrence commenced;
                        and

                  (ii)  CPIC's total losses in such loss occurrence.

Any assessments for accounting years subsequent to that in which the loss
occurrence commenced may not be included in the Ultimate Net Loss hereunder.
Moreover, notwithstanding Section C above, in respect of CPIC, the Ultimate Net
Loss hereunder shall not include any monies expended to purchase or retire bonds
as a consequence of being a member of CPIC. For the purposes of this Contract,
the Company may not include in the Ultimate Net Loss any assessment or any
percentage assessment levied by CPIC to meet the obligations of an insolvent
insurer member or other party, or to meet any obligations arising from the
deferment by CPIC of the collection of monies.

NOTES:     Wherever used herein the terms:

           "Company"       shall be understood to mean "Company," "Reinsured,"
                           "Reassured" or whatever other term is used in the
                           attached reinsurance document to designate the
                           reinsured company or companies.

           "Agreement"     shall be understood to mean "Agreement," "Contract,"
                           "Policy" or whatever other term is used to designate
                           the attached reinsurance document.

           "Reinsurers"    shall be understood to mean "Reinsurers,"
                           "Underwriters" or whatever other term is used in the
                           attached reinsurance document to designate the
                           reinsurer or reinsurers.

                                   Page 2 of 2



                     POLLUTION AND SEEPAGE EXCLUSION CLAUSE

This Contract excludes loss and/or damage and/or costs and/or expenses arising
from seepage and/or pollution and/or contamination, other than contamination
from smoke. Nevertheless, this exclusion does not preclude payment of the cost
of removing debris of property damaged by a loss otherwise covered hereunder,
subject always to a limit of 25% of the Company's property loss under the
applicable original policy.

BRMA 39A



                          ELECTRONIC DATA ENDORSEMENT B

1.    ELECTRONIC DATA EXCLUSION

      Notwithstanding any provision to the contrary within the Contract or any
      endorsement thereto, it is understood and agreed as follows:-

      a)    This Contract does not insure loss, damage, destruction, distortion,
            erasure, corruption or alteration of ELECTRONIC DATA from any cause
            whatsoever (including but not limited to COMPUTER VIRUS) or loss of
            use, reduction in functionality, cost, expense of whatsoever nature
            resulting therefrom, regardless of any other cause or event
            contributing concurrently or in any other sequence to the loss.

            ELECTRONIC DATA means facts, concepts and information converted to a
            form useable for communications, interpretation or processing by
            electronic and electromechanical data processing or electronically
            controlled equipment and includes programs, software and other coded
            instructions for the processing and manipulation of data or the
            direction and manipulation of such equipment.

            COMPUTER VIRUS means a set of corrupting, harmful or otherwise
            unauthorized instructions or code including a set of maliciously
            introduced unauthorized instructions or code, programmatic or
            otherwise, that propagate themselves through a computer system or
            network of whatsoever nature. COMPUTER VIRUS includes but is not
            limited to "Trojan Horses," "worms" and "time or logic bombs."

      b)    However, in the event that a peril listed below results from any of
            the matters described in paragraph a) above, this Contract, subject
            to all its terms, conditions and exclusions, will cover physical
            damage occurring during the Contract period to property insured by
            this Contract directly caused by such listed peril.

            Listed Perils

            Fire
            Explosion

2.    ELECTRONIC DATA PROCESSING MEDIA VALUATION

      Notwithstanding any provision to the contrary within the Contract or any
      endorsement thereto, it is understood and agreed as follows:-

      Should electronic data processing media insured by this Contract suffer
      physical loss or damage insured by this Contract, then the basis of
      valuation shall be the cost of the blank media plus the costs of copying
      the ELECTRONIC DATA from back-up or from originals of a previous
      generation. These costs will not include research and engineering nor any
      costs of recreating, gathering or assembling such ELECTRONIC DATA. If the
      media is not repaired, replaced or restored the basis of valuation shall
      be the cost of the blank media. However this Contract does not insure any
      amount pertaining to the value of such ELECTRONIC DATA to the Assured or
      any other party, even if such ELECTRONIC DATA cannot be recreated,
      gathered or assembled.

N.M.A. 2915 (25.1.01)

EX-10.12

                                                                   EXHIBIT 10.12

                        REINSTATEMENT PREMIUM PROTECTION
                              REINSURANCE CONTRACT
                             EFFECTIVE: JULY 1, 2004

                                    issued to

                         Philadelphia Insurance Company
                            Bala Cynwyd, Pennsylvania
                    Philadelphia Indemnity Insurance Company
                            Bala Cynwyd, Pennsylvania
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                        Philadelphia Insurance Companies

                                                                 [BENFIELD LOGO]



                                TABLE OF CONTENTS



ARTICLE                                                                                                   PAGE
                                                                                                       
    I         Coverage                                                                                      1

   II         Term                                                                                          1

  III         Concurrency of Conditions                                                                     2

   IV         Premium                                                                                       2

    V         Loss Notices and Settlements                                                                  2

   VI         Late Payments                                                                                 2

  VII         Offset (BRMA 36D)                                                                             4

 VIII         Access to Records (BRMA 1D)                                                                   4

   IX         Errors And Omissions (BRMA 14F)                                                               4

    X         Currency (BRMA 12A)                                                                           4

   XI         Taxes (BRMA 50C)                                                                              4

  XII         Federal Excise Tax (BRMA 17A)                                                                 5

 XIII         Unauthorized Reinsurers                                                                       5

  XIV         Insolvency                                                                                    6

   XV         Arbitration                                                                                   7

  XVI         Service of Suit                                                                               8

 XVII         Agency Agreement                                                                              8

XVIII         Governing Law                                                                                 9

  XIX         Confidentiality                                                                               9

   XX         Severability                                                                                  9

  XXI         Intermediary (BRMA 23A)                                                                       9

              Schedule A


                                                                 [BENFIELD LOGO]



                        REINSTATEMENT PREMIUM PROTECTION
                              REINSURANCE CONTRACT
                             EFFECTIVE: JULY 1, 2004

                                    issued to

                         Philadelphia Insurance Company
                            Bala Cynwyd, Pennsylvania
                    Philadelphia Indemnity Insurance Company
                            Bala Cynwyd, Pennsylvania
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                        Philadelphia Insurance Companies
             (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 - COVERAGE

By this Contract the Reinsurer agrees to indemnify the Company for 100% of any
reinstatement premium which the Company pays or becomes liable to pay as a
result of loss occurrences commencing during the term of this Contract under the
provisions of the Company's Underlying Excess Catastrophe Reinsurance Contract,
effective July 1, 2004 and Excess Catastrophe Reinsurance Contract, effective
June 1, 2004 (hereinafter referred to as the "Underlying Contracts" and
described in Schedule A attached to and forming part of this Contract), subject
to the terms and conditions set forth herein. However, the liability of the
Reinsurer shall not exceed $9,165,000 during the term of this Contract.

ARTICLE II - TERM

A.    This Contract shall become effective on July 1, 2004, with respect to
      reinstatement premium payable by the Company under the provisions of the
      Underlying Contracts as a result of losses arising out of loss occurrences
      commencing on or after that date, and shall remain in force until May 31,
      2005, both days inclusive.

B.    If this Contract expires while a loss occurrence covered hereunder is in
      progress, the Reinsurer's liability hereunder shall, subject to the other
      terms and conditions of this Contract, be determined as if the entire loss
      occurrence had occurred prior to the expiration of this Contract, provided
      that no part of such loss occurrence is claimed against any renewal or
      replacement of this Contract.

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ARTICLE III - CONCURRENCY OF CONDITIONS

A.    It is agreed that this Contract will follow the terms, conditions,
      exclusions, definitions, warranties and settlements of the Company under
      the Underlying Contracts which are not inconsistent with the provisions of
      this Contract.

B.    The Company shall advise the Reinsurer of any material changes in the
      Underlying Contracts which may affect the liability of the Reinsurer under
      this Contract.

ARTICLE IV - PREMIUM

A.    As premium for the reinsurance provided hereunder, the Company shall pay
      the Reinsurer the following:

      1.    As respects the Underlying Excess Catastrophe Reinsurance Contract,
            effective July 1, 2004, $319,410; and

      2.    As respects the Excess Catastrophe Reinsurance Contract, effective
            June 1, 2004, $420,000 for the first excess layer, $331,250 for the
            second excess layer, $133,000 for the third excess layer and
            $103,000 for the Fourth layer.

B.    The Company shall pay the Reinsurer the sum of the amounts set forth in
      subparagraphs 1 and 2 of paragraph A above in four equal installments of
      $326,665 on July 1, September 1 and December 1 of 2004 and March 1, 2005.

ARTICLE V - LOSS NOTICES AND SETTLEMENTS

A.    Whenever reinstatement premium settlements made by the Company under the
      Underlying Contracts appear likely to result in a claim hereunder, the
      Company shall notify the Reinsurer. The Company will advise the Reinsurer
      of all subsequent developments relating to such claims that, in the
      opinion of the Company, may materially affect the position of the
      Reinsurer.

B.    All reinstatement premium settlements made by the Company under the
      Underlying Contracts, provided they are within the terms of the Underlying
      Contracts and within the terms of this Contract, shall be binding upon the
      Reinsurer, and the Reinsurer agrees to pay all amounts for which it may be
      liable upon receipt of reasonable evidence of the amount paid (or
      scheduled to be paid) by the Company.

ARTICLE VI - 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 XXI (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

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                                     Page 2



      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 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 10 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 10 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

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      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 VII - OFFSET (BRMA 36D)

The Company and the Reinsurer, each at its option, may offset any balance or
balances, whether on account of premiums, claims and losses, loss expenses or
salvages due from one party to the other under this Contract; provided, however,
that in the event of the insolvency of a party hereto, offsets shall only be
allowed in accordance with applicable statutes and regulations.

ARTICLE VIII - 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 IX - 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 X - CURRENCY (BRMA 12A)

A.    Whenever the word "Dollars" or the "$" sign appears in this Contract, they
      shall be construed to mean United States Dollars and all transactions
      under this Contract shall be in United States Dollars.

B.    Amounts paid or received by the Company in any other currency shall be
      converted to United States Dollars at the rate of exchange at the date
      such transaction is entered on the books of the Company.

ARTICLE XI - TAXES (BRMA 50C)

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, the District of Columbia or Canada.

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                                     Page 4


ARTICLE XII - FEDERAL EXCISE TAX (BRMA 17A)

(Applicable to those reinsurers, excepting Underwriters at Lloyd's London and
other reinsurers exempt from Federal Excise Tax, who are domiciled outside the
United States of America.)

A.    The Reinsurer has agreed to allow for the purpose of paying the Federal
      Excise Tax the applicable percentage of the premium payable hereon (as
      imposed under Section 4371 of the Internal Revenue Code) to the extent
      such premium is subject to the Federal Excise Tax.

B.    In the event of any return of premium becoming due hereunder the Reinsurer
      will deduct the applicable percentage from the return premium payable
      hereon and the Company or its agent should take steps to recover the tax
      from the United States Government.

ARTICLE XIII - UNAUTHORIZED REINSURERS

A.    If the Reinsurer is unauthorized in any state of the United States of
      America or the District of Columbia, the Reinsurer agrees to fund, on or
      before December 31, 2004, its share of the Company's ceded United States
      outstanding loss reserves (being the sum of all reinstatement premiums
      paid by the Company under the Underlying Contracts but not yet recovered
      from the Reinsurer, plus the Company's reserves for reinstatement premiums
      due under the Underlying Contracts, if any) by:

      1.    Clean, irrevocable and unconditional letters of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a bank or banks meeting the NAIC Securities
            Valuation Office credit standards for issuers of letters of credit
            and acceptable to said insurance regulatory authorities; and/or

      2.    Escrow accounts for the benefit of the Company; and/or

      3.    Cash advances;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved. The Reinsurer, at its sole option, may fund in other
      than cash if its method and form of funding are acceptable to the
      insurance regulatory authorities involved.

B.    If the Reinsurer is unauthorized in any province or jurisdiction of
      Canada, the Reinsurer agrees to fund, on or before December 31, 2004, 115%
      of its share of the Company's ceded Canadian outstanding loss reserves
      (being the sum of all reinstatement premiums paid by the Company under the
      Underlying Contracts but not yet recovered from the Reinsurer, plus the
      Company's reserves for reinstatement premiums due under the Underlying
      Contracts, if any) by:

      1.    A clean, irrevocable and unconditional letter of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a Canadian bank or banks meeting the NAIC
            Securities Valuation Office credit standards for issuers of letters
            of credit and acceptable to said insurance regulatory authorities,
            for no more than 15/115ths of the total funding required; and/or

      2.    Cash advances for the remaining balance of the funding required;

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                                     Page 5



      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved.

C.    With regard to funding in whole or in part by letters of credit, it is
      agreed that each letter of credit will be in a form acceptable to
      insurance regulatory authorities involved, will be issued for a term of at
      least one year and will include an "evergreen clause," which automatically
      extends the term for at least one additional year at each expiration date
      unless written notice of non-renewal is given to the Company not less than
      30 days prior to said expiration date or longer where required by
      insurance regulatory authorities. The Company and the Reinsurer further
      agree, notwithstanding anything to the contrary in this Contract, that
      said letters of credit may be drawn upon by the Company or its successors
      in interest at any time, without diminution because of the insolvency of
      the Company or the Reinsurer, but only for one or more of the following
      purposes:

       1.   To reimburse itself for the Reinsurer's share of reinstatement
            premiums paid by the Company under the terms of the Underlying
            Contracts, unless paid in cash by the Reinsurer;

       2.   To reimburse itself for the Reinsurer's share of any other amounts
            claimed to be due hereunder, unless paid in cash by the Reinsurer;

       3.   To fund a cash account in an amount equal to the Reinsurer's share
            of any ceded outstanding loss reserves funded by means of a letter
            of credit which is under non-renewal notice, if said letter of
            credit has not been renewed or replaced by the Reinsurer 10 days
            prior to its expiration date;

       4.   To refund to the Reinsurer any sum in excess of the actual amount
            required to fund the Reinsurer's share of the Company's ceded
            outstanding loss reserves, if so requested by the Reinsurer.

      In the event the amount drawn by the Company on any letter of credit is in
      excess of the actual amount required for C(1) or C(3), or in the case of
      C(2), the actual amount determined to be due, the Company shall promptly
      return to the Reinsurer the excess amount so drawn.

ARTICLE XIV - 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

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                                     Page 6



      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 XV - ARBITRATION

A.    As a condition precedent to any right of action hereunder, any dispute or
      difference between the Company and any Reinsurer relating to the
      interpretation or performance of this Contract, including its formation or
      validity, or any transaction under this Contract, whether arising before
      or after termination, shall be submitted to arbitration.

B.    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 provided that communication shall be made by the Company to each
      of the reinsurers constituting the one party, and provided, however, that
      nothing therein 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 Reinsurer under the terms of this Contract
      from several to joint.

C.    Upon written request of any party, each party shall choose an arbitrator
      and the two chosen shall select a third arbitrator. If either party
      refuses or neglects to appoint an arbitrator within 30 days after receipt
      of the written request for arbitration, the requesting party may appoint a
      second arbitrator. If the two arbitrators fail to agree on the selection
      of a third arbitrator within 30 days of their appointment, the Company
      shall petition the American Arbitration Association to appoint the third
      arbitrator. If the American Arbitration Association fails to appoint the
      third arbitrator within 30 days after it has been requested to do so,
      either party may request a justice of a court of general jurisdiction of
      the state in which the arbitration is to be held to appoint the third
      arbitrator. All arbitrators shall be active or retired officers of
      insurance or reinsurance companies, or Lloyd's London Underwriters, and
      disinterested in the outcome of the arbitration. Each party shall submit
      its case to the arbitrators within 30 days of the appointment of the third
      arbitrator.

D.    The parties hereby waive all objections to the method of selection of the
      arbitrators, it being the intention of both sides that all the arbitrators
      be chosen from those submitted by the parties.

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E.    The arbitrators shall have the power to determine all procedural rules for
      the holding of the arbitration including but not limited to inspection of
      documents, examination of witnesses and any other matter relating to the
      conduct of the arbitration. The arbitrators shall interpret this Contract
      as an honorable engagement and not as merely a legal obligation; they are
      relieved of all judicial formalities and may abstain from following the
      strict rules of law. The arbitrators may award interest and costs. Each
      party shall bear the expense of its own arbitrator and shall share equally
      with the other party the expenses of the third arbitrator and of the
      arbitration.

F.    The decision in writing of the majority of the arbitrators shall be final
      and binding upon both parties. Judgment may be entered upon the final
      decision of the arbitrators in any court having jurisdiction. The
      arbitration shall take place in Bala Cynwyd, Pennsylvania, unless
      otherwise mutually agreed between the Company and the Reinsurer.

G.    This Article shall remain in full force and effect in the event any other
      provision of this Contract shall be found invalid or non-binding.

H.    All time limitations stated in this Article may be amended by mutual
      consent of the parties, and will be amended automatically to the extent
      made necessary by any circumstances beyond the control of the parties.

ARTICLE XVI - SERVICE OF SUIT

(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. This
Article is not intended to conflict with or override the parties' obligations to
arbitrate their disputes in accordance with Article XV).

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 any 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 therefore, 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 XVII - 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

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                                     Page 8



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 XVIII - GOVERNING LAW

This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Pennsylvania exclusive of the rules
with respect to conflicts of law, except as to rules with respect to credit for
reinsurance in which case the applicable rules of all states shall apply.

ARTICLE XIX - CONFIDENTIALITY

The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly, communicate, disclose or divulge to any third
party, any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company's books, records and
papers. The restrictions as outlined in this Article shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, retrocessionaires, legal counsel, arbitrators involved in
any arbitration procedures under this Contract or disclosures required upon
subpoena or other dully-issued order of a court or other governmental agency or
regulatory authority.

ARTICLE XX - SEVERABILITY

If any provision of this Contract should be invalid under applicable laws, the
latter shall control but only to the extent of the conflict without affecting
the remaining provisions of this Contract.

ARTICLE XXI - 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:

Bala Cynwyd, Pennsylvania, this ________ day of _________________ in the year
________.

          ______________________________________________________________________
          Philadelphia Insurance Companies (for and on behalf of the "Company")

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                                     Page 9



                                   SCHEDULE A

                        REINSTATEMENT PREMIUM PROTECTION
                              REINSURANCE CONTRACT
                             EFFECTIVE: JULY 1, 2004

                                    issued to

                         Philadelphia Insurance Company
                            Bala Cynwyd, Pennsylvania
                    Philadelphia Indemnity Insurance Company
                            Bala Cynwyd, Pennsylvania
                                       and

                    any and all other companies which are now
                   or may hereafter become member companies of
                        Philadelphia Insurance Companies



                              UNDERLYING         FIRST            SECOND            THIRD           FOURTH
                                EXCESS           EXCESS           EXCESS            EXCESS          EXCESS
                                                                                  
Company's Retention          $  7,000,000     $ 10,000,000     $ 20,000,000     $ 40,000,000     $ 65,000,000

Reinsurer's Per
Occurrence Limit             $  3,000,000     $ 10,000,000     $ 20,000,000     $ 25,000,000     $ 50,000,000

Reinsurer's Annual Limit     $  6,000,000     $ 20,000,000     $ 40,000,000     $ 50,000,000     $100,000,000

Annual Minimum Premium       $    702,000     $  1,680,000     $  2,000,000     $  1,350,000     $  1,600,000

Premium Rate                        0.457%           1.000%           1.190%           0.810%           0.960%

Annual Deposit Premium       $    877,500     $  2,100,000     $  2,500,000     $  1,687,500     $  2,000,000

Quarterly Deposit Premium    $    219,375     $    525,000     $    625,000     $    421,875     $    500,000


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EX-10.13

                                                                   EXHIBIT 10.13

       UNDERLYING EXCESS CATASTROPHE AND REINSTATEMENT PREMIUM PROTECTION
                              REINSURANCE CONTRACT
                             EFFECTIVE: JULY 1, 2004

                                    issued to

                       Liberty American Insurance Company
                             Pinellas Park, Florida
                          Mobile USA Insurance Company
                             Pinellas Park, Florida
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                     Liberty American Insurance Group, Inc.

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                                TABLE OF CONTENTS



 ARTICLE                                                                                                   PAGE
                                                                                                        
     I         Classes of Business Reinsured                                                                 1
    II         Term                                                                                          1
   III         Concurrency of Conditions                                                                     2
    IV         Territory                                                                                     2
     V         Exclusions                                                                                    2
    VI         Retention and Limit                                                                           4
   VII         Reinstatement                                                                                 5
  VIII         Definitions                                                                                   5
    IX         Other Reinsurance                                                                             6
     X         Loss Occurrence                                                                               7
    XI         Loss Notices and Settlements                                                                  8
   XII         Salvage and Subrogation                                                                       8
  XIII         Florida Hurricane Catastrophe Fund                                                            8
   XIV         Reinsurance Premium                                                                           9
    XV         Late Payments                                                                                10
   XVI         Offset (BRMA 36D)                                                                            11
  XVII         Access to Records (BRMA 1D)                                                                  12
 XVIII         Liability of the Reinsurer                                                                   12
   XIX         Net Retained Lines (BRMA 32E)                                                                12
    XX         Errors and Omissions (BRMA 14F)                                                              12
   XXI         Currency (BRMA 12A)                                                                          12
  XXII         Taxes (BRMA 50C)                                                                             13
 XXIII         Federal Excise Tax (BRMA 17A)                                                                13
  XXIV         Unauthorized Reinsurers                                                                      13
   XXV         Insolvency                                                                                   15
  XXVI         Arbitration                                                                                  16
 XXVII         Service of Suit                                                                              17
XXVIII         Agency Agreement                                                                             17
  XXIX         Governing Law                                                                                17
   XXX         Confidentiality                                                                              18
  XXXI         Intermediary (BRMA 23A)                                                                      18
               Schedule A


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       UNDERLYING EXCESS CATASTROPHE AND REINSTATEMENT PREMIUM PROTECTION
                              REINSURANCE CONTRACT
                             EFFECTIVE: JULY 1, 2004

                                    issued to

                       Liberty American Insurance Company
                             Pinellas Park, Florida
                          Mobile USA Insurance Company
                             Pinellas Park, Florida
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                     Liberty American Insurance Group, Inc.
             (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 Property 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 - TERM

A.    This Contract shall become effective on July 1, 2004, with respect to
      losses arising out of loss occurrences commencing on or after that date,
      and shall remain in force until May 31, 2005, both days inclusive.

B.    If this Contract expires while a loss occurrence covered hereunder is in
      progress, the Reinsurer's liability hereunder shall, subject to the other
      terms and conditions of this Contract, be determined as if the entire loss
      occurrence had occurred prior to the expiration of this Contract, provided
      that no part of such loss occurrence is claimed against any renewal or
      replacement of this Contract.

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                                     Page 1



ARTICLE III - CONCURRENCY OF CONDITIONS

A.    As respects Section II of Article VI only, it is agreed that this Contract
      shall follow the terms, conditions, exclusions, definitions, warranties
      and settlements of the Company under Section I of Article VI and under the
      Company's Florida Only Excess Catastrophe Reinsurance Contract, effective
      June 1, 2004, and $50,000,000 Excess $90,000,000 Florida Only Catastrophe
      Reinsurance Contract, effective June 1, 2004 (hereinafter referred to
      collectively as the "Underlying Contracts" and described in Schedule A
      attached to and forming part of this Contract) which are not inconsistent
      with the provisions of this Contract.

B.    The Company shall advise the Reinsurer of any material changes in the
      Underlying Contracts which may affect the liability of the Reinsurer under
      this Contract.

ARTICLE IV - TERRITORY

The liability of the Reinsurer shall be limited to losses under policies
covering property located within the territorial limits of the State of Florida
or extra territorial limits of the Company's policies.

ARTICLE V - EXCLUSIONS

This Contract does not apply to and specifically excludes the following:

       1.   Financial guarantee and insolvency.

       2.   Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
            Physical Damage - Reinsurance (U.S.A.)" and the "Nuclear Incident
            Exclusion Clause - Physical Damage - Reinsurance (Canada)" attached
            to and forming part of this Contract.

       3.   Loss or damage caused by or resulting from 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, but
            this exclusion shall not apply to loss or damage covered under a
            standard policy with a standard War Exclusion Clause.

       4.   Loss or liability excluded under the provisions of the "Pools,
            Associations and Syndicates Exclusion Clause" attached to and
            forming part of this Contract.

      5.    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.

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       6.   Losses in respect of overhead transmission and distribution lines
            and their supporting structures other than those on or within 300
            meters (or 1,000 feet) of the insured premises. It is understood and
            agreed that public utilities extension and/or suppliers extension
            and/or contingent business interruption coverages are not subject to
            this exclusion, provided that these are not part of a transmitters'
            or distributors' policy.

       7.   Accident and Health, Casualty, Fidelity and/or Surety business.

       8.   Pollution and seepage coverages excluded under the provisions of the
            "Pollution and Seepage Exclusion Clause (BRMA 39A)" attached to and
            forming part of this Contract.

       9.   Notwithstanding any other provision to the contrary within this
            Contract or any amendment thereto, it is agreed that this Contract
            excludes loss, damage, cost or expense directly or indirectly caused
            by, contributed to by, resulting from, or arising out of or in
            connection with any act of terrorism, as defined herein, regardless
            of any other cause or event contributing concurrently or in any
            other sequence to the loss.

            An "act of terrorism" includes any act, or preparation in respect of
            action, or threat of action, designed to influence the government de
            jure or de facto of any nation or any political division thereof, or
            in pursuit of political, religious, ideological or similar purposes
            to intimidate the public or a section of the public of any nation by
            any person or group(s) of persons, whether acting alone or on behalf
            of or in connection with any organization(s) or government(s) de
            jure or de facto, and which:

            a.    Involves violence against one or more persons; or

            b.    Involves damage to property; or

            c.    Endangers life other than that of the person committing the
                  action; or

            d.    Creates a risk to health or safety of the public or a section
                  of the public; or

            e.    Is designed to interfere with or to disrupt an electronic
                  system.

            This Contract also excludes loss, damage, cost or expense directly
            or indirectly caused by, contributed to by, resulting from, or
            arising out of or in connection with any action in controlling,
            preventing, suppressing, retaliating against, or responding to any
            act of terrorism.

            Notwithstanding the above and subject otherwise to the terms,
            conditions and limitations of this Contract, in respect only of
            personal lines this Contract will pay actual loss or damage (but not
            related cost or expense) caused by any act of terrorism provided
            such act is not directly or indirectly caused by, contributed to by,
            resulting from, or arising out of or in connection with biological,
            chemical or nuclear pollution or contamination.

      10.   Loss or liability in any way or to any extent arising out of the
            actual or alleged presence or actual, alleged or threatened presence
            of fungi including, but not limited to, mold, mildew, mycotoxins,
            microbial volatile organic compounds or other "microbial
            contamination." This includes:

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            a.    Any supervision, instruction, recommendations, warnings or
                  advice given or which should have been given in connection
                  with the above; and

            b.    Any obligation to share damages with or repay someone else who
                  must pay damages because of such injury or damage.

            For purposes of this exclusion, "microbial contamination" means any
            contamination, either airborne or surface, which arises out of or is
            related to the presence of fungi, mold, mildew, mycotoxins,
            microbial volatile organic compounds or spores, including, without
            limitation, Penicillium, Aspergillus, Fusarium, Aspergillus Flavus
            and Stachybotrys chartarum.

            Losses resulting from the above causes do not in and of themselves
            constitute an event unless arising out of one or more of the
            following perils, in which case this exclusion does not apply:

                  Fire, lightning, explosion, aircraft or vehicle impact,
                  falling objects, windstorm, hail, tornado, cyclone, hurricane,
                  earthquake, volcano, tsunami, flood, freeze or weight of snow.

            Notice of any claims for mold-related losses must be given by the
            Company to the Reinsurer, in writing, within 24 months after the
            commencement date of the loss occurrence to which such claims
            relate.

      11.   Loss or liability excluded under the provisions of the "Electronic
            Data Endorsement B" (N.M.A. 2915) attached to and forming part of
            this Contract.

ARTICLE VI - RETENTION AND LIMIT

A. Section I - Underlying Excess Catastrophe Reinsurance:

      1.    The Company shall retain and be liable for the first $3,500,000 of
            ultimate net loss arising out of each loss 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 $3,500,000 as respects any one loss occurrence.

      2.    No claim shall be made under Section I as respects any one loss
            occurrence unless at least two risks insured or reinsured by the
            Company are involved in such loss occurrence. For purposes of this
            Contract, the Company shall be the sole judge of what constitutes
            one risk.

B.    Section II - Reinstatement Premium Protection Reinsurance

      The Reinsurer shall be liable for any reinstatement premium which the
      Company pays or becomes liable to pay as a result of loss occurrences
      commencing during the term of this Contract under paragraph A above and
      the Underlying Contracts. However, the liability of the Reinsurer shall
      not exceed $12,247,500 for the term of this Contract.

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ARTICLE VII - REINSTATEMENT

A.    As respects Section I of Article VI, 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 loss 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 Section I occurrence limit reinstated (based
            on the loss paid by the Reinsurer under Section I); times

      2.    The final adjusted reinsurance premium under Section I, as
            calculated in accordance with paragraph A of Article XIV, for the
            term of this Contract (exclusive of reinstatement premium).

B.    Whenever the Company requests payment by the Reinsurer of any loss under
      Section I, the Company shall submit a statement to the Reinsurer of
      reinstatement premium due the Reinsurer. If the final adjusted reinsurance
      premium under Section I for the term of this Contract has not been
      determined as of the date of any such statement, the calculation of
      reinstatement premium due shall be based on the annual deposit premium
      under Section I and shall be readjusted when the final adjusted
      reinsurance premium under Section I for the term of this Contract has been
      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
      under Section I of Article VI shall not exceed $3,500,000 as respects loss
      or losses arising out of any one loss occurrence, nor shall it exceed
      $7,000,000 in all during the term of this Contract.

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 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 any action against its

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            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.

      Notwithstanding anything stated herein, the amount included in the
      ultimate net loss for any one loss occurrence as respects loss in excess
      of policy limits and extra contractual obligations shall not exceed 25.0%
      of the Company's indemnity loss hereunder arising out of that loss
      occurrence.

      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.

      If any provision of this paragraph B 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.

C.    "Loss adjustment expense" as used herein shall mean expenses assignable to
      the investigation, appraisal, adjustment, settlement, litigation, defense
      and/or appeal of specific claims, regardless of how such expenses are
      classified for statutory reporting purposes. Loss adjustment expense shall
      include, but not be limited to, declaratory judgments, interest on
      judgments, expenses of outside adjusters, and a pro rata share of the
      salaries and expenses of the Company's field employees according to the
      time occupied adjusting such losses and expenses of the Company's
      officials incurred in connection with the losses, but shall not include
      office expenses or salaries of the Company's regular employees.

ARTICLE IX - OTHER REINSURANCE

The Company shall be permitted to carry excess catastrophe reinsurance,
recoveries under which shall inure solely to the benefit of the Company. The
Company shall also carry 15.0% quota share reinsurance on its direct personal
lines business, recoveries under which shall inure to the benefit of this
Contract, or so deemed.

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ARTICLE X - LOSS OCCURRENCE

A.    The term "loss occurrence" shall mean the sum of all individual losses
      directly occasioned by any one disaster, accident or loss or series of
      disasters, accidents or losses arising out of one event which occurs
      within the area of one state of the United States or province of Canada
      and states or provinces contiguous thereto and to one another. However,
      the duration and extent of any one "loss occurrence" shall be limited to
      all individual losses sustained by the Company occurring during any period
      of 168 consecutive hours arising out of and directly occasioned by the
      same event, except that the term "loss occurrence" shall be further
      defined as follows:

      1.    As regards windstorm, hail, tornado, hurricane, cyclone, including
            ensuing collapse and water damage, all individual losses sustained
            by the Company occurring during any period of 72 consecutive hours
            arising out of and directly occasioned by the same event. However,
            the event need not be limited to one state or province or states or
            provinces contiguous thereto.

      2.    As regards riot, riot attending a strike, civil commotion, vandalism
            and malicious mischief, all individual losses sustained by the
            Company occurring during any period of 72 consecutive hours within
            the area of one municipality or county and the municipalities or
            counties contiguous thereto arising out of and directly occasioned
            by the same event. The maximum duration of 72 consecutive hours may
            be extended in respect of individual losses which occur beyond such
            72 consecutive hours during the continued occupation of an insured's
            premises by strikers, provided such occupation commenced during the
            aforesaid period.

      3.    As regards earthquake (the epicentre of which need not necessarily
            be within the territorial confines referred to in the introductory
            portion of this paragraph) and fire following directly occasioned by
            the earthquake, only those individual fire losses which commence
            during the period of 168 consecutive hours may be included in the
            Company's "loss occurrence."

      4.    As regards "freeze," only individual losses directly occasioned by
            collapse, breakage of glass and water damage (caused by bursting
            frozen pipes and tanks) may be included in the Company's "loss
            occurrence."

      5.    As regards firestorms, brush fires, and other fires or series of
            fires, irrespective of origin (except as provided in subparagraphs 2
            and 3 above), which spread through trees, grassland or other
            vegetation, all individual losses sustained by the Company which
            occur during any period of 168 consecutive hours within a 100-mile
            radius of any one fixed point selected by the Company may be
            included in the Company's "loss occurrence." However, an individual
            loss subject to this subparagraph cannot be included in more than
            one "loss occurrence."

B.    For all those "loss occurrences," other than those referred to in
      subparagraph 2 of paragraph A above, the Company may choose the date and
      time when any such period of consecutive hours commences, provided that it
      is not earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss, and provided that only one such period of 168
      consecutive hours shall apply with respect to one event, except for any
      "loss occurrence" referred to in

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      subparagraph 1 of paragraph A above where only one such period of 72
      consecutive hours shall apply with respect to one event, regardless of the
      duration of the event.

C.    As respects those "loss occurrences" referred to in subparagraph 2 of
      paragraph A above, if the disaster, accident or loss occasioned by the
      event is of greater duration than 72 consecutive hours, then the Company
      may divide that disaster, accident or loss into two or more "loss
      occurrences," provided no two periods overlap and no individual loss is
      included in more than one such period and provided that no period
      commences earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss.

D.    No individual losses occasioned by an event that would be covered by 72
      hours clauses may be included in any "loss occurrence" claimed under the
      168 hours provision.

ARTICLE XI - LOSS NOTICES AND SETTLEMENTS

A.    Whenever losses sustained by the Company appear likely to result in a
      claim hereunder, the Company shall notify the Reinsurer, and the Reinsurer
      shall have the right to participate in the adjustment of such losses at
      its own expense.

B.    All loss settlements made by the Company, provided they are within the
      terms of this Contract, shall be binding upon the Reinsurer, and the
      Reinsurer agrees to pay all amounts for which it may be liable upon
      receipt of reasonable evidence of the amount paid (or scheduled to be
      paid) by the Company.

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) on account of claims
and settlements involving reinsurance hereunder. Salvage 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 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 - FLORIDA HURRICANE CATASTROPHE FUND

A.    Any loss reimbursement paid or payable to the Company under the Florida
      Hurricane Catastrophe Fund (FHCF) as a result of loss occurrences
      commencing during the term of this Contract shall inure to the benefit of
      this Contract. Further, any FHCF loss reimbursement shall be deemed to be
      paid to the Company in accordance with the reimbursement contract between
      the Company and the State Board of Administration of the State of Florida
      at the full payout level set forth therein and will be deemed not to be
      reduced by any reduction or exhaustion of the FHCF's claims paying
      capacity.

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B.    Prior to the determination of the Company's FHCF retention and payout, if
      any, under the reimbursement contract, the Reinsurer's liability hereunder
      will be determined provisionally based on the projected payout, determined
      in accordance with the provisions of the reimbursement contract. Following
      determination of the payout under the reimbursement contract, the ultimate
      net loss under this Contract will be recalculated. If, as a result of such
      calculation, the loss to the Reinsurer in any one loss occurrence is less
      than the amount previously paid by the Reinsurer, the Company shall
      promptly remit the difference to the Reinsurer. If the loss to the
      Reinsurer in any one loss occurrence is greater than the amount previously
      paid by the Reinsurer, the Reinsurer shall promptly remit the difference
      to the Company.

C.    If an FHCF reimbursement amount is based on the Company's losses in more
      than one loss occurrence and the FHCF does not designate the amount
      allocable to each loss occurrence, the FHCF reimbursement amount shall be
      prorated in the proportion that the Company's losses in each loss
      occurrence bear to the Company's total losses arising out of all loss
      occurrences to which the FHCF reimbursement applies.

D.    Any reimbursement premiums or emergency assessment paid by the Company
      under the FHCF shall be deemed to be premiums paid for inuring
      reinsurance.

ARTICLE XIV - REINSURANCE PREMIUM

A.    As respects Section I:

      1.    As premium for reinsurance coverage provided under Section I, the
            Company shall pay the Reinsurer the greater of a minimum premium of
            $1,050,000 or the sum of the following:

            a.    1.637% of the Company's gross earned premium for Condominium,
                  Dwelling and Homeowners business during the term of this
                  Contract; and

            b.    2.062% of the Company's gross earned premium for Manufactured
                  Homeowners business during the term of this Contract.

      2.    The Company shall pay the Reinsurer a deposit premium of $1,312,500
            in four equal installments of $328,125 on July 1, September 1 and
            December 1 of 2004 and March 1, 2005.

      3.    Within 45 days after the expiration of this Contract, the Company
            shall provide a report to the Reinsurer setting forth the premium
            due under Section I, computed in accordance with paragraph A, and
            any additional premium due the Reinsurer or return premium due the
            Company shall be remitted promptly.

      4.    "Gross earned premium" as used herein is defined as earned premium
            of the Company for the classes of business reinsured hereunder,
            before the deduction of any premiums ceded by the Company for
            reinsurance which inures to the benefit of this Contract. Gross
            earned premium will not include the Company's earned premium for
            Homeowners, Manufactured Homeowners, Dwelling and Condominium
            policies that include a "No Wind/No Water" exclusion. It is
            understood that gross earned

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            premium shall include catastrophe fees, but shall exclude MGA fees,
            DRST fees and policy surcharges to recoup residual market deficit
            assessments.

B. As respects Section II:

       1.   As premium for the reinsurance provided under Section II, the
            Company shall pay the Reinsurer the sum of the following:

            a.    As respects Section I of this Contract, $437,500.

            b.    As respects the Florida Only Excess Catastrophe Reinsurance
                  Contract, effective June 1, 2004, $1,105,650 for the First
                  layer, $582,750 for the Second layer, $223,200 for the Third
                  layer and $116,000 for the Fourth layer.

            c.    As respects the $50,000,000 excess $90,000,000 Florida Only
                  Catastrophe Reinsurance Contract, effective June 1, 2004,
                  $54,250.

       2.   The Company shall pay the Reinsurer the sum of the amounts in (a)
            through (c) of subparagraph 1 above in four equal installments of
            $629,837.50 on July 1, 2004, September 1, 2004, December 1, 2004 and
            March 1, 2005.

ARTICLE XV - 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 XXXI (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 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

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            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 10 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 10 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 or control 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 XVI - OFFSET (BRMA 36D)

The Company and the Reinsurer, each at its option, may offset any balance or
balances, whether on account of premiums, claims and losses, loss expenses or
salvages due from one party to the other under this Contract; provided, however,
that in the event of the insolvency of a party hereto, offsets shall only be
allowed in accordance with applicable statutes and regulations.

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ARTICLE XVII - 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 XVIII - 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. However, in no event shall this be construed
      in any way to provide coverage outside the terms and conditions set forth
      in this Contract.

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 XIX - 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 XX - 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 XXI - CURRENCY (BRMA 12A)

A.    Whenever the word "Dollars" or the "$" sign appears in this Contract, they
      shall be construed to mean United States Dollars and all transactions
      under this Contract shall be in United States Dollars.

B.    Amounts paid or received by the Company in any other currency shall be
      converted to United States Dollars at the rate of exchange at the date
      such transaction is entered on the books of the Company.

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ARTICLE XXII - TAXES (BRMA 50C)

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, the District of Columbia or Canada.

ARTICLE XXIII - FEDERAL EXCISE TAX (BRMA 17A)

(Applicable to those reinsurers, excepting Underwriters at Lloyd's London and
other reinsurers exempt from Federal Excise Tax, who are domiciled outside the
United States of America.)

A.    The Reinsurer has agreed to allow for the purpose of paying the Federal
      Excise Tax the applicable percentage of the premium payable hereon as
      imposed under Section 4371 of the Internal Revenue Code to the extent such
      premium is subject to the Federal Excise Tax.

B.    In the event of any return of premium becoming due hereunder the Reinsurer
      will deduct the applicable percentage from the return premium payable
      hereon and the Company or its agent should take steps to recover the tax
      from the United States Government.

ARTICLE XXIV - UNAUTHORIZED REINSURERS

A.    If the Reinsurer is unauthorized in any state of the United States of
      America or the District of Columbia, the Reinsurer agrees to fund, on or
      before December 31, 2004, as respects Section I of Article VI, its share
      of the Company's ceded United States unearned premium and outstanding loss
      and loss adjustment expense reserves (including all case reserves plus any
      reasonable amount estimated to be unreported, as determined by the
      Company, from known loss occurrences) and, as respects Section II of
      Article VI, its share of the Company's ceded United States unearned
      premium and outstanding loss reserves (being the sum of all reinstatement
      premiums paid by the Company under the Underlying Contracts but not yet
      recovered from the Reinsurer, plus the Company's reserves for
      reinstatement premiums due under the Underlying Contracts, if any) by:

      1.    Clean, irrevocable and unconditional letters of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a bank or banks meeting the NAIC Securities
            Valuation Office credit standards for issuers of letters of credit
            and acceptable to said insurance regulatory authorities; and/or

      2.    Escrow accounts for the benefit of the Company; and/or

      3.    Cash advances;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved. The Reinsurer, at its sole option, may fund in other
      than cash if its method and form of funding are acceptable to the
      insurance regulatory authorities involved.

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                                    Page 13



B.    If the Reinsurer is unauthorized in any province or jurisdiction of
      Canada, the Reinsurer agrees to fund, on or before December 31, 2004, as
      respects Section I of Article VI, 115% of its share of the Company's ceded
      Canadian unearned premium and outstanding loss and loss adjustment expense
      reserves (including all case reserves plus any reasonable amount estimated
      to be unreported, as determined by the Company, from known loss
      occurrences) and, as respects Section II of Article VI, 115% of its share
      of the Company's ceded Canadian unearned premium and outstanding loss
      reserves (being the sum of all reinstatement premiums paid by the Company
      under the Underlying Contracts but not yet recovered from the Reinsurer,
      plus the Company's reserves for reinstatement premiums due under the
      Underlying Contracts, if any) by:

      1.    A clean, irrevocable and unconditional letter of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a Canadian bank or banks meeting the NAIC
            Securities Valuation Office credit standards for issuers of letters
            of credit and acceptable to said insurance regulatory authorities,
            for no more than 15/115ths of the total funding required; and/or

      2.    Cash advances for the remaining balance of the funding required;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved.

C.    With regard to funding in whole or in part by letters of credit, it is
      agreed that each letter of credit will be in a form acceptable to
      insurance regulatory authorities involved, will be issued for a term of at
      least one year and will include an "evergreen clause," which automatically
      extends the term for at least one additional year at each expiration date
      unless written notice of non-renewal is given to the Company not less than
      30 days prior to said expiration date or longer where required by
      insurance regulatory authorities. The Company and the Reinsurer further
      agree, notwithstanding anything to the contrary in this Contract, that
      said letters of credit may be drawn upon by the Company or its successors
      in interest at any time, without diminution because of the insolvency of
      the Company or the Reinsurer, but only for one or more of the following
      purposes:

      1.    As respects Section I , to reimburse itself for the Reinsurer's
            share of unearned premiums returned to insureds on account of policy
            cancellations and, as respects Section II, to reimburse itself for
            the Reinsurer's share of reinstatement premiums paid by the Company
            under the terms of the Underlying Contracts, unless paid in cash by
            the Reinsurer;

       2.   As respects Section I, to reimburse itself for the Reinsurer's share
            of losses and/or loss adjustment expense paid under the terms of
            policies reinsured hereunder, unless paid in cash by the Reinsurer;

       3.   As respects Sections I and II, to reimburse itself for the
            Reinsurer's share of any other amounts claimed to be due hereunder,
            unless paid in cash by the Reinsurer;

      4.    To fund a cash account in an amount equal to the Reinsurer's share,
            as respects Section I, of any ceded unearned premium and/or
            outstanding loss and loss adjustment expense reserves (including all
            case reserves plus any reasonable amount estimated to be unreported,
            as determined by the Company, from known loss

                                                                 [BENFIELD LOGO]

                                    Page 14



            occurrences) and as respects Section II, any ceded outstanding loss
            reserves (being the sum of all reinstatement premiums paid by the
            Company under the Underlying Contracts but not yet recovered from
            the Reinsurer, plus the Company's reserves for reinstatement premium
            due under the Underlying Contracts, if any) funded by means of a
            letter of credit which is under non-renewal notice, if said letter
            of credit has not been renewed or replaced by the Reinsurer 10 days
            prior to its expiration date;

      5.    To refund to the Reinsurer any sum in excess of the actual amount
            required to fund the Reinsurer's share, as respects Section I, of
            the Company's ceded unearned premium and/or outstanding loss and
            loss adjustment expense reserves (including all case reserves plus
            any reasonable amount estimated to be unreported, as determined by
            the Company, from known loss occurrences) and, as respects Section
            II, the Reinsurer's share of the Company's ceded unearned premium
            and/or outstanding loss reserves (being the sum of all reinstatement
            premiums paid by the Company under the Underlying Contracts but not
            yet recovered from the Reinsurer, plus the Company's reserves for
            reinstatement premium due under the Underlying Contracts, if any) if
            so requested by the Reinsurer.

      In the event the amount drawn by the Company on any letter of credit is in
      excess of the actual amount required for C(1), C(2) or C(4), or in the
      case of C(3), the actual amount determined to be due, the Company shall
      promptly return to the Reinsurer the excess amount so drawn.

ARTICLE XXV - 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

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                                    Page 15



      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 XXVI - ARBITRATION

A.    As a condition precedent to any right of action hereunder, any dispute or
      difference between the Company and any Reinsurer relating to the
      interpretation or performance of this Contract, including its formation or
      validity, or any transaction under this Contract, whether arising before
      or after termination, shall be submitted to arbitration.

B.    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 provided that communication shall be made by the Company to each
      of the reinsurers constituting the one party, and provided, however, that
      nothing therein 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 Reinsurer under the terms of this Contract
      from several to joint.

C.    Upon written request of any party, each party shall choose an arbitrator
      and the two chosen shall select a third arbitrator. If either party
      refuses or neglects to appoint an arbitrator within 30 days after receipt
      of the written request for arbitration, the requesting party may appoint a
      second arbitrator. If the two arbitrators fail to agree on the selection
      of a third arbitrator within 30 days of their appointment, the Company
      shall petition the American Arbitration Association to appoint the third
      arbitrator. If the American Arbitration Association fails to appoint the
      third arbitrator within 30 days after it has been requested to do so,
      either party may request a justice of a court of general jurisdiction of
      the state in which the arbitration is to be held to appoint the third
      arbitrator. All arbitrators shall be active or retired officers of
      insurance or reinsurance companies, or Lloyd's London Underwriters, and
      disinterested in the outcome of the arbitration. Each party shall submit
      its case to the arbitrators within 30 days of the appointment of the third
      arbitrator.

D.    The parties hereby waive all objections to the method of selection of the
      arbitrators, it being the intention of both sides that all the arbitrators
      be chosen from those submitted by the parties.

E.    The arbitrators shall have the power to determine all procedural rules for
      the holding of the arbitration including but not limited to inspection of
      documents, examination of witnesses and any other matter relating to the
      conduct of the arbitration. The arbitrators shall interpret this Contract
      as an honorable engagement and not as merely a legal obligation; they are
      relieved of all judicial formalities and may abstain from following the
      strict rules of law. The arbitrators may award interest and costs. Each
      party shall bear the expense of its own arbitrator and shall share equally
      with the other party the expenses of the third arbitrator and of the
      arbitration.

F.    The decision in writing of the majority of the arbitrators shall be final
      and binding upon both parties. Judgment may be entered upon the final
      decision of the arbitrators in any court

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                                    Page 16



      having jurisdiction. The arbitration shall take place in Pinellas Park,
      Florida, unless otherwise mutually agreed between the Company and the
      Reinsurer.

G.    This Article shall remain in full force and effect in the event any other
      provision of this Contract shall be found invalid or non-binding.

H.    All time limitations stated in this Article may be amended by mutual
      consent of the parties, and will be amended automatically to the extent
      made necessary by any circumstances beyond the control of the parties.

ARTICLE XXVII - SERVICE OF SUIT

(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. This
Article is not intended to conflict with or override the parties obligations to
arbitrate their disputes in accordance with Article XXVI.)

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 XXVIII - 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 XXIX - GOVERNING LAW

This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Florida exclusive of the rules with
respect to conflicts of law, except as to rules with respect to credit for
reinsurance in which case the applicable rules of all the states shall apply.

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                                    Page 17



ARTICLE XXX - CONFIDENTIALITY

The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly communicate, disclose or divulge to any third
party any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company's books, records and
papers. The restrictions as outlined in this Article shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, retrocessionaires, legal counsel, arbitrators involved in
any arbitration procedures under this Contract or disclosures required upon
subpoena or other duly-issued order of a court or other governmental agency or
regulatory authority.

ARTICLE XXXI - 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:

Pinellas Park, Florida, this ________ day of _______________________ in the year
________.

     ___________________________________________________________________________
     Liberty American Insurance Group, Inc. (for and on behalf of the "Company")

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                                    Page 18



                                   SCHEDULE A

                        UNDERLYING EXCESS CATASTROPHE AND
                        REINSTATEMENT PREMIUM PROTECTION
                              REINSURANCE CONTRACT
                             EFFECTIVE: JULY 1, 2004

                                    issued to

                       Liberty American Insurance Company
                             Pinellas Park, Florida
                          Mobile USA Insurance Company
                             Pinellas Park, Florida
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                     Liberty American Insurance Group, Inc.



                                                                                                                           $50M
                                         UNDERLYING           FIRST         SECOND            THIRD         FOURTH        EXCESS
                                           EXCESS             EXCESS        EXCESS            EXCESS        EXCESS         $90M
                                                                                                     
Company's Retention                      $  3,500,000     $  7,000,000   $ 20,000,000     $ 35,000,000   $ 50,000,000  $ 90,000,000

Reinsurer's Per Occurrence Limit         $  3,500,000     $ 13,000,000   $ 15,000,000     $ 15,000,000   $ 40,000,000  $ 50,000,000

Reinsurer's Annual Limit                 $  7,000,000     $ 26,000,000   $ 30,000,000     $ 30,000,000   $ 80,000,000  $100,000,000

Annual Minimum Premium                   $  1,050,000     $  2,808,000   $  2,220,000     $  1,200,000   $  1,280,000  $  1,240,000

Condominium, Dwelling and
 Homeowners Premium Rate                        1.637%           4.203%         3.323%           1.796%         1.916%        1.856%

Manufactured Homeowners Premium Rate            2.062%           5.046%         3.990%           2.157%         2.300%        2.228%

Annual Deposit Premium                   $  1,312,500     $  3,510,000   $  2,775,000     $  1,500,000   $  1,600,000  $  1,550,000

Quarterly Deposit Premium                $    328,125     $    877,500   $    693,750     $    375,000   $    400,000  $    387,500


                                                                 [BENFIELD LOGO]



   NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (U.S.A.)

1.    This Reinsurance does not cover any loss or liability accruing to the
      Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph (1) of this
      Clause, this Reinsurance does not cover any loss or liability accruing to
      the Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      I.    Nuclear reactor power plants including all auxiliary property on the
            site, or

      II.   Any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and "critical facilities" as such, or

      III.  Installations for fabricating complete fuel elements or for
            processing substantial quantities of "special nuclear material," and
            for reprocessing, salvaging, chemically separating, storing or
            disposing of "spent" nuclear fuel or waste materials, or

      IV.   Installations other than those listed in paragraph (2) III above
            using substantial quantities of radioactive isotopes or other
            products of nuclear fission.

3.    Without in any way restricting the operations of paragraphs (1) and (2)
      hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, from any insurance on
      property which is on the same site as a nuclear reactor power plant or
      other nuclear installation and which normally would be insured therewith
      except that this paragraph (3) shall not operate

      (a)   where Reassured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused. However on and after 1st January 1960
            this sub-paragraph (b) shall only apply provided the said
            radioactive contamination exclusion provision has been approved by
            the Governmental Authority having jurisdiction thereof.

4.    Without in any way restricting the operations of paragraphs (1), (2) and
      (3) hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    It is understood and agreed that this Clause shall not extend to risks
      using radioactive isotopes in any form where the nuclear exposure is not
      considered by the Reassured to be the primary hazard.

6.    The term "special nuclear material" shall have the meaning given it in the
      Atomic Energy Act of 1954 or by any law amendatory thereof.

7.    Reassured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

Note.-Without in any way restricting the operation of paragraph (1) hereof, it
is understood and agreed that

      (a)   all policies issued by the Reassured on or before 31st December 1957
            shall be free from the application of the other provisions of this
            Clause until expiry date or 31st December 1960 whichever first
            occurs whereupon all the provisions of this Clause shall apply.

      (b)   with respect to any risk located in Canada policies issued by the
            Reassured on or before 31st December 1958 shall be free from the
            application of the other provisions of this Clause until expiry date
            or 31st December 1960 whichever first occurs whereupon all the
            provisions of this Clause shall apply.

12/12/57
N.M.A. 1119
BRMA 35B



   NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (CANADA)

1.    This Agreement does not cover any loss or liability accruing to the
      Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph 1 of this
      clause, this Agreement does not cover any loss or liability accruing to
      the Reinsured, directly or indirectly, and whether as Insurer or
      Reinsurer, from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      (a)   nuclear reactor power plants including all auxiliary property on the
            site, or

      (b)   any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and critical facilities as such, or

      (c)   installations for fabricating complete fuel elements or for
            processing substantial quantities of radioactive materials, and for
            reprocessing, salvaging, chemically separating, storing or disposing
            of spent nuclear fuel or waste materials, or

      (d)   installations other than those listed in (c) above using substantial
            quantities of radioactive isotopes or other products of nuclear
            fission.

3.    Without in any way restricting the operation of paragraphs 1 and 2 of this
      clause, this Agreement does not cover any loss or liability by radioactive
      contamination accruing to the Reinsured, directly or indirectly, and
      whether as Insurer or Reinsurer, from any insurance on property which is
      on the same site as a nuclear reactor power plant or other nuclear
      installation and which normally would be insured therewith, except that
      this paragraph 3 shall not operate:

      (a)   where the Reinsured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where the said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused.

4.    Without in any way restricting the operation of paragraphs 1, 2 and 3 of
      this clause, this Agreement does not cover any loss or liability by
      radioactive contamination accruing to the Reinsured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    This clause shall not extend to risks using radioactive isotopes in any
      form where the nuclear exposure is not considered by the Reinsured to be
      the primary hazard.

6.    The term "radioactive material" means uranium, thorium, plutonium,
      neptunium, their respective derivatives and compounds, radioactive
      isotopes of other elements and any other substances which may be
      designated by or pursuant to any law, act or statute, or any law
      amendatory thereof as being prescribed substances capable of releasing
      atomic energy, or as being requisite for the production, use or
      application of atomic energy.

7.    Reinsured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

8.    Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, this Agreement does not cover any loss or liability
      accruing to the Reinsured, directly or indirectly, and whether as Insurer
      or Reinsurer, caused:

      (1)   by any nuclear incident, as defined in or pursuant to the Nuclear
            Liability Act or any other nuclear liability act, law or statute, or
            any law amendatory thereof or nuclear explosion, except for ensuing
            loss or damage which results directly from fire, lightning or
            explosion of natural, coal or manufactured gas;

      (2)   by contamination by radioactive material.

NOTE:    Without in any way restricting the operation of paragraphs 1, 2, 3 and
         4 of this clause, paragraph 8 of this clause shall only apply to all
         original contracts of the Reinsured, whether new, renewal or
         replacement, which become effective on or after December 31, 1992.

N.M.A. 1980a (1/4/96)



               POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE

SECTION A:

Excluding:

     (a)    All business derived directly or indirectly from any Pool,
            Association or Syndicate which maintains its own reinsurance
            facilities.

     (b)    Any Pool or Scheme (whether voluntary or mandatory) formed after
            March 1, 1968 for the purpose of insuring property whether on a
            country-wide basis or in respect of designated areas. This exclusion
            shall not apply to so-called Automobile Insurance Plans or other
            Pools formed to provide coverage for Automobile Physical Damage.

SECTION B:

It is agreed that business written by the Company for the same perils, which is
known at the time to be insured by, or in excess of underlying amounts placed in
the following Pools, Associations or Syndicates, whether by way of insurance or
reinsurance, is excluded hereunder:

         Industrial Risk Insurers,
         Associated Factory Mutuals,
         Improved Risk Mutuals,
         Any Pool, Association or Syndicate formed for the purpose of writing
            Oil, Gas or Petro-Chemical Plants and/or Oil or Gas Drilling Rigs,
         United States Aircraft Insurance Group,
         Canadian Aircraft Insurance Group,
         Associated Aviation Underwriters,
         American Aviation Underwriters.

Section B does not apply:

      (a)   Where The Total Insured Value over all interests of the risk in
            question is less than $250,000,000.

      (b)   To interests traditionally underwritten as Inland Marine or stock
            and/or contents written on a blanket basis.

      (c)   To Contingent Business Interruption, except when the Company is
            aware that the key location is known at the time to be insured in
            any Pool, Association or Syndicate named above, other than as
            provided for under Section B(a).

      (d)   To risks as follows:

            Offices, Hotels, Apartments, Hospitals, Educational Establishments,
            Public Utilities (other than railroad schedules) and builder's risks
            on the classes of risks specified in this subsection (d) only.

Where this clause attaches to Catastrophe Excesses, the following Section C is
added:

SECTION C:

Nevertheless the Reinsurer specifically agrees that liability accruing to the
Company from its participation in residual market mechanisms including but not
limited to:

      (1)   The following so-called "Coastal Pools":

            Alabama Insurance Underwriting Association
            Louisiana Insurance Underwriting Association
            Mississippi Windstorm Underwriting Association
            North Carolina Insurance Underwriting Association
            South Carolina Windstorm and Hail Underwriting Association
            Texas Windstorm Insurance Association

AND

      (2)   All "Fair Plan" and "Rural Risk Plan" business

                                  Page 1 of 2



AND

      (3)   Citizens Property Insurance Corporation ("CPIC") and the California
            Earthquake Authority ("CEA")

for all perils otherwise protected hereunder shall not be excluded, except,
however, that this reinsurance does not include any increase in such liability
resulting from:

      (i)   The inability of any other participant in such "Coastal Pool" and/or
            "Fair Plan" and/or "Rural Risk Plan" and/or Residual Market
            Mechanisms to meet its liability.

      (ii)  Any claim against such "Coastal Pool" and/or "Fair Plan" and/or
            "Rural Risk Plan" and/or Residual Market Mechanisms, or any
            participant therein, including the Company, whether by way of
            subrogation or otherwise, brought by or on behalf of any insolvency
            fund (as defined in the Insolvency Fund Exclusion Clause
            incorporated in this Contract).

SECTION D:

      (1)   Notwithstanding Section C above, in respect of the CEA, where an
            assessment is made against the Company by the CEA, the Company may
            include in its Ultimate Net Loss only that assessment directly
            attributable to each separate loss occurrence covered hereunder. The
            Company's initial capital contribution to the CEA shall not be
            included in the Ultimate Net Loss.

      (2)   Notwithstanding Section C above, in respect of CPIC, where an
            assessment is made against the Company by CPIC, the maximum loss
            that the Company may include in the Ultimate Net Loss in respect of
            any loss occurrence hereunder shall not exceed the lesser of:

            (a)   The Company's assessment from CPIC for the accounting year in
                  which the loss occurrence commenced, or

            (b)   The product of the following:

                  (i)   The Company's percentage participation in CPIC for the
                        accounting year in which the loss occurrence commenced;
                        and

                  (ii)  CPIC's total losses in such loss occurrence.

Any assessments for accounting years subsequent to that in which the loss
occurrence commenced may not be included in the Ultimate Net Loss hereunder.
Moreover, notwithstanding Section C above, in respect of CPIC, the Ultimate Net
Loss hereunder shall not include any monies expended to purchase or retire bonds
as a consequence of being a member of CPIC. For the purposes of this Contract,
the Company may not include in the Ultimate Net Loss any assessment or any
percentage assessment levied by CPIC to meet the obligations of an insolvent
insurer member or other party, or to meet any obligations arising from the
deferment by CPIC of the collection of monies.

NOTES: Wherever used herein the terms:

           "Company"       shall be understood to mean "Company," "Reinsured,"
                           "Reassured" or whatever other term is used in the
                           attached reinsurance document to designate the
                           reinsured company or companies.

           "Agreement"     shall be understood to mean "Agreement," "Contract,"
                           "Policy" or whatever other term is used to designate
                           the attached reinsurance document.

           "Reinsurers"    shall be understood to mean "Reinsurers,"
                           "Underwriters" or whatever other term is used in the
                           attached reinsurance document to designate the
                           reinsurer or reinsurers.

                                  Page 2 of 2



                     POLLUTION AND SEEPAGE EXCLUSION CLAUSE

This Contract excludes loss and/or damage and/or costs and/or expenses arising
from seepage and/or pollution and/or contamination, other than contamination
from smoke. Nevertheless, this exclusion does not preclude payment of the cost
of removing debris of property damaged by a loss otherwise covered hereunder,
subject always to a limit of 25% of the Company's property loss under the
applicable original policy.

BRMA 39A



                          ELECTRONIC DATA ENDORSEMENT B

1.    ELECTRONIC DATA EXCLUSION

      Notwithstanding any provision to the contrary within the Contract or any
      endorsement thereto, it is understood and agreed as follows:-

      a)    This Contract does not insure loss, damage, destruction, distortion,
            erasure, corruption or alteration of ELECTRONIC DATA from any cause
            whatsoever (including but not limited to COMPUTER VIRUS) or loss of
            use, reduction in functionality, cost, expense of whatsoever nature
            resulting therefrom, regardless of any other cause or event
            contributing concurrently or in any other sequence to the loss.

            ELECTRONIC DATA means facts, concepts and information converted to a
            form useable for communications, interpretation or processing by
            electronic and electromechanical data processing or electronically
            controlled equipment and includes programs, software and other coded
            instructions for the processing and manipulation of data or the
            direction and manipulation of such equipment.

            COMPUTER VIRUS means a set of corrupting, harmful or otherwise
            unauthorized instructions or code including a set of maliciously
            introduced unauthorized instructions or code, programmatic or
            otherwise, that propagate themselves through a computer system or
            network of whatsoever nature. COMPUTER VIRUS includes but is not
            limited to "Trojan Horses," "worms" and "time or logic bombs."

      b)    However, in the event that a peril listed below results from any of
            the matters described in paragraph a) above, this Contract, subject
            to all its terms, conditions and exclusions, will cover physical
            damage occurring during the Contract period to property insured by
            this Contract directly caused by such listed peril.

            Listed Perils

            Fire
            Explosion

2.    ELECTRONIC DATA PROCESSING MEDIA VALUATION

      Notwithstanding any provision to the contrary within the Contract or any
      endorsement thereto, it is understood and agreed as follows:-

      Should electronic data processing media insured by this Contract suffer
      physical loss or damage insured by this Contract, then the basis of
      valuation shall be the cost of the blank media plus the costs of copying
      the ELECTRONIC DATA from back-up or from originals of a previous
      generation. These costs will not include research and engineering nor any
      costs of recreating, gathering or assembling such ELECTRONIC DATA. If the
      media is not repaired, replaced or restored the basis of valuation shall
      be the cost of the blank media. However this Contract does not insure any
      amount pertaining to the value of such ELECTRONIC DATA to the Assured or
      any other party, even if such ELECTRONIC DATA cannot be recreated,
      gathered or assembled.

N.M.A. 2915 (25.1.01)
Form approved by Lloyd's Underwriters' Non-Marine Association Limited

EX-10.14

                                                                   EXHIBIT 10.14

                                                                 [BENFIELD LOGO]

                       Liberty American Insurance Company
                             Pinellas Park, Florida
                          Mobile USA Insurance Company
                             Pinellas Park, Florida
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                     Liberty American Insurance Group, Inc.
              Hereinafter referred to collectively as the "Company"

                         $50,000,000 EXCESS $140,000,000
                  FLORIDA ONLY CATASTROPHE REINSURANCE CONTRACT

                          EFFECTIVE: SEPTEMBER 1, 2004

                            REINSURANCE CONFIRMATION

BUSINESS REINSURED

Business classified by the Company as Property business. In force, new and
renewal business.

TERM

Effective September 1, 2004, with respect to losses arising out of loss
occurrences commencing on or after that date, through May 31, 2005 both days
inclusive. Extended expiration in the event a loss occurrence is in progress at
expiration.

TERRITORY

State of Florida and extra territorial limits of the Company's policies.

EXCLUSIONS

See attached.

RETENTION AND LIMIT

100% of $50,000,000 ultimate net loss each loss occurrence excess of
$140,000,000 ultimate net loss each loss occurrence.

No claim shall be made as respects any one loss occurrence unless at least two
risks insured or reinsured by the Company are involved in such loss occurrence.
For purposes hereof, the Company shall be the sole judge of what constitutes one
risk.

Page 1



                                                                 [BENFIELD LOGO]

FLORIDA HURRICANE CAT FUND (FHCF)

FHCF inuring to Catastrophe Reinsurance Program. Recoveries deemed in place,
however, the full payout limit may be reduced by prior loss occurrences for
which recoveries were made from the FHCF.

OTHER REINSURANCE

The Company shall carry a 15% quota share reinsurance of its direct personal
lines business, recoveries under which to inure to the benefit of this Contract,
or so deemed.

DEFINITIONS

UNL includes LAE.  See attached.


LOSS OCCURRENCE

No reinstatement same wind event.  See attached.


REINSTATEMENT

One full reinstatement during the contract year, with additional premium
calculated 100% as to time and pro rata as to amount.

LOSS NOTICES AND SETTLEMENTS

Individual loss notices and settlements.

PREMIUM

In consideration for coverage provided hereunder, the Company shall pay the
Reinsurer a provisional premium of $1,925,000 in installments of $641,666.67 on
September 1, 2004 and December 1, 2004 and $641,666.66 on March 1, 2005.

The provisional premium shall be adjusted based on the reduction in the
Company's 2004 estimated FHCF coverage resulting from Hurricane Charley
recoveries only. For every $1,000,000 less than the estimated $50,000,000 FHCF
coverage reduction resulting from Hurricane Charley, the provisional ROL of
3.85% shall be adjusted downward 0.01%, subject to a minimum ROL of 3.75%. For
every $1,000,000 greater than the estimated $50,000,000 FHCF coverage reduction
resulting from Hurricane Charley, the provisional ROL of 3.85% shall be adjusted
upward 0.015%, subject to a maximum ROL of 4.0%. For purposes of this article
only, the maximum FHCF coverage reduction resulting from Hurricane Charley shall
be $60,000,000 and the minimum FHCF coverage reduction resulting from Hurricane
Charley shall be $40,000,000.

Any additional premium due resulting from the ROL adjustment will be payable by
the Company to the Reinsurer on December 1, 2004. Adjustments to be made
quarterly thereafter until finally settled. The Reinsurer will allow return
premiums at the same rates and quarterly adjustment dates.

LATE PAYMENTS

See attached. Interest penalty based on 6-month United States Treasury Bill
Rate. Interest penalty of less than $100 shall be waived.

Page 2



                                                                 [BENFILED LOGO]

OTHER PROVISIONS

Salvage and Subrogation
Offset (BRMA 36D)
Access to Records (BRMA 1D)
Liability of the Reinsurer
Net Retained Lines (BRMA 32E)
Errors and Omissions (BRMA 14F)
Currency (BRMA 12A)
Taxes (BRMA 50C)
Federal Excise Tax (BRMA 17A)
Reserve Requirements (Evergreen LOC for unearned premium, outstanding
losses/LAE, including all case reserves plus any reasonable amount estimated to
be unreported from known loss occurrences)
Insolvency
Arbitration
Service of Suit
Agency Agreement
Governing Law (State of Florida)
Confidentiality
Severability
Intermediary (BRMA 23A)

ALLOCATION OF FINAL SHARES

The Company shall have the right to review all authorizations and the full
authority to allocate final shares. Such decisions will be at the sole
discretion of the Company and may result in other than a "proportional signdown"
of authorizations. As respects signdowns within the London marketplace, the
final allocation of shares to individual companies or syndicates may not be
proportionate to the original authorizations.

Page 3



                                                                 [BENFIELD LOGO]

                                   EXCLUSIONS

This Contract does not apply to and specifically excludes the following:

      1.    Financial Guarantee and Insolvency.

      2.    Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
            Physical Damage - Reinsurance (U.S.A.)" and "Nuclear Incident
            Exclusion Clause - Physical Damage - Reinsurance (Canada)" attached
            to and forming part of this Contract.

      3.    Loss or damage caused by or resulting from 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, but
            this exclusion shall not apply to loss or damage covered under a
            standard policy with a standard War Exclusion Clause.

      4.    Loss or liability excluded under the provisions of the "Pools,
            Associations and Syndicates Exclusion Clause" attached to and
            forming part of this Contract.

      5.    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.

      6.    Losses in respect of overhead transmission and distribution lines
            and their supporting structures, other than those on or within 300
            meters (or 1,000 feet) of the insured premises. It is understood and
            agreed that public utilities extension and/or suppliers extension
            and/or contingent business interruption coverages are not subject to
            this exclusion, provided that these are not part of a transmitters'
            or distributors' Policy.

      7.    Accident and Health, Casualty, Fidelity and/or Surety business.

      8.    Pollution and seepage coverages excluded under the provisions of the
            "Pollution and Seepage Exclusion Clause (BRMA 39A)" attached to and
            forming part of this Contract.

      9.    Notwithstanding any other provision to the contrary within this
            Contract or any amendment thereto, it is agreed that this Contract
            excludes loss, damage, cost or expense directly or indirectly caused
            by, contributed to by, resulting from, or arising out of or in
            connection with any act of terrorism, as defined herein, regardless
            of any other cause or event contributing concurrently or in any
            other sequence to the loss.

            An "act of terrorism" includes any act, or preparation in respect of
            action, or threat of action, designed to influence the government de
            jure or de facto of any nation or any political division thereof, or
            in pursuit of political, religious, ideological, or similar purposes
            to intimidate the public or a section of the public of any nation by
            any person or group(s) of persons, whether acting alone or on behalf
            of or in connection with any organization(s) or government(s) de
            jure or de facto, and which:

                  a.    Involves violence against one or more persons; or

                  b.    Involves damage to property; or

Page 4



                                                                 [BENFIELD LOGO]

                  c.    Endangers life other than that of the person committing
                        the action; or

                  d.    Creates a risk to health or safety of the public or a
                        section of the public; or

                  e.    Is designed to interfere with or to disrupt an
                        electronic system.

      This Contract also excludes loss, damage, cost or expense directly or
      indirectly caused by, contributed to by, resulting from, or arising out of
      or in connection with any action in controlling, preventing, suppressing,
      retaliating against or responding to any act of terrorism.

      Notwithstanding the above and subject otherwise to the terms, conditions,
      and limitations of this Contract, in respect only of personal lines this
      Contract will pay actual loss or damage (but not related cost or expense)
      caused by any act of terrorism provided such act is not directly or
      indirectly caused by, contributed to by, resulting from, or arising out of
      or in connection with biological, chemical, or nuclear pollution or
      contamination.

10.   Loss or liability in any way or to any extent arising out of the actual or
      alleged presence or actual, alleged or threatened presence of fungi
      including, but not limited to, mold, mildew, mycotoxins, microbial
      volatile organic compounds or other "microbial contamination". This
      includes:

            a.    Any supervision, instruction, recommendations, warnings or
                  advice given or which should have been given in connection
                  with the above; and

            b.    Any obligation to share damages with or repay someone else who
                  must pay damages because of such injury or damage.

      For purposes of this exclusion, "microbial contamination" means any
      contamination, either airborne or surface, which arises out of or is
      related to the presence of fungi, mold, mildew, mycotoxins, microbial
      volatile organic compounds or spores, including, without limitation,
      Penicillium, Aspergillus, Fusarium, Aspergillus Flavus and Stachybotrys
      chartarum.

      Losses resulting from the above causes do not in and of themselves
      constitute an event unless arising out of one or more of the following
      perils, in which case this exclusion does not apply:

                  Fire, lightning, explosion, aircraft or vehicle impact,
                  falling objects, windstorm, hail, tornado, cyclone, hurricane,
                  earthquake, volcano, tsunami, flood, freeze or weight of snow.

      Notice of any claims for mold-related losses must be given by the Company
      to the Reinsurer, in writing, within 24 months after the commencement date
      of the loss occurrence to which such claims relate.

11.   Loss or liability excluded under the provisions of the "Electronic Data
      Endorsement B" (NMA 2915) attached to and forming part of this Contract.

Page 5



                                                                 [BENFIELD LOGO]

                                   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 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 any 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.

      Notwithstanding anything stated herein, the amount included in the
      ultimate net loss for any one loss occurrence as respects loss in excess
      of policy limits and extra contractual obligations shall not exceed 25.0%
      of the Company's indemnity loss hereunder arising out of that loss
      occurrence.

      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.

      If any provision of this paragraph B 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.

C.    "Loss adjustment expense" as used herein shall mean expenses assignable to
      the investigation, appraisal, adjustment, settlement, litigation, defense
      and/or appeal of specific claims, regardless of how such expenses are
      classified for statutory reporting purposes. Loss adjustment expense shall
      include, but not be limited to, declaratory judgments, interest on
      judgments, expenses of outside adjusters, and a pro rata share of the
      salaries and expenses of the Company's field employees according to the
      time occupied adjusting such losses and expenses of the Company's
      officials incurred in connection with the losses, but shall not include
      office expenses or salaries of the Company's regular employees.

Page 6



                                                                 [BENFIELD LOGO]

                                  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 herein (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 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 10 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 10 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

Page 7



                                                                 [BENFIELD LOGO]

      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 8


                                                                 [BENFIELD LOGO]

                                NON BRMA ARTICLES

LOSS OCCURRENCE

A.    The term "loss occurrence" shall mean the sum of all individual losses
      directly occasioned by any one disaster, accident or loss or series of
      disasters, accidents or losses arising out of one event which occurs
      within the area of one state of the United States or province of Canada
      and states or provinces contiguous thereto and to one another. However,
      the duration and extent of any one "loss occurrence" shall be limited to
      all individual losses sustained by the Company occurring during any period
      of 168 consecutive hours arising out of and directly occasioned by the
      same event, except that the term "loss occurrence" shall be further
      defined as follows:

      1.    As regards windstorm, hail, tornado, hurricane, cyclone, including
            ensuing collapse and water damage, all individual losses sustained
            by the Company occurring during any period of 72 consecutive hours
            arising out of and directly occasioned by the same event. However,
            the event need not be limited to one state or province or states or
            provinces contiguous thereto.

      2.    As regards riot, riot attending a strike, civil commotion, vandalism
            and malicious mischief, all individual losses sustained by the
            Company occurring during any period of 72 consecutive hours within
            the area of one municipality or county and the municipalities or
            counties contiguous thereto arising out of and directly occasioned
            by the same event. The maximum duration of 72 consecutive hours may
            be extended in respect of individual losses which occur beyond such
            72 consecutive hours during the continued occupation of an insured's
            premises by strikers, provided such occupation commenced during the
            aforesaid period.

      3.    As regards earthquake (the epicenter of which need not necessarily
            be within the territorial confines referred to in the introductory
            portion of this paragraph) and fire following directly occasioned by
            the earthquake, only those individual fire losses which commence
            during the period of 168 consecutive hours may be included in the
            Company's "loss occurrence."

      4.    As regards "freeze," only individual losses directly occasioned by
            collapse, breakage of glass and water damage (caused by bursting
            frozen pipes and tanks) may be included in the Company's "loss
            occurrence."

      5.    As regards firestorms, brush fires, and other fires or series of
            fires, irrespective of origin (except as provided in subparagraphs 2
            and 3 above), which spread through trees, grassland or other
            vegetation, all individual losses sustained by the Company which
            occur during any period of 168 consecutive hours within a 100-mile
            radius of any one fixed point selected by the Company may be
            included in the Company's "loss occurrence." However, an individual
            loss subject to this subparagraph cannot be included in more than
            one "loss occurrence."

B.    For all those "loss occurrences," other than those referred to in
      subparagraph 2 of paragraph A above, the Company may choose the date and
      time when any such period of consecutive hours commences, provided that it
      is not earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss, and provided that only one such period of 168
      consecutive hours shall apply with respect to one event, except for any
      "loss occurrence" referred to in subparagraph 1 of paragraph A above where
      only one such period of 72 consecutive hours shall apply with respect to
      one event, regardless of the duration of the event.

C.    As respects those "loss occurrences" referred to in subparagraph 2 of
      paragraph A above, if the disaster, accident or loss occasioned by the
      event is of greater duration than 72 consecutive hours, then the Company
      may divide that disaster, accident or loss into two or more "loss
      occurrences," provided no two periods overlap and no individual loss is
      included in more than one such period and

Page 9



                                                                 [BENFIELD LOGO]

      provided that no period commences earlier than the date and time of the
      occurrence of the first recorded individual loss sustained by the Company
      arising out of that disaster, accident or loss.

D.    No individual losses occasioned by an event that would be covered by 72
      hours clauses may be included in any "loss occurrence" claimed under the
      168 hours provision.

FLORIDA HURRICANE CATASTROPHE FUND

A.    Any loss reimbursement paid or payable to the Company under the Florida
      Hurricane Catastrophe Fund (FHCF) as a result of loss occurrences
      commencing during the term of this Contract shall inure to the benefit of
      this Contract. Further, any FHCF loss reimbursement shall be deemed to be
      paid to the Company in accordance with the reimbursement contract between
      the Company and the State Board of Administration of the State of Florida
      at the full payout level set forth therein and will be deemed not to be
      reduced by any reduction or exhaustion of the FHCF's claims paying
      capacity.

B.    Prior to the determination of the Company's FHCF retention and payout, if
      any, under the reimbursement contract, the Reinsurer's liability hereunder
      will be determined provisionally based on the projected payout, determined
      in accordance with the provisions of the reimbursement contract. Following
      determination of the payout under the reimbursement contract, the ultimate
      net loss under this Contract will be recalculated. If, as a result of such
      calculation, the loss to the Reinsurer in any one loss occurrence is less
      than the amount previously paid by the Reinsurer, the Company shall
      promptly remit the difference to the Reinsurer. If the loss to the
      Reinsurer in any one loss occurrence is greater than the amount previously
      paid by the Reinsurer, the Reinsurer shall promptly remit the difference
      to the Company.

C.    If an FHCF reimbursement amount is based on the Company's losses in more
      than one loss occurrence and the FHCF does not designate the amount
      allocable to each loss occurrence, the FHCF reimbursement amount shall be
      prorated in the proportion that the Company's losses in each loss
      occurrence bear to the Company's total losses arising out of all loss
      occurrences to which the FHCF reimbursement applies.

D.    Any reimbursement premiums or emergency assessment paid by the Company
      under the FHCF shall be deemed to be premiums paid for inuring
      reinsurance.

LOSS NOTICES AND SETTLEMENTS

A.    Whenever losses sustained by the Company appear likely to result in a
      claim hereunder, the Company shall notify the Reinsurer, and the Reinsurer
      shall have the right to participate in the adjustment of such losses at
      its own expense.

B.    All loss settlements made by the Company, provided they are within the
      terms of this Contract, shall be binding upon the Reinsurer, and the
      Reinsurer agrees to pay all amounts for which it may be liable upon
      receipt of reasonable evidence of the amount paid (or scheduled to be
      paid) by the Company.

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) on account of claims
and settlements involving reinsurance hereunder. Salvage 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

Page 10



                                                                 [BENFIELD LOGO]

enforce its rights to salvage or subrogation relating to any loss, a part of
which loss was sustained by the Reinsurer, and to prosecute all claims arising
out of such rights.

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. However, in no event shall this be construed
      in any way to provide coverage outside the terms and conditions set forth
      in this Contract.

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.

RESERVE REQUIREMENTS

A.    If the Reinsurer is unauthorized in any state of the United States of
      America or the District of Columbia, the Reinsurer agrees to fund its
      share of the Company's ceded United States unearned premium and
      outstanding loss and loss adjustment expense reserves (including all case
      reserves plus any reasonable amount estimated to be unreported from known
      loss occurrences) by:

      1.    Clean, irrevocable and unconditional letters of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a bank or banks meeting the NAIC Securities
            Valuation Office credit standards for issuers of letters of credit
            and acceptable to said insurance regulatory authorities; and/or

      2.    Escrow accounts for the benefit of the Company; and/or

      3.    Cash advances;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved. The Reinsurer, at its sole option, may fund in other
      than cash if its method and form of funding are acceptable to the
      insurance regulatory authorities involved.

B.    If the Reinsurer is unauthorized in any province or jurisdiction of
      Canada, the Reinsurer agrees to fund 115% of its share of the Company's
      ceded Canadian unearned premium and outstanding loss and loss adjustment
      expense reserves (including all case reserves plus any reasonable amount
      estimated to be unreported from known loss occurrences) by:

      1.    A clean, irrevocable and unconditional letter of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a Canadian bank or banks meeting the NAIC
            Securities Valuation Office credit standards for issuers of letters
            of credit and acceptable to said insurance regulatory authorities,
            for no more than 15/115ths of the total funding required; and/or

      2.    Cash advances for the remaining balance of the funding required;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved.

C.    With regard to funding in whole or in part by letters of credit, it is
      agreed that each letter of credit will be in a form acceptable to
      insurance regulatory authorities involved, will be issued for a term of at
      least one year and will include an "evergreen clause," which automatically
      extends the term for at least one additional year at each expiration date
      unless written notice of non-renewal is given to the

Page 11



                                                                 [BENFIELD LOGO]

      Company not less than 30 days prior to said expiration date. The Company
      and the Reinsurer further agree, notwithstanding anything to the contrary
      in this Contract, that said letters of credit may be drawn upon by the
      Company or its successors in interest at any time, without diminution
      because of the insolvency of the Company or the Reinsurer, but only for
      one or more of the following purposes:

      1.    To reimburse itself for the Reinsurer's share of unearned premiums
            returned to insureds on account of policy cancellations, unless paid
            in cash by the Reinsurer;

      2.    To reimburse itself for the Reinsurer's share of losses and/or loss
            adjustment expense paid under the terms of policies reinsured
            hereunder, unless paid in cash by the Reinsurer;

      3.    To reimburse itself for the Reinsurer's share of any other amounts
            claimed to be due hereunder, unless paid in cash by the Reinsurer;

      4.    To fund a cash account in an amount equal to the Reinsurer's share
            of any ceded unearned premium and/or outstanding loss and loss
            adjustment expense reserves (including all case reserves plus any
            reasonable amount estimated to be unreported from known loss
            occurrences) funded by means of a letter of credit which is under
            non-renewal notice, if said letter of credit has not been renewed or
            replaced by the Reinsurer 10 days prior to its expiration date;

      5.    To refund to the Reinsurer any sum in excess of the actual amount
            required to fund the Reinsurer's share of the Company's ceded
            unearned premium and/or outstanding loss and loss adjustment expense
            reserves (including all case reserves plus any reasonable amount
            estimated to be unreported from known loss occurrences), if so
            requested by the Reinsurer.

      In the event the amount drawn by the Company on any letter of credit is in
      excess of the actual amount required for C(1), C(2) or C(4), or in the
      case of C(3), the actual amount determined to be due, the Company shall
      promptly return to the Reinsurer the excess amount so drawn.

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

Page 12



                                                                 [BENFIELD LOGO]

      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.

ARBITRATION

A.    As a condition precedent to any right of action hereunder, any dispute or
      difference between the Company and any Reinsurer relating to the
      interpretation or performance of this Contract, including its formation or
      validity, or any transaction under this Contract, whether arising before
      or after termination, shall be submitted to arbitration.

B.    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 provided that communication shall be made by the Company to each
      of the reinsurers constituting the one party, and provided, however, that
      nothing therein 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 Reinsurer under the terms of this Contract
      from several to joint.

C.    Upon written request of any party, each party shall choose an arbitrator
      and the two chosen shall select a third arbitrator. If either party
      refuses or neglects to appoint an arbitrator within 30 days after receipt
      of the written request for arbitration, the requesting party may appoint a
      second arbitrator. If the two arbitrators fail to agree on the selection
      of a third arbitrator within 30 days of their appointment, the Company
      shall petition the American Arbitration Association to appoint the third
      arbitrator. If the American Arbitration Association fails to appoint the
      third arbitrator within 30 days after it has been requested to do so,
      either party may request a justice of a court of general jurisdiction of
      the state in which the arbitration is to be held to appoint the third
      arbitrator. All arbitrators shall be active or retired officers of
      insurance or reinsurance companies, or Lloyd's London Underwriters, and
      disinterested in the outcome of the arbitration. Each party shall submit
      its case to the arbitrators within 30 days of the appointment of the third
      arbitrator.

D.    The parties hereby waive all objections to the method of selection of the
      arbitrators, it being the intention of both sides that all the arbitrators
      be chosen from those submitted by the parties.

E.    The arbitrators shall have the power to determine all procedural rules for
      the holding of the arbitration including but not limited to inspection of
      documents, examination of witnesses and any other matter relating to the
      conduct of the arbitration. The arbitrators shall interpret this Contract
      as an honorable engagement and not as merely a legal obligation; they are
      relieved of all judicial formalities and may abstain from following the
      strict rules of law. The arbitrators may award interest and costs. Each
      party shall bear the expense of its own arbitrator and shall share equally
      with the other party the expenses of the third arbitrator and of the
      arbitration.

F.    The decision in writing of the majority of the arbitrators shall be final
      and binding upon both parties. Judgment may be entered upon the final
      decision of the arbitrators in any court having jurisdiction. The
      arbitration shall take place in Pinellas Park, Florida, unless otherwise
      mutually agreed between the Company and the Reinsurer.

G.    This Article shall remain in full force and effect in the event any other
      provision of this Contract shall be found invalid or non-binding.

H.    All time limitations stated in this Article may be amended by mutual
      consent of the parties, and will be amended automatically to the extent
      made necessary by any circumstances beyond the control of the parties.

Page 13



                                                                 [BENFIELD LOGO]

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.

GOVERNING LAW

This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Florida exclusive of the rules with
respect to conflicts of law, except as to rules with respect to credit for
reinsurance in which case the applicable rules of all states shall apply.

CONFIDENTIALITY

The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly, communicate, disclose or divulge to any third
party, any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company's books, records and
papers. The restrictions as outlined in this Article shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, retrocessionaires, legal counsel, arbitrators involved in
any arbitration procedures under this Contract or disclosures required upon
subpoena or other dully-issued order of a court or other governmental agency or
regulatory authority.

SEVERABILITY

If any provision of this Contract should be invalid under applicable laws, the
latter shall control but only to the extent of the conflict without affecting
the remaining provisions of this Contract.

SERVICE OF SUIT

(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. This
Article is not intended to conflict with or override the parties' obligations to
arbitrate their disputes in accordance with the Arbitration Article)

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 any 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 therefore, 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.

Page 14



                                                                 [BENFIELD LOGO]

        NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE
                                    (U.S.A.)

1.    This Reinsurance does not cover any loss or liability accruing to the
      Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph (1) of this
      Clause, this Reinsurance does not cover any loss or liability accruing to
      the Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      I.    Nuclear reactor power plants including all auxiliary property on the
            site, or

      II.   Any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and "critical facilities" as such, or

      III.  Installations for fabricating complete fuel elements or for
            processing substantial quantities of "special nuclear material," and
            for reprocessing, salvaging, chemically separating, storing or
            disposing of "spent" nuclear fuel or waste materials, or

      IV.   Installations other than those listed in paragraph (2) III above
            using substantial quantities of radioactive isotopes or other
            products of nuclear fission.

3.    Without in any way restricting the operations of paragraphs (1) and (2)
      hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, from any insurance on
      property which is on the same site as a nuclear reactor power plant or
      other nuclear installation and which normally would be insured therewith
      except that this paragraph (3) shall not operate

      (a)   where Reassured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused. However on and after 1st January 1960
            this sub-paragraph (b) shall only apply provided the said
            radioactive contamination exclusion provision has been approved by
            the Governmental Authority having jurisdiction thereof.

4.    Without in any way restricting the operations of paragraphs (1), (2) and
      (3) hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    It is understood and agreed that this Clause shall not extend to risks
      using radioactive isotopes in any form where the nuclear exposure is not
      considered by the Reassured to be the primary hazard.

6.    The term "special nuclear material" shall have the meaning given it in the
      Atomic Energy Act of 1954 or by any law amendatory thereof.

7.    Reassured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

Note.-Without in any way restricting the operation of paragraph (1) hereof, it
is understood and agreed that

      (a)   all policies issued by the Reassured on or before 31st December 1957
            shall be free from the application of the other provisions of this
            Clause until expiry date or 31st December 1960 whichever first
            occurs whereupon all the provisions of this Clause shall apply.

Page 15



                                                                 [BENFIELD LOGO]

      (b)   with respect to any risk located in Canada policies issued by the
            Reassured on or before 31st December 1958 shall be free from the
            application of the other provisions of this Clause until expiry date
            or 31st December 1960 whichever first occurs whereupon all the
            provisions of this Clause shall apply.

12/12/57
N.M.A. 1119
BRMA 35B

Page 16



                                                                 [BENFIELD LOGO]

        NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE
                                    (CANADA)

1.    This Agreement does not cover any loss or liability accruing to the
      Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph 1 of this
      clause, this Agreement does not cover any loss or liability accruing to
      the Reinsured, directly or indirectly, and whether as Insurer or
      Reinsurer, from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      (a)   nuclear reactor power plants including all auxiliary property on the
            site, or

      (b)   any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and critical facilities as such, or

      (c)   installations for fabricating complete fuel elements or for
            processing substantial quantities of prescribed substances, and for
            reprocessing, salvaging, chemically separating, storing or disposing
            of spent nuclear fuel or waste materials, or

      (d)   installations other than those listed in (c) above using substantial
            quantities of radioactive isotopes or other products of nuclear
            fission.

3.    Without in any way restricting the operation of paragraphs 1 and 2 of this
      clause, this Agreement does not cover any loss or liability by radioactive
      contamination accruing to the Reinsured, directly or indirectly, and
      whether as Insurer or Reinsurer, from any insurance on property which is
      on the same site as a nuclear reactor power plant or other nuclear
      installation and which normally would be insured therewith, except that
      this paragraph 3 shall not operate:

      (a)   where the Reinsured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where the said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused.

4.    Without in any way restricting the operation of paragraphs 1, 2 and 3 of
      this clause, this Agreement does not cover any loss or liability by
      radioactive contamination accruing to the Reinsured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    This clause shall not extend to risks using radioactive isotopes in any
      form where the nuclear exposure is not considered by the Reinsured to be
      the primary hazard.

6.    The term "prescribed substances" shall have the meaning given to it by the
      Atomic Energy Control Act R.S.C. 1985(c), A-16 or by any law amendatory
      thereof.

7.    Reinsured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

8.    Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, this Agreement does not cover any loss or liability
      accruing to the Reinsured, directly or indirectly, and whether as Insurer
      or Reinsurer, caused:

      (1)   by any nuclear incident, as defined in the Nuclear Liability Act or
            any other nuclear liability act, law or statute, or any law
            amendatory thereof or nuclear explosion, except for ensuing loss or
            damage which results directly from fire, lightning or explosion of
            natural, coal or manufactured gas;

Page 17



                                                                 [BENFIELD LOGO]

      (2)   by contamination by radioactive material.

NOTE: Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, paragraph 8 of this clause shall only apply to all
      original contracts of the Reinsured, whether new, renewal or replacement,
      which become effective on or after December 31, 1992.

N.M.A. 1980 (2/19/93)

Page 18



                                                                 [BENFIELD LOGO]

               POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE

SECTION A:

Excluding:

      (a)   All business derived directly or indirectly from any Pool,
            Association or Syndicate which maintains its own reinsurance
            facilities.

      (b)   Any Pool or Scheme (whether voluntary or mandatory) formed after
            March 1, 1968 for the purpose of insuring property whether on a
            country-wide basis or in respect of designated areas. This exclusion
            shall not apply to so-called Automobile Insurance Plans or other
            Pools formed to provide coverage for Automobile Physical Damage.

SECTION B:

It is agreed that business written by the Company for the same perils, which is
known at the time to be insured by, or in excess of underlying amounts placed in
the following Pools, Associations or Syndicates, whether by way of insurance or
reinsurance, is excluded hereunder:

            Industrial Risk Insurers,
            Associated Factory Mutuals,
            Improved Risk Mutuals,
            Any Pool, Association or Syndicate formed for the purpose of writing
                  Oil, Gas or Petro-Chemical Plants and/or Oil or Gas Drilling
                  Rigs,
            United States Aircraft Insurance Group,
            Canadian Aircraft Insurance Group,
            Associated Aviation Underwriters,
            American Aviation Underwriters.

Section B does not apply:

      (a)   Where The Total Insured Value over all interests of the risk in
            question is less than $250,000,000.

      (b)   To interests traditionally underwritten as Inland Marine or stock
            and/or contents written on a blanket basis.

      (c)   To Contingent Business Interruption, except when the Company is
            aware that the key location is known at the time to be insured in
            any Pool, Association or Syndicate named above, other than as
            provided for under Section B(a).

      (d)   To risks as follows:

            Offices, Hotels, Apartments, Hospitals, Educational Establishments,
            Public Utilities (other than railroad schedules) and builder's risks
            on the classes of risks specified in this subsection (d) only.

Where this clause attaches to Catastrophe Excesses, the following Section C is
added:

SECTION C:

Nevertheless the Reinsurer specifically agrees that liability accruing to the
Company from its participation in residual market mechanisms including but not
limited to:

      (1)   The following so-called "Coastal Pools":

            Alabama Insurance Underwriting Association
            Louisiana Insurance Underwriting Association
            Mississippi Windstorm Underwriting Association
            North Carolina Insurance Underwriting Association
            South Carolina Windstorm and Hail Underwriting Association

Page 19



                                                                 [BENFIELD LOGO]

            Texas Windstorm Insurance Association

AND

      (2)   All "Fair Plan" and "Rural Risk Plan" business

AND

      (3)   Citizens Property Insurance Corporation ("CPIC") and the California
            Earthquake Authority ("CEA")

for all perils otherwise protected hereunder shall not be excluded, except,
however, that this reinsurance does not include any increase in such liability
resulting from:

      (i)   The inability of any other participant in such "Coastal Pool" and/or
            "Fair Plan" and/or "Rural Risk Plan" and/or Residual Market
            Mechanisms to meet its liability.

      (ii)  Any claim against such "Coastal Pool" and/or "Fair Plan" and/or
            "Rural Risk Plan" and/or Residual Market Mechanisms, or any
            participant therein, including the Company, whether by way of
            subrogation or otherwise, brought by or on behalf of any insolvency
            fund (as defined in the Insolvency Fund Exclusion Clause
            incorporated in this Contract).

SECTION D:

      (1)   Notwithstanding Section C above, in respect of the CEA, where an
            assessment is made against the Company by the CEA, the Company may
            include in its Ultimate Net Loss only that assessment directly
            attributable to each separate loss occurrence covered hereunder. The
            Company's initial capital contribution to the CEA shall not be
            included in the Ultimate Net Loss.

      (2)   Notwithstanding Section C above, in respect of CPIC, where an
            assessment is made against the Company by CPIC, the maximum loss
            that the Company may include in the Ultimate Net Loss in respect of
            any loss occurrence hereunder shall not exceed the lesser of:

            (a)   The Company's assessment from CPIC for the accounting year in
                  which the loss occurrence commenced, or

            (b)   The product of the following:

                        (i) The Company's percentage participation in CPIC for
                        the accounting year in which the loss occurrence
                        commenced; and

                        (ii) CPIC's total losses in such loss occurrence.

Any assessments for accounting years subsequent to that in which the loss
occurrence commenced may not be included in the Ultimate Net Loss hereunder.
Moreover, notwithstanding Section C above, in respect of CPIC, the Ultimate Net
Loss hereunder shall not include any monies expended to purchase or retire bonds
as a consequence of being a member of CPIC. For the purposes of this Contract,
the Company may not include in the Ultimate Net Loss any assessment or any
percentage assessment levied by CPIC to meet the obligations of an insolvent
insurer member or other party, or to meet any obligations arising from the
deferment by CPIC of the collection of monies.

NOTES: Wherever used herein the terms:

      "Company"       shall be understood to mean "Company," "Reinsured,"
                      "Reassured" or whatever other term is used in the
                      attached reinsurance document to designate the
                      reinsured company or companies.

      "Agreement"     shall be understood to mean "Agreement," "Contract,"
                      "Policy" or whatever other term is used to designate
                      the attached reinsurance document.

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                                                                 [BENFIELD LOGO]

      "Reinsurers"    shall be understood to mean "Reinsurers,"
                      "Underwriters" or whatever other term is used in the
                      attached reinsurance document to designate the
                      reinsurer or reinsurers.

Page 21



                                                                 [BENFIELD LOGO]

                     POLLUTION AND SEEPAGE EXCLUSION CLAUSE

This Contract excludes loss and/or damage and/or costs and/or expenses arising
from seepage and/or pollution and/or contamination, other than contamination
from smoke. Nevertheless, this exclusion does not preclude payment of the cost
of removing debris of property damaged by a loss otherwise covered hereunder,
subject always to a limit of 25% of the Company's property loss under the
applicable original policy.

Page 22



                                                                 [BENFIELD LOGO]

                          ELECTRONIC DATA ENDORSEMENT B

1.    ELECTRONIC DATA EXCLUSION

      Notwithstanding any provision to the contrary within the Policy or any
      endorsement thereto, it is understood and agreed as follows:

            (a)   This Policy does not insure loss, damage, destruction,
                  distortion, erasure, corruption or alteration of ELECTRONIC
                  DATA from any cause whatsoever (including but not limited to
                  COMPUTER VIRUS) or loss of use, reduction in functionality,
                  cost, expense of whatsoever nature resulting therefrom,
                  regardless of any other cause or event contributing
                  concurrently or in any other sequence to the loss.

                  ELECTRONIC DATA means facts, concepts and information
                  converted to a form useable for communications, interpretation
                  or processing by electronic and electromechanical data
                  processing or electronically controlled equipment and includes
                  programs, software and other coded instructions for the
                  processing and manipulation of data or the direction and
                  manipulation of such equipment.

                  COMPUTER VIRUS means a set of corrupting, harmful or otherwise
                  unauthorized instructions or code including a set of
                  maliciously introduced unauthorized instructions or code,
                  programmatic or otherwise, that propagate themselves through a
                  computer system or network of whatsoever nature. COMPUTER
                  VIRUS includes but is not limited to 'Trojan Horses', 'worms'
                  and 'time or logic bombs'.

            (b)   However, in the event that a peril listed below results from
                  any of the matters described in paragraph (a) above, this
                  Policy, subject to all its terms, conditions and exclusions,
                  will cover physical damage occurring during the Policy period
                  to property insured by this Policy directly caused by such
                  listed peril.

Listed Perils

            Fire

            Explosion

2.    ELECTRONIC DATA PROCESSING MEDIA VALUATION

      Notwithstanding any provision to the contrary within the Policy or any
      endorsement thereto, it is understood and agreed as follows:

      Should electronic data processing media insured by this Policy suffer
      physical loss or damage insured by this Policy, then the basis of
      valuation shall be the cost of the blank media plus the costs of copying
      the ELECTRONIC DATA from back-up or from originals of a previous
      generation. These costs will not include research and engineering nor any
      costs of recreating, gathering or assembling such ELECTRONIC DATA. If the
      media is not repaired, replaced or restored the basis of valuation shall
      be the cost of the blank media. However this Policy does not insure any
      amount pertaining to the value of such ELECTRONIC DATA to the Assured or
      any other party, even if such ELECTRONIC DATA cannot be recreated,
      gathered or assembled.

25/01/01
NMA2915

Page 23

EX-10.15

                                                                   EXHIBIT 10.15

                     65% FLORIDA ONLY THIRD AND FOURTH EVENT
                     EXCESS CATASTROPHE REINSURANCE CONTRACT
                          EFFECTIVE: SEPTEMBER 1, 2004

                                    issued to

                       Liberty American Insurance Company
                             Pinellas Park, Florida
                          Mobile USA Insurance Company
                             Pinellas Park, Florida
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                     Liberty American Insurance Group, Inc.

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                                TABLE OF CONTENTS


ARTICLE                                                                                PAGE
                                                                                    
     I       Classes of Business Reinsured                                              1
    II       Term                                                                       1
   III       Territory                                                                  2
    IV       Exclusions                                                                 2
     V       Retention and Limit                                                        4
    VI       Definitions                                                                5
   VII       Other Reinsurance                                                          6
  VIII       Loss Occurrence                                                            6
    IX       Loss Notices and Settlements                                               7
     X       Salvage and Subrogation                                                    8
    XI       Florida Hurricane Catastrophe Fund                                         8
   XII       Reinsurance Premium                                                        9
  XIII       Late Payments                                                              9
   XIV       Offset (BRMA 36D)                                                         11
    XV       Access to Records (BRMA 1D)                                               11
   XVI       Liability of the Reinsurer                                                11
  XVII       Net Retained Lines (BRMA 32B)                                             11
 XVIII       Errors and Omissions (BRMA 14F)                                           11
   XIX       Currency (BRMA 12A)                                                       12
    XX       Taxes (BRMA 50C)                                                          12
   XXI       Federal Excise Tax (BRMA 17A)                                             12
  XXII       Reserve Requirements                                                      12
 XXIII       Insolvency                                                                14
  XXIV       Arbitration                                                               15
   XXV       Service of Suit                                                           16
  XXVI       Agency Agreement                                                          16
 XXVII       Governing Law                                                             16
XXVIII       Confidentiality                                                           17
  XXIX       Severability                                                              17
   XXX       Intermediary (BRMA 23A)                                                   17
             Schedule A


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                     65% FLORIDA ONLY THIRD AND FOURTH EVENT
                     EXCESS CATASTROPHE REINSURANCE CONTRACT
                          EFFECTIVE: SEPTEMBER 1, 2004

                                    issued to

                       Liberty American Insurance Company
                             Pinellas Park, Florida
                          Mobile USA Insurance Company
                             Pinellas Park, Florida
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                     Liberty American Insurance Group, Inc.
             (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 Property 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 - TERM

A.    This Contract shall become effective on September 1, 2004, with respect to
      losses arising out of loss occurrences commencing on or after that date,
      and shall remain in force until May 31, 2005, both days inclusive.

B.    If this Contract expires while a loss occurrence covered hereunder is in
      progress, the Reinsurer's liability hereunder shall, subject to the other
      terms and conditions of this Contract, be determined as if the entire loss
      occurrence had occurred prior to the expiration of this Contract, provided
      that no part of such loss occurrence is claimed against any renewal or
      replacement of this Contract.

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                                     Page 1


ARTICLE III - TERRITORY

The liability of the Reinsurer shall be limited to losses under policies
covering property located within the territorial limits of the State of Florida
or extra territorial limits of the Company's policies.

ARTICLE IV - EXCLUSIONS

This Contract does not apply to and specifically excludes the following:

      1.    Financial guarantee and insolvency.

      2.    Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
            Physical Damage - Reinsurance (U.S.A.)" and the "Nuclear Incident
            Exclusion Clause - Physical Damage - Reinsurance (Canada)" attached
            to and forming part of this Contract.

      3.    Loss or damage caused by or resulting from 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, but
            this exclusion shall not apply to loss or damage covered under a
            standard policy with a standard War Exclusion Clause.

      4.    Loss or liability excluded under the provisions of the "Pools,
            Associations and Syndicates Exclusion Clause" attached to and
            forming part of this Contract.

      5.    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.

      6.    Losses in respect of overhead transmission and distribution lines
            and their supporting structures other than those on or within 300
            meters (or 1,000 feet) of the insured premises. It is understood and
            agreed that public utilities extension and/or suppliers extension
            and/or contingent business interruption coverages are not subject to
            this exclusion, provided that these are not part of a transmitters'
            or distributors' policy.

      7.    Accident and Health, Casualty, Fidelity and/or Surety business.

      8.    Pollution and seepage coverages excluded under the provisions of the
            "Pollution and Seepage Exclusion Clause (BRMA 39A)" attached to and
            forming part of this Contract.

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      9.    Notwithstanding any other provision to the contrary within this
            Contract or any amendment thereto, it is agreed that this Contract
            excludes loss, damage, cost or expense directly or indirectly caused
            by, contributed to by, resulting from, or arising out of or in
            connection with any act of terrorism, as defined herein, regardless
            of any other cause or event contributing concurrently or in any
            other sequence to the loss.

            An "act of terrorism" includes any act, or preparation in respect of
            action, or threat of action, designed to influence the government de
            jure or de facto of any nation or any political division thereof, or
            in pursuit of political, religious, ideological or similar purposes
            to intimidate the public or a section of the public of any nation by
            any person or group(s) of persons whether acting alone or on behalf
            of or in connection with any organization(s) or government(s) de
            jure or de facto, and which:

            a.    Involves violence against one or more persons, or

            b.    Involves damage to property; or

            c.    Endangers life other than that of the person committing the
                  action; or

            d.    Creates a risk to health or safety of the public or a section
                  of the public; or

            e.    Is designed to interfere with or to disrupt an electronic
                  system.

            This Contract also excludes loss, damage, cost or expense directly
            or indirectly caused by, contributed to by, resulting from, or
            arising out of or in connection with any action in controlling,
            preventing, suppressing, retaliating against, or responding to any
            act of terrorism.

            Notwithstanding the above and subject otherwise to the terms,
            conditions and limitations of this Contract, in respect only of
            personal lines this Contract will pay actual loss or damage (but not
            related cost or expense) caused by any act of terrorism provided
            such act is not directly or indirectly caused by, contributed to by,
            resulting from, or arising out of or in connection with biological,
            chemical or nuclear pollution or contamination.

      10.   Loss or liability in any way or to any extent arising out of the
            actual or alleged presence or actual, alleged or threatened presence
            of fungi including, but not limited to, mold, mildew, mycotoxins,
            microbial volatile organic compounds or other "microbial
            contamination." This includes:

            a.    Any supervision, instruction, recommendations, warnings or
                  advice given or which should have been given in connection
                  with the above; and

            b.    Any obligation to share damages with or repay someone else who
                  must pay damages because of such injury or damage.

            For purposes of this exclusion, "microbial contamination" means any
            contamination, either airborne or surface, which arises out of or is
            related to the presence of fungi, mold, mildew, mycotoxins,
            microbial volatile organic compounds or spores, including,

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                                     Page 3


            without limitation, Penicillium, Aspergillus, Fusarium, Aspergillus
            Flavus and Stachybotrys chartarum.

            Losses resulting from the above causes do not in and of themselves
            constitute an event unless arising out of one or more of the
            following perils, in which case this exclusion does not apply:

                  Fire, lightning, explosion, aircraft or vehicle impact,
                  falling objects, windstorm, hail, tornado, cyclone, hurricane,
                  earthquake, volcano, tsunami, flood, freeze or weight of snow.

            Notice of any claims for mold-related losses must be given by the
            Company to the Reinsurer, in writing, within 24 months after the
            commencement date of the loss occurrence to which such claims
            relate.

      11.   Loss or liability excluded under the provisions of the "Electronic
            Data Endorsement B" (N.M.A. 2915) attached to and forming part of
            this Contract.

ARTICLE V - 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 each loss 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 either of the following:

      1.    The amount, shown as "Reinsurer's Per Occurrence Limit" for that
            excess layer in Schedule A attached hereto, as respects any one loss
            occurrence; or

      2.    The amount, shown as "Reinsurer's Term Limit" for that excess layer
            in Schedule A attached hereto, in all during the term of this
            Contract.

B.    No claim shall be made under any excess layer of reinsurance coverage
      provided by this Contract as respects any one loss occurrence unless at
      least two risks insured or reinsured by the Company are involved in such
      loss occurrence. For purposes of this Contract, the Company shall be the
      sole judge of what constitutes one risk.

C.    No claim shall be made under the underlying excess layer of coverage
      provided by this Contract unless the amount, shown as "Funds Otherwise
      Recoverable" in Schedule A attached hereto, for the underlying excess
      layer has been paid or scheduled to be paid by the reinsurers under
      Section I of the Company's Underlying Excess Catastrophe and Reinstatement
      Premium Protection Reinsurance Contract, effective July 1, 2004. No claim
      shall be made under any other excess layer of coverage provided by this
      Contract unless the amount, shown as "Funds Otherwise Recoverable" in
      Schedule A attached hereto, has been paid or scheduled to be paid by the
      reinsurers under the corresponding excess layer

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                                     Page 4


      of the Company's Florida Only Excess Catastrophe Reinsurance Contract,
      effective June 1, 2004.

ARTICLE VI - 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 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 any 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.

      Notwithstanding anything stated herein, the amount included in the
      ultimate net loss for any one loss occurrence as respects loss in excess
      of policy limits and extra contractual obligations shall not exceed 25.0%
      of the Company's indemnity loss hereunder arising out of that loss
      occurrence.

      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.

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      If any provision of this paragraph B 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.

C.    "Loss adjustment expense" as used herein shall mean expenses assignable to
      the investigation, appraisal, adjustment, settlement, litigation, defense
      and/or appeal of specific claims, regardless of how such expenses are
      classified for statutory reporting purposes. Loss adjustment expense shall
      include, but not be limited to, declaratory judgments, interest on
      judgments, expenses of outside adjusters, and a pro rata share of the
      salaries and expenses of the Company's field employees according to the
      time occupied adjusting such losses and expenses of the Company's
      officials incurred in connection with the losses, but shall not include
      office expenses or salaries of the Company's regular employees.

ARTICLE VII - OTHER REINSURANCE

The Company shall carry 15.0% quota share reinsurance on its direct personal
lines business, recoveries under which shall inure to the benefit of this
Contract, or so deemed.

ARTICLE VIII - LOSS OCCURRENCE

A.    The term "loss occurrence" shall mean the sum of all individual losses
      directly occasioned by any one disaster, accident or loss or series of
      disasters, accidents or losses arising out of one event which occurs
      within the area of one state of the United States or province of Canada
      and states or provinces contiguous thereto and to one another. However,
      the duration and extent of any one "loss occurrence" shall be limited to
      all individual losses sustained by the Company occurring during any period
      of 168 consecutive hours arising out of and directly occasioned by the
      same event, except that the term "loss occurrence" shall be further
      defined as follows:

      1.    As regards windstorm, hail, tornado, hurricane, cyclone, including
            ensuing collapse and water damage, all individual losses sustained
            by the Company occurring during any period of 72 consecutive hours
            arising out of and directly occasioned by the same event. However,
            the event need not be limited to one state or province or states or
            provinces contiguous thereto.

      2.    As regards riot, riot attending a strike, civil commotion, vandalism
            and malicious mischief, all individual losses sustained by the
            Company occurring during any period of 72 consecutive hours within
            the area of one municipality or county and the municipalities or
            counties contiguous thereto arising out of and directly occasioned
            by the same event. The maximum duration of 72 consecutive hours may
            be extended in respect of individual losses which occur beyond such
            72 consecutive hours during the continued occupation of an insured's
            premises by strikers, provided such occupation commenced during the
            aforesaid period.

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                                     Page 6


      3.    As regards earthquake (the epicentre of which need not necessarily
            be within the territorial confines referred to in the introductory
            portion of this paragraph) and fire following directly occasioned by
            the earthquake, only those individual fire losses which commence
            during the period of 168 consecutive hours may be included in the
            Company's "loss occurrence."

      4.    As regards "freeze," only individual losses directly occasioned by
            collapse, breakage of glass and water damage (caused by bursting
            frozen pipes and tanks) may be included in the Company's "loss
            occurrence."

      5.    As regards firestorms, brush fires, and other fires or series of
            fires, irrespective of origin (except as provided in subparagraphs 2
            and 3 above), which spread through trees, grassland or other
            vegetation, all individual losses sustained by the Company which
            occur during any period of 168 consecutive hours within a 100-mile
            radius of any one fixed point selected by the Company may be
            included in the Company's "loss occurrence." However, an individual
            loss subject to this subparagraph cannot be included in more than
            one "loss occurrence."

B.    For all those "loss occurrences," other than those referred to in
      subparagraph 2 of paragraph A above, the Company may choose the date and
      time when any such period of consecutive hours commences, provided that it
      is not earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss, and provided that only one such period of 168
      consecutive hours shall apply with respect to one event, except for any
      "loss occurrence" referred to in subparagraph 1 of paragraph A above where
      only one such period of 72 consecutive hours shall apply with respect to
      one event, regardless of the duration of the event.

C.    As respects those "loss occurrences" referred to in subparagraph 2 of
      paragraph A above, if the disaster, accident or loss occasioned by the
      event is of greater duration than 72 consecutive hours, then the Company
      may divide that disaster, accident or loss into two or more "loss
      occurrences," provided no two periods overlap and no individual loss is
      included in more than one such period and provided that no period
      commences earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss.

D.    No individual losses occasioned by an event that would be covered by 72
      hours clauses may be included in any "loss occurrence" claimed under the
      168 hours provision.

ARTICLE IX - LOSS NOTICES AND SETTLEMENTS

A.    Whenever losses sustained by the Company appear likely to result in a
      claim hereunder, the Company shall notify the Reinsurer, and the Reinsurer
      shall have the right to participate in the adjustment of such losses at
      its own expense.

B.    All loss settlements made by the Company, provided they are within the
      terms of this Contract, shall be binding upon the Reinsurer, and the
      Reinsurer agrees to pay all amounts for which it may be liable upon
      receipt of reasonable evidence of the amount paid (or scheduled to be
      paid) by the Company.

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ARTICLE X - 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) on account of claims
and settlements involving reinsurance hereunder. Salvage 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 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 XI - FLORIDA HURRICANE CATASTROPHE FUND

A.    Any loss reimbursement paid or payable to the Company under the Florida
      Hurricane Catastrophe Fund (FHCF) as a result of loss occurrences
      commencing during the term of this Contract shall inure to the benefit of
      this Contract. Further, any FHCF loss reimbursement shall be deemed to be
      paid to the Company in accordance with the reimbursement contract between
      the Company and the State Board of Administration of the State of Florida
      at the full payout level set forth therein and will be deemed not to be
      reduced by any reduction or exhaustion of the FHCF's claims paying
      capacity.

B.    Prior to the determination of the Company's FHCF retention and payout, if
      any, under the reimbursement contract, the Reinsurer's liability hereunder
      will be determined provisionally based on the projected payout, determined
      in accordance with the provisions of the reimbursement contract. Following
      determination of the payout under the reimbursement contract, the ultimate
      net loss under this Contract will be recalculated. If, as a result of such
      calculation, the loss to the Reinsurer under any excess layer of this
      Contract in any one loss occurrence is less than the amount previously
      paid by the Reinsurer under that excess layer, the Company shall promptly
      remit the difference to the Reinsurer. If the loss to the Reinsurer under
      any excess layer in any one loss occurrence is greater than the amount
      previously paid by the Reinsurer, the Reinsurer shall promptly remit the
      difference to the Company.

C.    If an FHCF reimbursement amount is based on the Company's losses in more
      than one loss occurrence and the FHCF does not designate the amount
      allocable to each loss occurrence, the FHCF reimbursement amount shall be
      prorated in the proportion that the Company's losses in each loss
      occurrence bear to the Company's total losses arising out of all loss
      occurrences to which the FHCF reimbursement applies.

D.    Any reimbursement premiums or emergency assessment paid by the Company
      under the FHCF shall be deemed to be premiums paid for inuring
      reinsurance.

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ARTICLE XII - REINSURANCE PREMIUM

A.    As premium for each excess layer of reinsurance coverage provided by this
      Contract, the Company shall pay the Reinsurer the amount, shown as
      "Premium" for that excess layer in Schedule A attached hereto, in two
      equal installments of the amount, shown as "Installment Premium" for that
      excess layer in Schedule A attached hereto, on September 1, 2004 and March
      1, 2005.

B.    The Company shall remit additional premium, if any, on December 1, 2004.
      The additional premium shall be calculated by multiplying the "Additional
      Premium" for each excess layer in Schedule A attached hereto, by the
      following:

      1.    As respects the underlying excess layer of coverage provided by this
            Contract, the ratio of the ultimate net loss resulting from
            Hurricane Frances incurred by reinsurers under Section I of the
            Company's Underlying Excess Catastrophe and Reinstatement Premium
            Protection Reinsurance Contract, effective July 1, 2004, to the
            amount, shown as "Reinsurer's Per Occurrence Limit" in Schedule A
            attached hereto, for the underlying excess layer.

      2.    As respects the first, second and third excess layers of coverage
            provided by this Contract, the ratio of ultimate net loss resulting
            from Hurricane Frances incurred by reinsurers under the
            corresponding excess layer of the Company's Florida Only Excess
            Catastrophe Reinsurance Contract, effective June 1, 2004, to the
            amount, shown as "Reinsurer's Per Occurrence Limit" in Schedule A
            attached hereto for that excess layer.

      Quarterly recalculations and remittances of the additional premium, if
      any, due for each excess layer shall be made until all losses subject
      hereto have been finally settled.

ARTICLE XIII - 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 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

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      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 10 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 10 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 or control 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.

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ARTICLE XIV - OFFSET (BRMA 36D)

The Company and the Reinsurer, each at its option, may offset any balance or
balances, whether on account of premiums, claims and losses, loss expenses or
salvages due from one party to the other under this Contract; provided, however,
that in the event of the insolvency of a party hereto, offsets shall only be
allowed in accordance with applicable statutes and regulations.

ARTICLE XV - 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 XVI - 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. However, in no event shall this be construed
      in any way to provide coverage outside the terms and conditions set forth
      in this Contract.

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 XVII - NET RETAINED LINES (BRMA 32B)

A.    This Contract applies only to that portion of any policy which the Company
      retains net for its own account, 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 XVIII - 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.

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                                     Page 11


ARTICLE XIX - CURRENCY (BRMA 12A)

A.    Whenever the word "Dollars" or the "$" sign appears in this Contract, they
      shall be construed to mean United States Dollars and all transactions
      under this Contract shall be in United States Dollars.

B.   Amounts paid or received by the Company in any other currency shall be
     converted to United States Dollars at the rate of exchange at the date such
     transaction is entered on the books of the Company.

ARTICLE XX - TAXES (BRMA 50C)

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, the District of Columbia or Canada.

ARTICLE XXI - FEDERAL EXCISE TAX (BRMA 17A)

(Applicable to those reinsurers, excepting Underwriters at Lloyd's London and
other reinsurers exempt from Federal Excise Tax, who are domiciled outside the
United States of America.)

A.    The Reinsurer has agreed to allow for the purpose of paying the Federal
      Excise Tax the applicable percentage of the premium payable hereon as
      imposed under Section 4371 of the Internal Revenue Code to the extent such
      premium is subject to the Federal Excise Tax.

B.    In the event of any return of premium becoming due hereunder the Reinsurer
      will deduct the applicable percentage from the return premium payable
      hereon and the Company or its agent should take steps to recover the tax
      from the United States Government.

ARTICLE XXII - RESERVE REQUIREMENTS

A.    If the Reinsurer is unauthorized in any state of the United States of
      America or the District of Columbia, the Reinsurer agrees to fund, on or
      before December 31, 2004, its share of the Company's ceded United States
      unearned premium and outstanding loss and loss adjustment expense reserves
      (including all case reserves plus any reasonable amount estimated to be
      unreported, as determined by the Company, from known loss occurrences) by:

      1.    Clean, irrevocable and unconditional letters of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a bank or banks meeting the NAIC Securities
            Valuation Office credit standards for issuers of letters of credit
            and acceptable to said insurance regulatory authorities; and/or

                                                                 [BENFIELD LOGO]

                                     Page 12


      2.    Escrow accounts for the benefit of the Company; and/or

      3.    Cash advances;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved. The Reinsurer, at its sole option, may fund in other
      than cash if its method and form of funding are acceptable to the
      insurance regulatory authorities involved.

B.    If the Reinsurer is unauthorized in any province or jurisdiction of
      Canada, the Reinsurer agrees to fund, on or before December 31, 2004, 115%
      of its share of the Company's ceded Canadian unearned premium and
      outstanding loss and loss adjustment expense reserves (including all case
      reserves plus any reasonable amount estimated to be unreported, as
      determined by the Company, from known loss occurrences) by:

      1.    A clean, irrevocable and unconditional letter of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a Canadian bank or banks meeting the NAIC
            Securities Valuation Office credit standards for issuers of letters
            of credit and acceptable to said insurance regulatory authorities,
            for no more than 15/115ths of the total funding required; and/or

      2.    Cash advances for the remaining balance of the funding required;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved.

C.    With regard to funding in whole or in part by letters of credit, it is
      agreed that each letter of credit will be in a form acceptable to
      insurance regulatory authorities involved, will be issued for a term of at
      least one year and will include an "evergreen clause," which automatically
      extends the term for at least one additional year at each expiration date
      unless written notice of non-renewal is given to the Company not less than
      30 days prior to said expiration date or longer where required by
      insurance regulatory authorities. The Company and the Reinsurer further
      agree, notwithstanding anything to the contrary in this Contract, that
      said letters of credit may be drawn upon by the Company or its successors
      in interest at any time, without diminution because of the insolvency of
      the Company or the Reinsurer, but only for one or more of the following
      purposes:

      1.    To reimburse itself for the Reinsurer's share of unearned premiums
            returned to insureds on account of policy cancellations, unless paid
            in cash by the Reinsurer;

      2.    To reimburse itself for the Reinsurer's share of losses and/or loss
            adjustment expense paid under the terms of policies reinsured
            hereunder, unless paid in cash by the Reinsurer;

      3.    To reimburse itself for the Reinsurer's share of any other amounts
            claimed to be due hereunder, unless paid in cash by the Reinsurer;

      4.    To fund a cash account in an amount equal to the Reinsurer's share
            of any ceded unearned premium and/or outstanding loss and loss
            adjustment expense reserves

                                                                 [BENFIELD LOGO]

                                     Page 13


            (including all case reserves plus any reasonable amount estimated to
            be unreported, as determined by the Company, from known loss
            occurrences) funded by means of a letter of credit which is under
            non-renewal notice, if said letter of credit has not been renewed or
            replaced by the Reinsurer 10 days prior to its expiration date;

      5.    To refund to the Reinsurer any sum in excess of the actual amount
            required to fund the Reinsurer's share of the Company's ceded
            unearned premium and/or outstanding loss and loss adjustment expense
            reserves (including all case reserves plus any reasonable amount
            estimated to be unreported, as determined by the Company, from known
            loss occurrences), if so requested by the Reinsurer.

      In the event the amount drawn by the Company on any letter of credit is in
      excess of the actual amount required for C(1) or C(2) or C(4), in the case
      of C(3), the actual amount determined to be due, the Company shall
      promptly return to the Reinsurer the excess amount so drawn.

ARTICLE XXIII - 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

                                                                 [BENFIELD LOGO]

                                     Page 14


      Reinsurer to the payees under such policies and in substitution for the
      obligations of the company to such payees.

ARTICLE XXIV - ARBITRATION

A.    As a condition precedent to any right of action hereunder, any dispute or
      difference between the Company and any Reinsurer relating to the
      interpretation or performance of this Contract, including its formation or
      validity, or any transaction under this Contract, whether arising before
      or after termination, shall be submitted to arbitration.

B.    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 provided that communication shall be made by the Company to each
      of the reinsurers constituting the one party, and provided, however, that
      nothing therein 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 Reinsurer under the terms of this Contract
      from several to joint.

C.    Upon written request of any party, each party shall choose an arbitrator
      and the two chosen shall select a third arbitrator. If either party
      refuses or neglects to appoint an arbitrator within 30 days after receipt
      of the written request for arbitration, the requesting party may appoint a
      second arbitrator. If the two arbitrators fail to agree on the selection
      of a third arbitrator within 30 days of their appointment, the Company
      shall petition the American Arbitration Association to appoint the third
      arbitrator. If the American Arbitration Association fails to appoint the
      third arbitrator within 30 days after it has been requested to do so,
      either party may request a justice of a court of general jurisdiction of
      the state in which the arbitration is to be held to appoint the third
      arbitrator. All arbitrators shall be active or retired officers of
      insurance or reinsurance companies, or Lloyd's London Underwriters, and
      disinterested in the outcome of the arbitration. Each party shall submit
      its case to the arbitrators within 30 days of the appointment of the third
      arbitrator.

D.    The parties hereby waive all objections to the method of selection of the
      arbitrators, it being the intention of both sides that all the arbitrators
      be chosen from those submitted by the parties.

E.    The arbitrators shall have the power to determine all procedural rules for
      the holding of the arbitration including but not limited to inspection of
      documents, examination of witnesses and any other matter relating to the
      conduct of the arbitration. The arbitrators shall interpret this Contract
      as an honorable engagement and not as merely a legal obligation; they are
      relieved of all judicial formalities and may abstain from following the
      strict rules of law. The arbitrators may award interest and costs. Each
      party shall bear the expense of its own arbitrator and shall share equally
      with the other party the expenses of the third arbitrator and of the
      arbitration.

F.    The decision in writing of the majority of the arbitrators shall be final
      and binding upon both parties. Judgment may be entered upon the final
      decision of the arbitrators in any court having jurisdiction. The
      arbitration shall take place in Pinellas Park, Florida, unless otherwise
      mutually agreed between the Company and the Reinsurer.

                                                                 [BENFIELD LOGO]

                                     Page 15


G.    This Article shall remain in full force and effect in the event any other
      provision of this Contract shall be found invalid or non-binding.

H.    All time limitations stated in this Article may be amended by mutual
      consent of the parties, and will be amended automatically to the extent
      made necessary by any circumstances beyond the control of the parties.

ARTICLE XXV - SERVICE OF SUIT

(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. This
Article is not intended to conflict with or override the parties obligations to
arbitrate their disputes in accordance with Article XXIV.)

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 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 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 - GOVERNING LAW

This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Florida exclusive of the rules with
respect to conflicts of law, except as to rules with respect to credit for
reinsurance in which case the applicable rules of all the states shall apply.

                                                                 [BENFIELD LOGO]

                                     Page 16


ARTICLE XXVIII - CONFIDENTIALITY

The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly communicate, disclose or divulge to any third
party any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company's books, records and
papers. The restrictions as outlined in this Article shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, retrocessionaires, legal counsel, arbitrators involved in
any arbitration procedures under this Contract or disclosures required upon
subpoena or other duly-issued order of a court or other governmental agency or
regulatory authority.

ARTICLE XXIX - SEVERABILITY

If any provision of this Contract should be invalid under applicable laws, the
latter shall control but only to the extent of the conflict without affecting
the remaining provisions of this Contract.

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:

Pinellas Park, Florida, this ________ day of _______________________ in the year
________.

               ________________________________________________________________
               Liberty American Insurance Group, Inc. (for and on behalf of the
               "Company")

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                                    Page 17


                                   SCHEDULE A

                     65% FLORIDA ONLY THIRD AND FOURTH EVENT
                     EXCESS CATASTROPHE REINSURANCE CONTRACT
                          EFFECTIVE: SEPTEMBER 1, 2004

                                    issued to

                       Liberty American Insurance Company
                             Pinellas Park, Florida
                          Mobile USA Insurance Company
                             Pinellas Park, Florida
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                     Liberty American Insurance Group, Inc.



                                 UNDERLYING        FIRST           SECOND            THIRD
                                   EXCESS          EXCESS          EXCESS            EXCESS
                                                                       
Company's Retention              $3,500,000      $7,000,000      $20,000,000       $35,000,000

Reinsurer's Per                  $3,500,000      $13,000,000     $15,000,000       $15,000,000
Occurrence Limit

Reinsurer's Term Limit           $7,000,000      $26,000,000     $30,000,000       $30,000,000

Funds Otherwise                  $7,000,000      $26,000,000     $30,000,000       $30,000,000
Recoverable

Premium                          $  525,000      $ 1,105,000     $   787,500       $   487,500

Installment Premium              $  262,500      $   552,500     $   393,750       $   243,750

Additional Premium               $  980,000      $ 2,372,500     $ 2,062,500       $ 1,215,000


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.

                                                                 [BENFIELD LOGO]

Schedule A



   NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (U.S.A.)

1.    This Reinsurance does not cover any loss or liability accruing to the
      Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph (1) of this
      Clause, this Reinsurance does not cover any loss or liability accruing to
      the Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      I.    Nuclear reactor power plants including all auxiliary property on the
            site, or

      II.   Any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and "critical facilities" as such, or

      III.  Installations for fabricating complete fuel elements or for
            processing substantial quantities of "special nuclear material," and
            for reprocessing, salvaging, chemically separating, storing or
            disposing of "spent" nuclear fuel or waste materials, or

      IV.   Installations other than those listed in paragraph (2) III above
            using substantial quantities of radioactive isotopes or other
            products of nuclear fission.

3.    Without in any way restricting the operations of paragraphs (1) and (2)
      hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, from any insurance on
      property which is on the same site as a nuclear reactor power plant or
      other nuclear installation and which normally would be insured therewith
      except that this paragraph (3) shall not operate

      (a)   where Reassured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused. However on and after 1st January 1960
            this sub-paragraph (b) shall only apply provided the said
            radioactive contamination exclusion provision has been approved by
            the Governmental Authority having jurisdiction thereof.

4.    Without in any way restricting the operations of paragraphs (1), (2) and
      (3) hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    It is understood and agreed that this Clause shall not extend to risks
      using radioactive isotopes in any form where the nuclear exposure is not
      considered by the Reassured to be the primary hazard.

6.    The term "special nuclear material" shall have the meaning given it in the
      Atomic Energy Act of 1954 or by any law amendatory thereof.

7.    Reassured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

Note.-Without in any way restricting the operation of paragraph (1) hereof, it
      is understood and agreed that

      (a)   all policies issued by the Reassured on or before 31st December 1957
            shall be free from the application of the other provisions of this
            Clause until expiry date or 31st December 1960 whichever first
            occurs whereupon all the provisions of this Clause shall apply.

      (b)   with respect to any risk located in Canada policies issued by the
            Reassured on or before 31st December 1958 shall be free from the
            application of the other provisions of this Clause until expiry date
            or 31st December 1960 whichever first occurs whereupon all the
            provisions of this Clause shall apply.

12/12/57
N.M.A. 1119
BRMA 35B



   NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (CANADA)

1.    This Agreement does not cover any loss or liability accruing to the
      Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph 1 of this
      clause, this Agreement does not cover any loss or liability accruing to
      the Reinsured, directly or indirectly, and whether as Insurer or
      Reinsurer, from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      (a)   nuclear reactor power plants including all auxiliary property on the
            site, or

      (b)   any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and critical facilities as such, or

      (c)   installations for fabricating complete fuel elements or for
            processing substantial quantities of radioactive materials, and for
            reprocessing, salvaging, chemically separating, storing or disposing
            of spent nuclear fuel or waste materials, or

      (d)   installations other than those listed in (c) above using substantial
            quantities of radioactive isotopes or other products of nuclear
            fission.

3.    Without in any way restricting the operation of paragraphs 1 and 2 of this
      clause, this Agreement does not cover any loss or liability by radioactive
      contamination accruing to the Reinsured, directly or indirectly, and
      whether as Insurer or Reinsurer, from any insurance on property which is
      on the same site as a nuclear reactor power plant or other nuclear
      installation and which normally would be insured therewith, except that
      this paragraph 3 shall not operate:

      (a)   where the Reinsured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where the said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused.

4.    Without in any way restricting the operation of paragraphs 1, 2 and 3 of
      this clause, this Agreement does not cover any loss or liability by
      radioactive contamination accruing to the Reinsured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    This clause shall not extend to risks using radioactive isotopes in any
      form where the nuclear exposure is not considered by the Reinsured to be
      the primary hazard.

6.    The term "radioactive material" means uranium, thorium, plutonium,
      neptunium, their respective derivatives and compounds, radioactive
      isotopes of other elements and any other substances which may be
      designated by or pursuant to any law, act or statute, or any law
      amendatory thereof as being prescribed substances capable of releasing
      atomic energy, or as being requisite for the production, use or
      application of atomic energy.

7.    Reinsured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

8.    Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, this Agreement does not cover any loss or liability
      accruing to the Reinsured, directly or indirectly, and whether as Insurer
      or Reinsurer, caused:

      (1)   by any nuclear incident, as defined in or pursuant to the Nuclear
            Liability Act or any other nuclear liability act, law or statute, or
            any law amendatory thereof or nuclear explosion, except for ensuing
            loss or damage which results directly from fire, lightning or
            explosion of natural, coal or manufactured gas;

      (2)   by contamination by radioactive material.

NOTE: Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, paragraph 8 of this clause shall only apply to all
      original contracts of the Reinsured, whether new, renewal or replacement,
      which become effective on or after December 31, 1992.

N.M.A. 1980a (1/4/96)



               POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE

SECTION A:

Excluding:

      (a)   All business derived directly or indirectly from any Pool,
            Association or Syndicate which maintains its own reinsurance
            facilities.

      (b)   Any Pool or Scheme (whether voluntary or mandatory) formed after
            March 1, 1968 for the purpose of insuring property whether on a
            country-wide basis or in respect of designated areas. This exclusion
            shall not apply to so-called Automobile Insurance Plans or other
            Pools formed to provide coverage for Automobile Physical Damage.

SECTION B:

It is agreed that business written by the Company for the same perils, which is
known at the time to be insured by, or in excess of underlying amounts placed in
the following Pools, Associations or Syndicates, whether by way of insurance or
reinsurance, is excluded hereunder:

        Industrial Risk Insurers,
        Associated Factory Mutuals,
        Improved Risk Mutuals,
        Any Pool, Association or Syndicate formed for the purpose of writing
          Oil, Gas or Petro-Chemical Plants and/or Oil or Gas Drilling Rigs,
        United States Aircraft Insurance Group,
        Canadian Aircraft Insurance Group,
        Associated Aviation Underwriters,
        American Aviation Underwriters.

Section B does not apply:

      (a)   Where The Total Insured Value over all interests of the risk in
            question is less than $250,000,000.

      (b)   To interests traditionally underwritten as Inland Marine or stock
            and/or contents written on a blanket basis.

      (c)   To Contingent Business Interruption, except when the Company is
            aware that the key location is known at the time to be insured in
            any Pool, Association or Syndicate named above, other than as
            provided for under Section B(a).

      (d)   To risks as follows:

            Offices, Hotels, Apartments, Hospitals, Educational Establishments,
            Public Utilities (other than railroad schedules) and builder's risks
            on the classes of risks specified in this subsection (d) only.

Where this clause attaches to Catastrophe Excesses, the following Section C is
added:

SECTION C:

Nevertheless the Reinsurer specifically agrees that liability accruing to the
Company from its participation in residual market mechanisms including but not
limited to:

      (1)   The following so-called "Coastal Pools":

            Alabama Insurance Underwriting Association
            Louisiana Insurance Underwriting Association
            Mississippi Windstorm Underwriting Association
            North Carolina Insurance Underwriting Association
            South Carolina Windstorm and Hail Underwriting Association
            Texas Windstorm Insurance Association

AND

      (2)   All "Fair Plan" and "Rural Risk Plan" business

                                   Page 1 of 2


AND

      (3)   Citizens Property Insurance Corporation ("CPIC") and the California
            Earthquake Authority ("CEA")

for all perils otherwise protected hereunder shall not be excluded, except,
however, that this reinsurance does not include any increase in such liability
resulting from:

      (i)   The inability of any other participant in such "Coastal Pool" and/or
            "Fair Plan" and/or "Rural Risk Plan" and/or Residual Market
            Mechanisms to meet its liability.

      (ii)  Any claim against such "Coastal Pool" and/or "Fair Plan" and/or
            "Rural Risk Plan" and/or Residual Market Mechanisms, or any
            participant therein, including the Company, whether by way of
            subrogation or otherwise, brought by or on behalf of any insolvency
            fund (as defined in the Insolvency Fund Exclusion Clause
            incorporated in this Contract).

SECTION D:

      (1)   Notwithstanding Section C above, in respect of the CEA, where an
            assessment is made against the Company by the CEA, the Company may
            include in its Ultimate Net Loss only that assessment directly
            attributable to each separate loss occurrence covered hereunder. The
            Company's initial capital contribution to the CEA shall not be
            included in the Ultimate Net Loss.

      (2)   Notwithstanding Section C above, in respect of CPIC, where an
            assessment is made against the Company by CPIC, the maximum loss
            that the Company may include in the Ultimate Net Loss in respect of
            any loss occurrence hereunder shall not exceed the lesser of:

            (a)   The Company's assessment from CPIC for the accounting year in
                  which the loss occurrence commenced, or

            (b)   The product of the following:

                  (i)   The Company's percentage participation in CPIC for the
                        accounting year in which the loss occurrence commenced;
                        and

                  (ii)  CPIC's total losses in such loss occurrence.

Any assessments for accounting years subsequent to that in which the loss
occurrence commenced may not be included in the Ultimate Net Loss hereunder.
Moreover, notwithstanding Section C above, in respect of CPIC, the Ultimate Net
Loss hereunder shall not include any monies expended to purchase or retire bonds
as a consequence of being a member of CPIC. For the purposes of this Contract,
the Company may not include in the Ultimate Net Loss any assessment or any
percentage assessment levied by CPIC to meet the obligations of an insolvent
insurer member or other party, or to meet any obligations arising from the
deferment by CPIC of the collection of monies.

NOTES: Wherever used herein the terms:

      "Company"    shall be understood to mean "Company," "Reinsured,"
                   "Reassured" or whatever other term is used in the attached
                   reinsurance document to designate the reinsured company or
                   companies.

      "Agreement"  shall be understood to mean "Agreement," "Contract,"
                   "Policy" or whatever other term is used to designate the
                   attached reinsurance document.

      "Reinsurers" shall be understood to mean "Reinsurers," "Underwriters"
                   or whatever other term is used in the attached reinsurance
                   document to designate the reinsurer or reinsurers.

                                  Page 2 of 2



                     POLLUTION AND SEEPAGE EXCLUSION CLAUSE

This Contract excludes loss and/or damage and/or costs and/or expenses arising
from seepage and/or pollution and/or contamination, other than contamination
from smoke. Nevertheless, this exclusion does not preclude payment of the cost
of removing debris of property damaged by a loss otherwise covered hereunder,
subject always to a limit of 25% of the Company's property loss under the
applicable original policy.

BRMA 39A



                          ELECTRONIC DATA ENDORSEMENT B

1.    ELECTRONIC DATA EXCLUSION

      Notwithstanding any provision to the contrary within the Contract or any
      endorsement thereto, it is understood and agreed as follows:-

      a)    This Contract does not insure loss, damage, destruction, distortion,
            erasure, corruption or alteration of ELECTRONIC DATA from any cause
            whatsoever (including but not limited to COMPUTER VIRUS) or loss of
            use, reduction in functionality, cost, expense of whatsoever nature
            resulting therefrom, regardless of any other cause or event
            contributing concurrently or in any other sequence to the loss.

            ELECTRONIC DATA means facts, concepts and information converted to a
            form useable for communications, interpretation or processing by
            electronic and electromechanical data processing or electronically
            controlled equipment and includes programs, software and other coded
            instructions for the processing and manipulation of data or the
            direction and manipulation of such equipment.

            COMPUTER VIRUS means a set of corrupting, harmful or otherwise
            unauthorized instructions or code including a set of maliciously
            introduced unauthorized instructions or code, programmatic or
            otherwise, that propagate themselves through a computer system or
            network of whatsoever nature. COMPUTER VIRUS includes but is not
            limited to "Trojan Horses," "worms" and "time or logic bombs."

      b)    However, in the event that a peril listed below results from any of
            the matters described in paragraph a) above, this Contract, subject
            to all its terms, conditions and exclusions, will cover physical
            damage occurring during the Contract period to property insured by
            this Contract directly caused by such listed peril.

            Listed Perils

            Fire
            Explosion

2.    ELECTRONIC DATA PROCESSING MEDIA VALUATION

      Notwithstanding any provision to the contrary within the Contract or any
      endorsement thereto, it is understood and agreed as follows:-

      Should electronic data processing media insured by this Contract suffer
      physical loss or damage insured by this Contract, then the basis of
      valuation shall be the cost of the blank media plus the costs of copying
      the ELECTRONIC DATA from back-up or from originals of a previous
      generation. These costs will not include research and engineering nor any
      costs of recreating, gathering or assembling such ELECTRONIC DATA. If the
      media is not repaired, replaced or restored the basis of valuation shall
      be the cost of the blank media. However this Contract does not insure any
      amount pertaining to the value of such ELECTRONIC DATA to the Assured or
      any other party, even if such ELECTRONIC DATA cannot be recreated,
      gathered or assembled.

N.M.A. 2915 (25.1.01)
Form approved by Lloyd's Underwriters' Non-Marine Association Limited

EX-10.16

                                                                   EXHIBIT 10.16

                     35% FLORIDA ONLY THIRD AND FOURTH EVENT
                     EXCESS CATASTROPHE REINSURANCE CONTRACT
                          EFFECTIVE: SEPTEMBER 2, 2004

                                    issued to

                       Liberty American Insurance Company
                             Pinellas Park, Florida
                          Mobile USA Insurance Company
                             Pinellas Park, Florida
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                     Liberty American Insurance Group, Inc.

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                                TABLE OF CONTENTS



  ARTICLE                                            PAGE
                                                  
     I  Classes of Business Reinsured                 1
    II  Term                                          1
   III  Territory                                     2
    IV  Exclusions                                    2
     V  Retention and Limit                           4
    VI  Definitions                                   5
   VII  Other Reinsurance                             6
  VIII  Loss Occurrence                               6
    IX  Loss Notices and Settlements                  7
     X  Salvage and Subrogation                       8
    XI  Florida Hurricane Catastrophe Fund            8
   XII  Reinsurance Premium                           9
  XIII  Late Payments                                 9
   XIV  Offset (BRMA 36D)                            11
    XV  Access to Records (BRMA 1D)                  11
   XVI  Liability of the Reinsurer                   11
  XVII  Net Retained Lines (BRMA 32B)                11
 XVIII  Errors and Omissions (BRMA 14F)              11
   XIX  Currency (BRMA 12A)                          12
    XX  Taxes (BRMA 50C)                             12
   XXI  Federal Excise Tax (BRMA 17A)                12
  XXII  Reserve Requirements                         12
 XXIII  Insolvency                                   14
  XXIV  Arbitration                                  15
   XXV  Service of Suit                              16
  XXVI  Agency Agreement                             16
 XXVII  Governing Law                                16
XXVIII  Confidentiality                              17
  XXIX  Severability                                 17
   XXX  Intermediary (BRMA 23A)                      17
        Schedule A


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                     35% FLORIDA ONLY THIRD AND FOURTH EVENT
                     EXCESS CATASTROPHE REINSURANCE CONTRACT
                          EFFECTIVE: SEPTEMBER 2, 2004

                                    issued to

                       Liberty American Insurance Company
                             Pinellas Park, Florida
                          Mobile USA Insurance Company
                             Pinellas Park, Florida
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                     Liberty American Insurance Group, Inc.
             (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 Property 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 - TERM

A.    This Contract shall become effective on September 2, 2004, with respect to
      losses arising out of loss occurrences commencing on or after that date,
      and shall remain in force until May 31, 2005, both days inclusive.

B.    If this Contract expires while a loss occurrence covered hereunder is in
      progress, the Reinsurer's liability hereunder shall, subject to the other
      terms and conditions of this Contract, be determined as if the entire loss
      occurrence had occurred prior to the expiration of this Contract, provided
      that no part of such loss occurrence is claimed against any renewal or
      replacement of this Contract.

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                                     Page 1


ARTICLE III - TERRITORY

The liability of the Reinsurer shall be limited to losses under policies
covering property located within the territorial limits of the State of Florida
or extra territorial limits of the Company's policies.

ARTICLE IV - EXCLUSIONS

This Contract does not apply to and specifically excludes the following:

      1.    Financial guarantee and insolvency.

      2.    Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
            Physical Damage - Reinsurance (U.S.A.)" and the "Nuclear Incident
            Exclusion Clause - Physical Damage - Reinsurance (Canada)" attached
            to and forming part of this Contract.

      3.    Loss or damage caused by or resulting from 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, but
            this exclusion shall not apply to loss or damage covered under a
            standard policy with a standard War Exclusion Clause.

      4.    Loss or liability excluded under the provisions of the "Pools,
            Associations and Syndicates Exclusion Clause" attached to and
            forming part of this Contract.

      5.    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.

      6.    Losses in respect of overhead transmission and distribution lines
            and their supporting structures other than those on or within 300
            meters (or 1,000 feet) of the insured premises. It is understood and
            agreed that public utilities extension and/or suppliers extension
            and/or contingent business interruption coverages are not subject to
            this exclusion, provided that these are not part of a transmitters'
            or distributors' policy.

      7.    Accident and Health, Casualty, Fidelity and/or Surety business.

      8.    Pollution and seepage coverages excluded under the provisions of the
            "Pollution and Seepage Exclusion Clause (BRMA 39A)" attached to and
            forming part of this Contract.

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                                     Page 2


      9.    Notwithstanding any other provision to the contrary within this
            Contract or any amendment thereto, it is agreed that this Contract
            excludes loss, damage, cost or expense directly or indirectly caused
            by, contributed to by, resulting from, or arising out of or in
            connection with any act of terrorism, as defined herein, regardless
            of any other cause or event contributing concurrently or in any
            other sequence to the loss.

            An "act of terrorism" includes any act, or preparation in respect of
            action, or threat of action, designed to influence the government de
            jure or de facto of any nation or any political division thereof, or
            in pursuit of political, religious, ideological or similar purposes
            to intimidate the public or a section of the public of any nation by
            any person or group(s) of persons whether acting alone or on behalf
            of or in connection with any organization(s) or government(s) de
            jure or de facto, and which:

            a.    Involves violence against one or more persons, or

            b.    Involves damage to property; or

            c.    Endangers life other than that of the person committing the
                  action; or

            d.    Creates a risk to health or safety of the public or a section
                  of the public; or

            e.    Is designed to interfere with or to disrupt an electronic
                  system.

            This Contract also excludes loss, damage, cost or expense directly
            or indirectly caused by, contributed to by, resulting from, or
            arising out of or in connection with any action in controlling,
            preventing, suppressing, retaliating against, or responding to any
            act of terrorism.

            Notwithstanding the above and subject otherwise to the terms,
            conditions and limitations of this Contract, in respect only of
            personal lines this Contract will pay actual loss or damage (but not
            related cost or expense) caused by any act of terrorism provided
            such act is not directly or indirectly caused by, contributed to by,
            resulting from, or arising out of or in connection with biological,
            chemical or nuclear pollution or contamination.

      10.   Loss or liability in any way or to any extent arising out of the
            actual or alleged presence or actual, alleged or threatened presence
            of fungi including, but not limited to, mold, mildew, mycotoxins,
            microbial volatile organic compounds or other "microbial
            contamination." This includes:

            a.    Any supervision, instruction, recommendations, warnings or
                  advice given or which should have been given in connection
                  with the above; and

            b.    Any obligation to share damages with or repay someone else who
                  must pay damages because of such injury or damage.

            For purposes of this exclusion, "microbial contamination" means any
            contamination, either airborne or surface, which arises out of or is
            related to the presence of fungi, mold, mildew, mycotoxins,
            microbial volatile organic compounds or spores, including,

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                                     Page 3


            without limitation, Penicillium, Aspergillus, Fusarium, Aspergillus
            Flavus and Stachybotrys chartarum.

            Losses resulting from the above causes do not in and of themselves
            constitute an event unless arising out of one or more of the
            following perils, in which case this exclusion does not apply:

                  Fire, lightning, explosion, aircraft or vehicle impact,
                  falling objects, windstorm, hail, tornado, cyclone, hurricane,
                  earthquake, volcano, tsunami, flood, freeze or weight of snow.

            Notice of any claims for mold-related losses must be given by the
            Company to the Reinsurer, in writing, within 24 months after the
            commencement date of the loss occurrence to which such claims
            relate.

      11.   Loss or liability excluded under the provisions of the "Electronic
            Data Endorsement B" (N.M.A. 2915) attached to and forming part of
            this Contract.

ARTICLE V - 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 each loss occurrence. Subject
      to the provisions of paragraphs B and C below, 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 either
      of the following:

      1.    The amount, shown as "Reinsurer's Per Occurrence Limit" for that
            excess layer in Schedule A attached hereto, as respects any one loss
            occurrence; or

      2.    The amount, shown as "Reinsurer's Term Limit" for that excess layer
            in Schedule A attached hereto, in all during the term of this
            Contract.

B.    No claim shall be made under any excess layer of reinsurance coverage
      provided by this Contract as respects any one loss occurrence unless at
      least two risks insured or reinsured by the Company are involved in such
      loss occurrence. For purposes of this Contract, the Company shall be the
      sole judge of what constitutes one risk.

C.    No claim shall be made under the underlying excess layer of coverage
      provided by this Contract unless the amount, shown as "Funds Otherwise
      Recoverable" in Schedule A attached hereto, for the underlying excess
      layer has been paid or scheduled to be paid by the reinsurers under
      Section I of the Company's Underlying Excess Catastrophe and Reinstatement
      Premium Protection Reinsurance Contract, effective July 1, 2004. No claim
      shall be made under any other excess layer of coverage provided by this
      Contract unless the amount, shown as "Funds Otherwise Recoverable" in
      Schedule A attached hereto, has been paid or scheduled to be paid by the
      reinsurers under the corresponding excess layer

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                                     Page 4


      of the Company's Florida Only Excess Catastrophe Reinsurance Contract,
      effective June 1, 2004.

ARTICLE VI - 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 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 any 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.

      Notwithstanding anything stated herein, the amount included in the
      ultimate net loss for any one loss occurrence as respects loss in excess
      of policy limits and extra contractual obligations shall not exceed 25.0%
      of the Company's indemnity loss hereunder arising out of that loss
      occurrence.

      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.

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                                     Page 5


      If any provision of this paragraph B 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.

C.    "Loss adjustment expense" as used herein shall mean expenses assignable to
      the investigation, appraisal, adjustment, settlement, litigation, defense
      and/or appeal of specific claims, regardless of how such expenses are
      classified for statutory reporting purposes. Loss adjustment expense shall
      include, but not be limited to, declaratory judgments, interest on
      judgments, expenses of outside adjusters, and a pro rata share of the
      salaries and expenses of the Company's field employees according to the
      time occupied adjusting such losses and expenses of the Company's
      officials incurred in connection with the losses, but shall not include
      office expenses or salaries of the Company's regular employees.

ARTICLE VII - OTHER REINSURANCE

The Company shall carry 15.0% quota share reinsurance on its direct personal
lines business, recoveries under which shall inure to the benefit of this
Contract, or so deemed.

ARTICLE VIII - LOSS OCCURRENCE

A.    The term "loss occurrence" shall mean the sum of all individual losses
      directly occasioned by any one disaster, accident or loss or series of
      disasters, accidents or losses arising out of one event which occurs
      within the area of one state of the United States or province of Canada
      and states or provinces contiguous thereto and to one another. However,
      the duration and extent of any one "loss occurrence" shall be limited to
      all individual losses sustained by the Company occurring during any period
      of 168 consecutive hours arising out of and directly occasioned by the
      same event, except that the term "loss occurrence" shall be further
      defined as follows:

      1.    As regards windstorm, hail, tornado, hurricane, cyclone, including
            ensuing collapse and water damage, all individual losses sustained
            by the Company occurring during any period of 72 consecutive hours
            arising out of and directly occasioned by the same event. However,
            the event need not be limited to one state or province or states or
            provinces contiguous thereto.

      2.    As regards riot, riot attending a strike, civil commotion, vandalism
            and malicious mischief, all individual losses sustained by the
            Company occurring during any period of 72 consecutive hours within
            the area of one municipality or county and the municipalities or
            counties contiguous thereto arising out of and directly occasioned
            by the same event. The maximum duration of 72 consecutive hours may
            be extended in respect of individual losses which occur beyond such
            72 consecutive hours during the continued occupation of an insured's
            premises by strikers, provided such occupation commenced during the
            aforesaid period.

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                                     Page 6


      3.    As regards earthquake (the epicentre of which need not necessarily
            be within the territorial confines referred to in the introductory
            portion of this paragraph) and fire following directly occasioned by
            the earthquake, only those individual fire losses which commence
            during the period of 168 consecutive hours may be included in the
            Company's "loss occurrence."

      4.    As regards "freeze," only individual losses directly occasioned by
            collapse, breakage of glass and water damage (caused by bursting
            frozen pipes and tanks) may be included in the Company's "loss
            occurrence."

      5.    As regards firestorms, brush fires, and other fires or series of
            fires, irrespective of origin (except as provided in subparagraphs 2
            and 3 above), which spread through trees, grassland or other
            vegetation, all individual losses sustained by the Company which
            occur during any period of 168 consecutive hours within a 100-mile
            radius of any one fixed point selected by the Company may be
            included in the Company's "loss occurrence." However, an individual
            loss subject to this subparagraph cannot be included in more than
            one "loss occurrence."

B.    For all those "loss occurrences," other than those referred to in
      subparagraph 2 of paragraph A above, the Company may choose the date and
      time when any such period of consecutive hours commences, provided that it
      is not earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss, and provided that only one such period of 168
      consecutive hours shall apply with respect to one event, except for any
      "loss occurrence" referred to in subparagraph 1 of paragraph A above where
      only one such period of 72 consecutive hours shall apply with respect to
      one event, regardless of the duration of the event.

C.    As respects those "loss occurrences" referred to in subparagraph 2 of
      paragraph A above, if the disaster, accident or loss occasioned by the
      event is of greater duration than 72 consecutive hours, then the Company
      may divide that disaster, accident or loss into two or more "loss
      occurrences," provided no two periods overlap and no individual loss is
      included in more than one such period and provided that no period
      commences earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss.

D.    No individual losses occasioned by an event that would be covered by 72
      hours clauses may be included in any "loss occurrence" claimed under the
      168 hours provision.

ARTICLE IX - LOSS NOTICES AND SETTLEMENTS

A.    Whenever losses sustained by the Company appear likely to result in a
      claim hereunder, the Company shall notify the Reinsurer, and the Reinsurer
      shall have the right to participate in the adjustment of such losses at
      its own expense.

B.    All loss settlements made by the Company, provided they are within the
      terms of this Contract, shall be binding upon the Reinsurer, and the
      Reinsurer agrees to pay all amounts for which it may be liable upon
      receipt of reasonable evidence of the amount paid (or scheduled to be
      paid) by the Company.

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                                     Page 7


ARTICLE X - 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) on account of claims
and settlements involving reinsurance hereunder. Salvage 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 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 XI - FLORIDA HURRICANE CATASTROPHE FUND

A.    Any loss reimbursement paid or payable to the Company under the Florida
      Hurricane Catastrophe Fund (FHCF) as a result of loss occurrences
      commencing during the term of this Contract shall inure to the benefit of
      this Contract. Further, any FHCF loss reimbursement shall be deemed to be
      paid to the Company in accordance with the reimbursement contract between
      the Company and the State Board of Administration of the State of Florida
      at the full payout level set forth therein and will be deemed not to be
      reduced by any reduction or exhaustion of the FHCF's claims paying
      capacity.

B.    Prior to the determination of the Company's FHCF retention and payout, if
      any, under the reimbursement contract, the Reinsurer's liability hereunder
      will be determined provisionally based on the projected payout, determined
      in accordance with the provisions of the reimbursement contract. Following
      determination of the payout under the reimbursement contract, the ultimate
      net loss under this Contract will be recalculated. If, as a result of such
      calculation, the loss to the Reinsurer under any excess layer of this
      Contract in any one loss occurrence is less than the amount previously
      paid by the Reinsurer under that excess layer, the Company shall promptly
      remit the difference to the Reinsurer. If the loss to the Reinsurer under
      any excess layer in any one loss occurrence is greater than the amount
      previously paid by the Reinsurer, the Reinsurer shall promptly remit the
      difference to the Company.

C.    If an FHCF reimbursement amount is based on the Company's losses in more
      than one loss occurrence and the FHCF does not designate the amount
      allocable to each loss occurrence, the FHCF reimbursement amount shall be
      prorated in the proportion that the Company's losses in each loss
      occurrence bear to the Company's total losses arising out of all loss
      occurrences to which the FHCF reimbursement applies.

D.    Any reimbursement premiums or emergency assessment paid by the Company
      under the FHCF shall be deemed to be premiums paid for inuring
      reinsurance.

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                                     Page 8


ARTICLE XII - REINSURANCE PREMIUM

A.    As premium for each excess layer of reinsurance coverage provided by this
      Contract, the Company shall pay the Reinsurer the amount, shown as
      "Premium" for that excess layer in Schedule A attached hereto, in two
      equal installments of the amount, shown as "Installment Premium" for that
      excess layer in Schedule A attached hereto, on September 2, 2004 and March
      1, 2005.

B.    The Company shall remit additional premium, if any, on December 1, 2004.
      The additional premium shall be calculated by multiplying the "Additional
      Premium" for each excess layer in Schedule A attached hereto, by the
      following:

      1.    As respects the underlying excess layer of coverage provided by this
            Contract, the ratio of the ultimate net loss resulting from
            Hurricane Frances incurred by reinsurers under Section I of the
            Company's Underlying Excess Catastrophe and Reinstatement Premium
            Protection Reinsurance Contract, effective July 1, 2004, to the
            amount, shown as "Reinsurer's Per Occurrence Limit" in Schedule A
            attached hereto, for the underlying excess layer.

      2.    As respects the first, second and third excess layers of coverage
            provided by this Contract, the ratio of ultimate net loss resulting
            from Hurricane Frances incurred by reinsurers under the
            corresponding excess layer of the Company's Florida Only Excess
            Catastrophe Reinsurance Contract, effective June 1, 2004, to the
            amount, shown as "Reinsurer's Per Occurrence Limit" in Schedule A
            attached hereto for that excess layer.

      Quarterly recalculations and remittances of the additional premium, if
      any, due for each excess layer shall be made until all losses subject
      hereto have been finally settled.

ARTICLE XIII - 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 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

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      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 10 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 10 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 or control 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.

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ARTICLE XIV - OFFSET (BRMA 36D)

The Company and the Reinsurer, each at its option, may offset any balance or
balances, whether on account of premiums, claims and losses, loss expenses or
salvages due from one party to the other under this Contract; provided, however,
that in the event of the insolvency of a party hereto, offsets shall only be
allowed in accordance with applicable statutes and regulations.

ARTICLE XV - 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 XVI - 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. However, in no event shall this be construed
      in any way to provide coverage outside the terms and conditions set forth
      in this Contract.

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 XVII - NET RETAINED LINES (BRMA 32B)

A.    This Contract applies only to that portion of any policy which the Company
      retains net for its own account, 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 XVIII - 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.

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ARTICLE XIX - CURRENCY (BRMA 12A)

A.    Whenever the word "Dollars" or the "$" sign appears in this Contract, they
      shall be construed to mean United States Dollars and all transactions
      under this Contract shall be in United States Dollars.

B.    Amounts paid or received by the Company in any other currency shall be
      converted to United States Dollars at the rate of exchange at the date
      such transaction is entered on the books of the Company.

ARTICLE XX - TAXES (BRMA 50C)

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, the District of Columbia or Canada.

ARTICLE XXI - FEDERAL EXCISE TAX (BRMA 17A)

(Applicable to those reinsurers, excepting Underwriters at Lloyd's London and
other reinsurers exempt from Federal Excise Tax, who are domiciled outside the
United States of America.)

A.    The Reinsurer has agreed to allow for the purpose of paying the Federal
      Excise Tax the applicable percentage of the premium payable hereon as
      imposed under Section 4371 of the Internal Revenue Code to the extent such
      premium is subject to the Federal Excise Tax.

B.    In the event of any return of premium becoming due hereunder the Reinsurer
      will deduct the applicable percentage from the return premium payable
      hereon and the Company or its agent should take steps to recover the tax
      from the United States Government.

ARTICLE XXII - RESERVE REQUIREMENTS

A.    If the Reinsurer is unauthorized in any state of the United States of
      America or the District of Columbia, the Reinsurer agrees to fund, on or
      before December 31, 2004, its share of the Company's ceded United States
      unearned premium and outstanding loss and loss adjustment expense reserves
      (including all case reserves plus any reasonable amount estimated to be
      unreported, as determined by the Company, from known loss occurrences) by:

      1.    Clean, irrevocable and unconditional letters of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a bank or banks meeting the NAIC Securities
            Valuation Office credit standards for issuers of letters of credit
            and acceptable to said insurance regulatory authorities; and/or

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                                    Page 12


      2.    Escrow accounts for the benefit of the Company; and/or

      3.    Cash advances;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved. The Reinsurer, at its sole option, may fund in other
      than cash if its method and form of funding are acceptable to the
      insurance regulatory authorities involved.

B.    If the Reinsurer is unauthorized in any province or jurisdiction of
      Canada, the Reinsurer agrees to fund, on or before December 31, 2004, 115%
      of its share of the Company's ceded Canadian unearned premium and
      outstanding loss and loss adjustment expense reserves (including all case
      reserves plus any reasonable amount estimated to be unreported, as
      determined by the Company, from known loss occurrences) by:

      1.    A clean, irrevocable and unconditional letter of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a Canadian bank or banks meeting the NAIC
            Securities Valuation Office credit standards for issuers of letters
            of credit and acceptable to said insurance regulatory authorities,
            for no more than 15/115ths of the total funding required; and/or

      2.    Cash advances for the remaining balance of the funding required;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved.

C.    With regard to funding in whole or in part by letters of credit, it is
      agreed that each letter of credit will be in a form acceptable to
      insurance regulatory authorities involved, will be issued for a term of at
      least one year and will include an "evergreen clause," which automatically
      extends the term for at least one additional year at each expiration date
      unless written notice of non-renewal is given to the Company not less than
      30 days prior to said expiration date or longer where required by
      insurance regulatory authorities. The Company and the Reinsurer further
      agree, notwithstanding anything to the contrary in this Contract, that
      said letters of credit may be drawn upon by the Company or its successors
      in interest at any time, without diminution because of the insolvency of
      the Company or the Reinsurer, but only for one or more of the following
      purposes:

      1.    To reimburse itself for the Reinsurer's share of unearned premiums
            returned to insureds on account of policy cancellations, unless paid
            in cash by the Reinsurer;

      2.    To reimburse itself for the Reinsurer's share of losses and/or loss
            adjustment expense paid under the terms of policies reinsured
            hereunder, unless paid in cash by the Reinsurer;

      3.    To reimburse itself for the Reinsurer's share of any other amounts
            claimed to be due hereunder, unless paid in cash by the Reinsurer;

      4.    To fund a cash account in an amount equal to the Reinsurer's share
            of any ceded unearned premium and/or outstanding loss and loss
            adjustment expense reserves

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                                    Page 13


            (including all case reserves plus any reasonable amount estimated to
            be unreported, as determined by the Company, from known loss
            occurrences) funded by means of a letter of credit which is under
            non-renewal notice, if said letter of credit has not been renewed or
            replaced by the Reinsurer 10 days prior to its expiration date;

      5.    To refund to the Reinsurer any sum in excess of the actual amount
            required to fund the Reinsurer's share of the Company's ceded
            unearned premium and/or outstanding loss and loss adjustment expense
            reserves (including all case reserves plus any reasonable amount
            estimated to be unreported, as determined by the Company, from known
            loss occurrences), if so requested by the Reinsurer.

      In the event the amount drawn by the Company on any letter of credit is in
      excess of the actual amount required for C(1) or C(2) or C(4), in the case
      of C(3), the actual amount determined to be due, the Company shall
      promptly return to the Reinsurer the excess amount so drawn.

ARTICLE XXIII - 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

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                                    Page 14


      Reinsurer to the payees under such policies and in substitution for the
      obligations of the company to such payees.

ARTICLE XXIV - ARBITRATION

A.    As a condition precedent to any right of action hereunder, any dispute or
      difference between the Company and any Reinsurer relating to the
      interpretation or performance of this Contract, including its formation or
      validity, or any transaction under this Contract, whether arising before
      or after termination, shall be submitted to arbitration.

B.    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 provided that communication shall be made by the Company to each
      of the reinsurers constituting the one party, and provided, however, that
      nothing therein 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 Reinsurer under the terms of this Contract
      from several to joint.

C.    Upon written request of any party, each party shall choose an arbitrator
      and the two chosen shall select a third arbitrator. If either party
      refuses or neglects to appoint an arbitrator within 30 days after receipt
      of the written request for arbitration, the requesting party may appoint a
      second arbitrator. If the two arbitrators fail to agree on the selection
      of a third arbitrator within 30 days of their appointment, the Company
      shall petition the American Arbitration Association to appoint the third
      arbitrator. If the American Arbitration Association fails to appoint the
      third arbitrator within 30 days after it has been requested to do so,
      either party may request a justice of a court of general jurisdiction of
      the state in which the arbitration is to be held to appoint the third
      arbitrator. All arbitrators shall be active or retired officers of
      insurance or reinsurance companies, or Lloyd's London Underwriters, and
      disinterested in the outcome of the arbitration. Each party shall submit
      its case to the arbitrators within 30 days of the appointment of the third
      arbitrator.

D.    The parties hereby waive all objections to the method of selection of the
      arbitrators, it being the intention of both sides that all the arbitrators
      be chosen from those submitted by the parties.

E.    The arbitrators shall have the power to determine all procedural rules for
      the holding of the arbitration including but not limited to inspection of
      documents, examination of witnesses and any other matter relating to the
      conduct of the arbitration. The arbitrators shall interpret this Contract
      as an honorable engagement and not as merely a legal obligation; they are
      relieved of all judicial formalities and may abstain from following the
      strict rules of law. The arbitrators may award interest and costs. Each
      party shall bear the expense of its own arbitrator and shall share equally
      with the other party the expenses of the third arbitrator and of the
      arbitration.

F.    The decision in writing of the majority of the arbitrators shall be final
      and binding upon both parties. Judgment may be entered upon the final
      decision of the arbitrators in any court having jurisdiction. The
      arbitration shall take place in Pinellas Park, Florida, unless otherwise
      mutually agreed between the Company and the Reinsurer.

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                                    Page 15


G.    This Article shall remain in full force and effect in the event any other
      provision of this Contract shall be found invalid or non-binding.

H.    All time limitations stated in this Article may be amended by mutual
      consent of the parties, and will be amended automatically to the extent
      made necessary by any circumstances beyond the control of the parties.

ARTICLE XXV - SERVICE OF SUIT

(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. This
Article is not intended to conflict with or override the parties obligations to
arbitrate their disputes in accordance with Article XXV.)

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 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 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 - GOVERNING LAW

This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Florida exclusive of the rules with
respect to conflicts of law, except as to rules with respect to credit for
reinsurance in which case the applicable rules of all the states shall apply.

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ARTICLE XXVIII - CONFIDENTIALITY

The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly communicate, disclose or divulge to any third
party any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company's books, records and
papers. The restrictions as outlined in this Article shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, retrocessionaires, legal counsel, arbitrators involved in
any arbitration procedures under this Contract or disclosures required upon
subpoena or other duly-issued order of a court or other governmental agency or
regulatory authority.

ARTICLE XXIX - SEVERABILITY

If any provision of this Contract should be invalid under applicable laws, the
latter shall control but only to the extent of the conflict without affecting
the remaining provisions of this Contract.

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:

Pinellas Park, Florida, this ________ day of ______________ in the year________.

                ________________________________________________________________
                Liberty American Insurance Group, Inc. (for and on behalf of the
                "Company")

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                                    Page 17


                                   SCHEDULE A

                     35% FLORIDA ONLY THIRD AND FOURTH EVENT
                     EXCESS CATASTROPHE REINSURANCE CONTRACT
                          EFFECTIVE: SEPTEMBER 2, 2004

                                    issued to

                       Liberty American Insurance Company
                             Pinellas Park, Florida
                          Mobile USA Insurance Company
                             Pinellas Park, Florida
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                     Liberty American Insurance Group, Inc.



                         UNDERLYING     FIRST         SECOND        THIRD
                           EXCESS       EXCESS        EXCESS        EXCESS
                                                      
Company's Retention      $3,500,000   $ 7,000,000   $20,000,000   $35,000,000

Reinsurer's Per          $3,500,000   $13,000,000   $15,000,000   $15,000,000
Occurrence Limit

Reinsurer's Term Limit   $7,000,000   $26,000,000   $30,000,000   $30,000,000

Funds Otherwise          $7,000,000   $26,000,000   $30,000,000   $30,000,000
Recoverable

Premium                  $  700,000   $ 1,820,000   $ 1,500,000   $ 1,140,000

Installment Premium      $  350,000   $   910,000   $   750,000   $   570,000

Additional Premium       $1,050,000   $ 2,730,000   $ 2,250,000   $ 1,710,000


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.

                                                                 [BENFIELD LOGO]

                                   Schedule A



   NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (U.S.A.)

1.    This Reinsurance does not cover any loss or liability accruing to the
      Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph (1) of this
      Clause, this Reinsurance does not cover any loss or liability accruing to
      the Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      I.    Nuclear reactor power plants including all auxiliary property on the
            site, or

      II.   Any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and "critical facilities" as such, or

      III.  Installations for fabricating complete fuel elements or for
            processing substantial quantities of "special nuclear material," and
            for reprocessing, salvaging, chemically separating, storing or
            disposing of "spent" nuclear fuel or waste materials, or

      IV.   Installations other than those listed in paragraph (2) III above
            using substantial quantities of radioactive isotopes or other
            products of nuclear fission.

3.    Without in any way restricting the operations of paragraphs (1) and (2)
      hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, from any insurance on
      property which is on the same site as a nuclear reactor power plant or
      other nuclear installation and which normally would be insured therewith
      except that this paragraph (3) shall not operate

      (a)   where Reassured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused. However on and after 1st January 1960
            this sub-paragraph (b) shall only apply provided the said
            radioactive contamination exclusion provision has been approved by
            the Governmental Authority having jurisdiction thereof.

4.    Without in any way restricting the operations of paragraphs (1), (2) and
      (3) hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    It is understood and agreed that this Clause shall not extend to risks
      using radioactive isotopes in any form where the nuclear exposure is not
      considered by the Reassured to be the primary hazard.

6.    The term "special nuclear material" shall have the meaning given it in the
      Atomic Energy Act of 1954 or by any law amendatory thereof.

7.    Reassured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

Note.-Without in any way restricting the operation of paragraph (1) hereof, it
is understood and agreed that

      (a)   all policies issued by the Reassured on or before 31st December 1957
            shall be free from the application of the other provisions of this
            Clause until expiry date or 31st December 1960 whichever first
            occurs whereupon all the provisions of this Clause shall apply.

      (b)   with respect to any risk located in Canada policies issued by the
            Reassured on or before 31st December 1958 shall be free from the
            application of the other provisions of this Clause until expiry date
            or 31st December 1960 whichever first occurs whereupon all the
            provisions of this Clause shall apply.

12/12/57
N.M.A. 1119
BRMA 35B



   NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (CANADA)

1.    This Agreement does not cover any loss or liability accruing to the
      Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph 1 of this
      clause, this Agreement does not cover any loss or liability accruing to
      the Reinsured, directly or indirectly, and whether as Insurer or
      Reinsurer, from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      (a)   nuclear reactor power plants including all auxiliary property on the
            site, or

      (b)   any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and critical facilities as such, or

      (c)   installations for fabricating complete fuel elements or for
            processing substantial quantities of radioactive materials, and for
            reprocessing, salvaging, chemically separating, storing or disposing
            of spent nuclear fuel or waste materials, or

      (d)   installations other than those listed in (c) above using substantial
            quantities of radioactive isotopes or other products of nuclear
            fission.

3.    Without in any way restricting the operation of paragraphs 1 and 2 of this
      clause, this Agreement does not cover any loss or liability by radioactive
      contamination accruing to the Reinsured, directly or indirectly, and
      whether as Insurer or Reinsurer, from any insurance on property which is
      on the same site as a nuclear reactor power plant or other nuclear
      installation and which normally would be insured therewith, except that
      this paragraph 3 shall not operate:

      (a)   where the Reinsured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where the said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused.

4.    Without in any way restricting the operation of paragraphs 1, 2 and 3 of
      this clause, this Agreement does not cover any loss or liability by
      radioactive contamination accruing to the Reinsured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    This clause shall not extend to risks using radioactive isotopes in any
      form where the nuclear exposure is not considered by the Reinsured to be
      the primary hazard.

6.    The term "radioactive material" means uranium, thorium, plutonium,
      neptunium, their respective derivatives and compounds, radioactive
      isotopes of other elements and any other substances which may be
      designated by or pursuant to any law, act or statute, or any law
      amendatory thereof as being prescribed substances capable of releasing
      atomic energy, or as being requisite for the production, use or
      application of atomic energy.

7.    Reinsured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

8.    Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, this Agreement does not cover any loss or liability
      accruing to the Reinsured, directly or indirectly, and whether as Insurer
      or Reinsurer, caused:

      (1)   by any nuclear incident, as defined in or pursuant to the Nuclear
            Liability Act or any other nuclear liability act, law or statute, or
            any law amendatory thereof or nuclear explosion, except for ensuing
            loss or damage which results directly from fire, lightning or
            explosion of natural, coal or manufactured gas;

      (2)   by contamination by radioactive material.

NOTE: Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, paragraph 8 of this clause shall only apply to all
      original contracts of the Reinsured, whether new, renewal or replacement,
      which become effective on or after December 31, 1992.

N.M.A. 1980a (1/4/96)


               POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE

SECTION A:

Excluding:

      (a)   All business derived directly or indirectly from any Pool,
            Association or Syndicate which maintains its own reinsurance
            facilities.

      (b)   Any Pool or Scheme (whether voluntary or mandatory) formed after
            March 1, 1968 for the purpose of insuring property whether on a
            country-wide basis or in respect of designated areas. This exclusion
            shall not apply to so-called Automobile Insurance Plans or other
            Pools formed to provide coverage for Automobile Physical Damage.

SECTION B:

It is agreed that business written by the Company for the same perils, which is
known at the time to be insured by, or in excess of underlying amounts placed in
the following Pools, Associations or Syndicates, whether by way of insurance or
reinsurance, is excluded hereunder:

         Industrial Risk Insurers,
         Associated Factory Mutuals,
         Improved Risk Mutuals,
         Any Pool, Association or Syndicate formed for the purpose of writing
             Oil, Gas or Petro-Chemical Plants and/or Oil or Gas Drilling Rigs,
         United States Aircraft Insurance Group,
         Canadian Aircraft Insurance Group,
         Associated Aviation Underwriters,
         American Aviation Underwriters.

Section B does not apply:

      (a)   Where The Total Insured Value over all interests of the risk in
            question is less than $250,000,000.

      (b)   To interests traditionally underwritten as Inland Marine or stock
            and/or contents written on a blanket basis.

      (c)   To Contingent Business Interruption, except when the Company is
            aware that the key location is known at the time to be insured in
            any Pool, Association or Syndicate named above, other than as
            provided for under Section B(a).

      (d)   To risks as follows:

            Offices, Hotels, Apartments, Hospitals, Educational Establishments,
            Public Utilities (other than railroad schedules) and builder's risks
            on the classes of risks specified in this subsection (d) only.

Where this clause attaches to Catastrophe Excesses, the following Section C is
added:

SECTION C:

Nevertheless the Reinsurer specifically agrees that liability accruing to the
Company from its participation in residual market mechanisms including but not
limited to:

      (1)   The following so-called "Coastal Pools":

            Alabama Insurance Underwriting Association
            Louisiana Insurance Underwriting Association
            Mississippi Windstorm Underwriting Association
            North Carolina Insurance Underwriting
            Association South Carolina Windstorm and Hail
               Underwriting Association
            Texas Windstorm Insurance Association

AND

      (2)   All "Fair Plan" and "Rural Risk Plan" business

                                   Page 1 of 2


AND

      (3)   Citizens Property Insurance Corporation ("CPIC") and the California
            Earthquake Authority ("CEA")

for all perils otherwise protected hereunder shall not be excluded, except,
however, that this reinsurance does not include any increase in such liability
resulting from:

      (i)   The inability of any other participant in such "Coastal Pool" and/or
            "Fair Plan" and/or "Rural Risk Plan" and/or Residual Market
            Mechanisms to meet its liability.

      (ii)  Any claim against such "Coastal Pool" and/or "Fair Plan" and/or
            "Rural Risk Plan" and/or Residual Market Mechanisms, or any
            participant therein, including the Company, whether by way of
            subrogation or otherwise, brought by or on behalf of any insolvency
            fund (as defined in the Insolvency Fund Exclusion Clause
            incorporated in this Contract).

SECTION D:

      (1)   Notwithstanding Section C above, in respect of the CEA, where an
            assessment is made against the Company by the CEA, the Company may
            include in its Ultimate Net Loss only that assessment directly
            attributable to each separate loss occurrence covered hereunder. The
            Company's initial capital contribution to the CEA shall not be
            included in the Ultimate Net Loss.

      (2)   Notwithstanding Section C above, in respect of CPIC, where an
            assessment is made against the Company by CPIC, the maximum loss
            that the Company may include in the Ultimate Net Loss in respect of
            any loss occurrence hereunder shall not exceed the lesser of:

            (a)   The Company's assessment from CPIC for the accounting year in
                  which the loss occurrence commenced, or

            (b)   The product of the following:

                  (i)   The Company's percentage participation in CPIC for the
                        accounting year in which the loss occurrence commenced;
                        and

                  (ii)  CPIC's total losses in such loss occurrence.

Any assessments for accounting years subsequent to that in which the loss
occurrence commenced may not be included in the Ultimate Net Loss hereunder.
Moreover, notwithstanding Section C above, in respect of CPIC, the Ultimate Net
Loss hereunder shall not include any monies expended to purchase or retire bonds
as a consequence of being a member of CPIC. For the purposes of this Contract,
the Company may not include in the Ultimate Net Loss any assessment or any
percentage assessment levied by CPIC to meet the obligations of an insolvent
insurer member or other party, or to meet any obligations arising from the
deferment by CPIC of the collection of monies.

NOTES: Wherever used herein the terms:

- ---------------------

     "Company"    shall be understood to mean "Company," "Reinsured,"
                  "Reassured" or whatever other term is used in the attached
                  reinsurance document to designate the reinsured company or
                  companies.

     "Agreement"  shall be understood to mean "Agreement," "Contract," "Policy"
                  or whatever other term is used to designate the attached
                  reinsurance document.

     "Reinsurers" shall be understood to mean "Reinsurers," "Underwriters" or
                  whatever other term is used in the attached reinsurance
                  document to designate the reinsurer or reinsurers.

                                  Page 2 of 2


                     POLLUTION AND SEEPAGE EXCLUSION CLAUSE

This Contract excludes loss and/or damage and/or costs and/or expenses arising
from seepage and/or pollution and/or contamination, other than contamination
from smoke. Nevertheless, this exclusion does not preclude payment of the cost
of removing debris of property damaged by a loss otherwise covered hereunder,
subject always to a limit of 25% of the Company's property loss under the
applicable original policy.

BRMA 39A



                          ELECTRONIC DATA ENDORSEMENT B

1.    ELECTRONIC DATA EXCLUSION

      Notwithstanding any provision to the contrary within the Contract or any
      endorsement thereto, it is understood and agreed as follows:-

      a)    This Contract does not insure loss, damage, destruction, distortion,
            erasure, corruption or alteration of ELECTRONIC DATA from any cause
            whatsoever (including but not limited to COMPUTER VIRUS) or loss of
            use, reduction in functionality, cost, expense of whatsoever nature
            resulting therefrom, regardless of any other cause or event
            contributing concurrently or in any other sequence to the loss.

            ELECTRONIC DATA means facts, concepts and information converted to a
            form useable for communications, interpretation or processing by
            electronic and electromechanical data processing or electronically
            controlled equipment and includes programs, software and other coded
            instructions for the processing and manipulation of data or the
            direction and manipulation of such equipment.

            COMPUTER VIRUS means a set of corrupting, harmful or otherwise
            unauthorized instructions or code including a set of maliciously
            introduced unauthorized instructions or code, programmatic or
            otherwise, that propagate themselves through a computer system or
            network of whatsoever nature. COMPUTER VIRUS includes but is not
            limited to "Trojan Horses," "worms" and "time or logic bombs."

      b)    However, in the event that a peril listed below results from any of
            the matters described in paragraph a) above, this Contract, subject
            to all its terms, conditions and exclusions, will cover physical
            damage occurring during the Contract period to property insured by
            this Contract directly caused by such listed peril.

            Listed Perils

            Fire
            Explosion

2.    ELECTRONIC DATA PROCESSING MEDIA VALUATION

      Notwithstanding any provision to the contrary within the Contract or any
      endorsement thereto, it is understood and agreed as follows:-

      Should electronic data processing media insured by this Contract suffer
      physical loss or damage insured by this Contract, then the basis of
      valuation shall be the cost of the blank media plus the costs of copying
      the ELECTRONIC DATA from back-up or from originals of a previous
      generation. These costs will not include research and engineering nor any
      costs of recreating, gathering or assembling such ELECTRONIC DATA. If the
      media is not repaired, replaced or restored the basis of valuation shall
      be the cost of the blank media. However this Contract does not insure any
      amount pertaining to the value of such ELECTRONIC DATA to the Assured or
      any other party, even if such ELECTRONIC DATA cannot be recreated,
      gathered or assembled.

N.M.A. 2915 (25.1.01)
Form approved by Lloyd's Underwriters' Non-Marine Association Limited

EX-10.17

                                                                   EXHIBIT 10.17

                                                                 [BENFIELD LOGO]

                         Philadelphia Insurance Company
                            Bala Cynwyd, Pennsylvania
                    Philadelphia Indemnity Insurance Company
                            Bala Cynwyd, Pennsylvania
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                        Philadelphia Insurance Companies
                    Hereinafter referred to as the "Company"

               THIRD EVENT EXCESS CATASTROPHE REINSURANCE CONTRACT
                          EFFECTIVE: SEPTEMBER 3, 2004

                            REINSURANCE CONFIRMATION

BUSINESS REINSURED

Business classified by the Company as Property business. In force, new and
renewal business.

TERM

Effective September 3, 2004, with respect to losses arising out of loss
occurrences commencing on or after that date, through May 31, 2005 both days
inclusive. Extended expiration in the event a loss occurrence is in progress at
expiration.

TERRITORY (BRMA 51A)

The territorial limits of this Contract shall be identical with those of the
Company's policies.

EXCLUSIONS

See attached.

RETENTION AND LIMIT

Based on the Company's ultimate net loss each loss occurrence. Layers,
retentions and limits as set forth in the attached Schedule A.

No claim shall be made under any excess layer of coverage provided by this
Contract unless the amount shown as Funds Otherwise Recoverable for each layer
in the attached Schedule A has been paid or scheduled to be paid under the first
layer of the Company's Excess Catastrophe Reinsurance Contract effective June 1,
2004 and the underlying layer of the Company's Underlying Excess Catastrophe
Reinsurance Contract effective July 1, 2004.

No claim shall be made under any excess layer of coverage provided by this
Contract in any one loss occurrence unless at least two risks insured or
reinsured by the Company are involved in such loss occurrence. For purposes
hereof, the Company shall be the sole judge of what constitutes one risk.

Page 1



                                                                 [BENFIELD LOGO]

FLORIDA HURRICANE CAT FUND

FHCF inuring to Catastrophe Reinsurance Program. Recoveries deemed in place,
however, the full payout limit may be reduced by prior loss occurrences for
which recoveries were made from the FHCF.

OTHER REINSURANCE

Company shall be permitted to carry excess reinsurance, recoveries under which
shall inure to the benefit of this Contract.

Company shall be permitted to carry quota share reinsurance and underlying
excess catastrophe reinsurance, recoveries under which shall inure solely to the
benefit of the Company.

DEFINITIONS

UNL includes LAE (See attached).

LOSS OCCURRENCE

No reinstatement same wind event (See attached).

LOSS NOTICES AND SETTLEMENTS

Individual loss notices and settlements.

PREMIUM

Premium for each layer as set forth in the attached Schedule A payable in two
equal installments on September 3, 2004 and March 1, 2005.

In the event of incurred losses resulting only from Hurricane Frances under the
Company's Excess Catastrophe Reinsurance Contract effective June 1, 2004 and the
underlying layer of the Company's Underlying Excess Catastrophe Reinsurance
Contract effective July 1, 2004, additional premium shall be due the Reinsurer.

Additional premium, if any, shall be remitted on December 1, 2004 and calculated
by multiplying the Additional Premium for each layer set forth in Schedule A to
the ratio of ultimate net loss resulting from Hurricane Frances incurred under
the first layer of the Company's Excess Catastrophe Reinsurance Contract
effective June 1, 2004 and the underlying layer of the Company's Underlying
Excess Catastrophe Reinsurance Contract effective July 1, 2004 to the
Reinsurer's Per Occurrence Limit for each corresponding layer as outlined in
Schedule A. Quarterly recalculations and remittances until all losses are
settled.

LATE PAYMENTS

See attached. Interest penalty based on 6-month United States Treasury Bill
Rate. Interest penalty of less than $100 shall be waived.

OTHER PROVISIONS

Salvage and Subrogation
Offset (BRMA 36D)
Access to Records (BRMA 1D)
Liability of the Reinsurer
Net Retained Lines (BRMA 32 E)

Page 2



                                                                 [BENFIELD LOGO]

Errors and Omissions (BRMA 14F)
Currency (BRMA 12A)
Taxes (BRMA 50C)
Federal Excise Tax (BRMA 17A)
Unauthorized Reinsurers (Evergreen LOC for unearned premium, outstanding losses/
LAE, including all case reserves plus any reasonable amount estimated to be
unreported from known loss occurrences)
Insolvency
Arbitration
Service of Suit
Agency Agreement
Governing Law (State of Pennsylvania)
Confidentiality
Severability
Intermediary (BRMA 23A)

ALLOCATION OF FINAL SHARES

The Company shall have the right to review all authorizations and the full
authority to allocate final shares. Such decisions will be at the sole
discretion of the Company and may result in other than a "proportional signdown"
of authorizations. As respects signdowns within the London marketplace, the
final allocation of shares to individual companies or syndicates may not be
proportionate to the original authorizations.

Page 3



                                                                 [BENFIELD LOGO]

                                   EXCLUSIONS

This Contract does not apply to and specifically excludes the following:

1.    Assumed reinsurance except for a 50% quota share of the First American
      Property and Casualty Insurance Company Florida Homeowners Program
      produced and underwritten by Mobile Homeowners Insurance Agencies, Inc.

2.    Financial Guarantee and Insolvency;

3.    Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
      Physical Damage - Reinsurance - U.S.A." and the "Nuclear Incident
      Exclusion Clause - Physical Damage - Reinsurance - Canada," attached to
      and forming part of this Contract.

4.    Loss or damage caused by or resulting from 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, but this exclusion shall not apply to loss or damage
      covered under a standard policy with a standard War Exclusion Clause;

5.    Loss or liability excluded under the provisions of the "Pools,
      Associations and Syndicates Exclusion Clause" attached to and forming part
      of this Contract;

6.    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;

7.    Losses in respect of overhead transmission and distribution lines and
      their supporting structures, other than those on or within 300 meters (or
      1,000 feet) of the insured premises. It is understood and agreed that
      public utilities extension and/or suppliers extension and/or contingent
      business interruption coverages are not subject to this exclusion,
      provided that these are not part of a transmitters' or distributors'
      Policy;

8.    Accident and Health, Casualty, Fidelity and/or Surety business;

9.    Pollution and seepage coverages excluded under the provisions of the
      "Pollution and Seepage Exclusion Clause (BRMA 39A)" attached to and
      forming part of this Contract;

10.   Notwithstanding any provision to the contrary within this Contract or any
      endorsement thereto, it is agreed that this Contract excludes loss,
      damage, cost, or expense directly or indirectly caused by, contributed to
      by, resulting from, or arising out of or in connection with any act of
      terrorism, as defined herein, regardless of any other cause or event
      contributing concurrently or in any other sequence to the loss.

      An act of terrorism includes any act, or preparation in respect of action,
      or threat of action designed to influence the government de jure or de
      facto of any nation or any political division thereof, or in pursuit of
      political, religious, ideological, or similar purposes to intimidate the
      public or a section of the public of any nation by any person or group(s)
      of persons whether acting alone or on behalf of or in connection with any
      organization(s) or government(s) de jure or de facto, and which:

            a.    Involves violence against one or more persons, or

            b.    Involves damage to property; or

            c.    Endangers life other than the person committing the action; or

Page 4



                                                                 [BENFIELD LOGO]

            d.    Creates a risk to health or safety of the public or a section
                  of the public; or

            e.    Is designed to interfere with or disrupt an electronic system.

      This Contract also excludes loss, damage, cost, or expense directly or
      indirectly caused by, contributed to by, resulting from, or arising out of
      or in connection with any action in controlling, preventing, suppressing,
      retaliating against, or responding to any act of terrorism.

      Notwithstanding the above and subject otherwise to the terms, conditions,
      and limitations of this Contract, in respect only of personal lines this
      contract will pay actual loss or damage (but not related cost or expense)
      caused by any act of terrorism provided such act is not directly or
      indirectly caused by, contributed to by, resulting from, or arising out of
      or in connection with biological, chemical, radioactive, or nuclear
      pollution or contamination.

11.   Loss or liability in any way or to any extent arising out of the actual or
      alleged presence or actual, alleged or threatened presence of fungi
      including, but not limited to, mold, mildew, mycotoxins, microbial
      volatile organic compounds or other "microbial contamination". This
      includes:

            a.    Any supervision, instruction, recommendations, warnings, or
                  advice given or which should have been given in connection
                  with the above; and

            b.    Any obligation to share damages with or repay someone else who
                  must pay damages because of such injury or damage.

      For purposes of this exclusion, "microbial contamination" means any
      contamination, either airborne or surface, which arises out of or is
      related to the presence of fungi, mold, mildew, mycotoxins, microbial
      volatile organic compounds or spores, including, without limitation,
      Penicillium, Aspergillus, Fusarium, Aspergillus Flavus and Stachybotrys
      chartarum.

      Losses resulting from the above causes do not in and of themselves
      constitute an event unless arising out of one or more of the following
      perils, in which case this exclusion does not apply.

                  Fire, lightning, explosion, aircraft or vehicle impact,
                  falling objects, windstorm, hail, tornado, cyclone, hurricane,
                  earthquake, volcano, tsunami, flood, freeze or weight of snow.

      Notice of any claims for mold-related losses must be given by the Company
      to the Reinsurer, in writing, within 24 months after the commencement date
      of the loss occurrence to which such claims relate.

12.   Loss or liability excluded under the provisions of the "Electronic Data
      Endorsement B" (NMA 2915) attached to and forming part of this Contract.

Page 5



                                                                 [BENFIELD LOGO]

                                   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 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 any 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.

      Notwithstanding anything stated herein, the amount included in the
      ultimate net loss for any one loss occurrence as respects loss in excess
      of policy limits and extra contractual obligations shall not exceed 25.0%
      of the Company's indemnity loss hereunder arising out of that loss
      occurrence.

      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.

      If any provision of this paragraph B 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.

C.    "Loss adjustment expense" as used herein shall mean expenses assignable to
      the investigation, appraisal, adjustment, settlement, litigation, defense
      and/or appeal of specific claims, regardless of how such expenses are
      classified for statutory reporting purposes. Loss adjustment expense shall
      include, but not be limited to, declaratory judgments, interest on
      judgments, expenses of outside adjusters, and a pro rata share of the
      salaries and expenses of the Company's field employees according to the
      time occupied adjusting such losses and expenses of the Company's
      officials incurred in connection with the losses, but shall not include
      office expenses or salaries of the Company's regular employees.

Page 6



                                                                 [BENFIELD LOGO]

                                  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 herein (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 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 10 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 10 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 7



                                                                 [BENFIELD LOGO]

                                NON BRMA ARTICLES

LOSS OCCURRENCE

A.    The term "loss occurrence" shall mean the sum of all individual losses
      directly occasioned by any one disaster, accident or loss or series of
      disasters, accidents or losses arising out of one event which occurs
      within the area of one state of the United States or province of Canada
      and states or provinces contiguous thereto and to one another. However,
      the duration and extent of any one "loss occurrence" shall be limited to
      all individual losses sustained by the Company occurring during any period
      of 168 consecutive hours arising out of and directly occasioned by the
      same event, except that the term "loss occurrence" shall be further
      defined as follows:

      1.    As regards windstorm, hail, tornado, hurricane, cyclone, including
            ensuing collapse and water damage, all individual losses sustained
            by the Company occurring during any period of 72 consecutive hours
            arising out of and directly occasioned by the same event. However,
            the event need not be limited to one state or province or states or
            provinces contiguous thereto.

      2.    As regards riot, riot attending a strike, civil commotion, vandalism
            and malicious mischief, all individual losses sustained by the
            Company occurring during any period of 72 consecutive hours within
            the area of one municipality or county and the municipalities or
            counties contiguous thereto arising out of and directly occasioned
            by the same event. The maximum duration of 72 consecutive hours may
            be extended in respect of individual losses which occur beyond such
            72 consecutive hours during the continued occupation of an insured's
            premises by strikers, provided such occupation commenced during the
            aforesaid period.

      3.    As regards earthquake (the epicenter of which need not necessarily
            be within the territorial confines referred to in the introductory
            portion of this paragraph) and fire following directly occasioned by
            the earthquake, only those individual fire losses which commence
            during the period of 168 consecutive hours may be included in the
            Company's "loss occurrence."

      4.    As regards "freeze," only individual losses directly occasioned by
            collapse, breakage of glass and water damage (caused by bursting
            frozen pipes and tanks) may be included in the Company's "loss
            occurrence."

      5.    As regards firestorms, brush fires, and other fires or series of
            fires, irrespective of origin (except as provided in subparagraphs 2
            and 3 above), which spread through trees, grassland or other
            vegetation, all individual losses sustained by the Company which
            occur during any period of 168 consecutive hours within a 100-mile
            radius of any one fixed point selected by the Company may be
            included in the Company's "loss occurrence." However, an individual
            loss subject to this subparagraph cannot be included in more than
            one "loss occurrence."

B.    For all those "loss occurrences," other than those referred to in
      subparagraph 2 of paragraph A above, the Company may choose the date and
      time when any such period of consecutive hours commences, provided that it
      is not earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss, and provided that only one such period of 168
      consecutive hours shall apply with respect to one event, except for any
      "loss occurrence" referred to in subparagraph 1 of paragraph A above where
      only one such period of 72 consecutive hours shall apply with respect to
      one event, regardless of the duration of the event.

C.    As respects those "loss occurrences" referred to in subparagraph 2 of
      paragraph A above, if the disaster, accident or loss occasioned by the
      event is of greater duration than 72 consecutive hours, then the Company
      may divide that disaster, accident or loss into two or more "loss
      occurrences," provided no two periods overlap and no individual loss is
      included in more than one such period and provided that no period
      commences earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss.

Page 8



                                                                 [BENFIELD LOGO]

D.    No individual losses occasioned by an event that would be covered by 72
      hours clauses may be included in any "loss occurrence" claimed under the
      168 hours provision.

FLORIDA HURRICANE CATASTROPHE FUND

A.    Any loss reimbursement paid or payable to the Company under the Florida
      Hurricane Catastrophe Fund (FHCF) as a result of loss occurrences
      commencing during the term of this Contract shall inure to the benefit of
      this Contract. Further, any FHCF loss reimbursement shall be deemed to be
      paid to the Company in accordance with the reimbursement contract between
      the Company and the State Board of Administration of the State of Florida
      at the full payout level set forth therein and will be deemed not to be
      reduced by any reduction or exhaustion of the FHCF's claims paying
      capacity.

B.    Prior to the determination of the Company's FHCF retention and payout, if
      any, under the reimbursement contract, the Reinsurer's liability hereunder
      will be determined provisionally based on the projected payout, determined
      in accordance with the provisions of the reimbursement contract. Following
      determination of the payout under the reimbursement contract, the ultimate
      net loss under this Contract will be recalculated. If, as a result of such
      calculation, the loss to the Reinsurer under any excess layer of this
      Contract in any one loss occurrence is less than the amount previously
      paid by the Reinsurer under that excess layer, the Company shall promptly
      remit the difference to the Reinsurer. If the loss to the Reinsurer under
      any excess layer in any one loss occurrence is greater than the amount
      previously paid by the Reinsurer, the Reinsurer shall promptly remit the
      difference to the Company.

C.    If an FHCF reimbursement amount is based on the Company's losses in more
      than one loss occurrence and the FHCF does not designate the amount
      allocable to each loss occurrence, the FHCF reimbursement amount shall be
      prorated in the proportion that the Company's losses in each loss
      occurrence bear to the Company's total losses arising out of all loss
      occurrences to which the FHCF reimbursement applies.

D.    Any reimbursement premiums or emergency assessment paid by the Company
      under the FHCF shall be deemed to be premiums paid for inuring
      reinsurance.

LOSS NOTICES AND SETTLEMENTS

A.    Whenever losses sustained by the Company appear likely to result in a
      claim hereunder, the Company shall notify the Reinsurer, and the Reinsurer
      shall have the right to participate in the adjustment of such losses at
      its own expense.

B.    All loss settlements made by the Company, provided they are within the
      terms of this Contract, shall be binding upon the Reinsurer, and the
      Reinsurer agrees to pay all amounts for which it may be liable upon
      receipt of reasonable evidence of the amount paid (or scheduled to be
      paid) by the Company.

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) on account of claims
and settlements involving reinsurance hereunder. Salvage 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 relating to any loss, a part of which loss was sustained
by the Reinsurer, and to prosecute all claims arising out of such rights.

Page 9



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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. However, in no event shall this be construed
      in any way to provide coverage outside the terms and conditions set forth
      in this Contract.

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.

RESERVE REQUIREMENTS

A.    If the Reinsurer is unauthorized in any state of the United States of
      America or the District of Columbia, the Reinsurer agrees to fund its
      share of the Company's ceded United States unearned premium and
      outstanding loss and loss adjustment expense reserves (including all case
      reserves plus any reasonable amount estimated to be unreported from known
      loss occurrences) by:

      1.    Clean, irrevocable and unconditional letters of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a bank or banks meeting the NAIC Securities
            Valuation Office credit standards for issuers of letters of credit
            and acceptable to said insurance regulatory authorities; and/or

      2.    Escrow accounts for the benefit of the Company; and/or

      3.    Cash advances;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved. The Reinsurer, at its sole option, may fund in other
      than cash if its method and form of funding are acceptable to the
      insurance regulatory authorities involved.

B.    If the Reinsurer is unauthorized in any province or jurisdiction of
      Canada, the Reinsurer agrees to fund 115% of its share of the Company's
      ceded Canadian unearned premium and outstanding loss and loss adjustment
      expense reserves (including all case reserves plus any reasonable amount
      estimated to be unreported from known loss occurrences) by:

      1.    A clean, irrevocable and unconditional letter of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a Canadian bank or banks meeting the NAIC
            Securities Valuation Office credit standards for issuers of letters
            of credit and acceptable to said insurance regulatory authorities,
            for no more than 15/115ths of the total funding required; and/or

      2.    Cash advances for the remaining balance of the funding required;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved.

C.    With regard to funding in whole or in part by letters of credit, it is
      agreed that each letter of credit will be in a form acceptable to
      insurance regulatory authorities involved, will be issued for a term of at
      least one year and will include an "evergreen clause," which automatically
      extends the term for at least one additional year at each expiration date
      unless written notice of non-renewal is given to the Company not less than
      30 days prior to said expiration date. The Company and the Reinsurer
      further agree, notwithstanding anything to the contrary in this Contract,
      that said letters of credit may be drawn upon by the Company or its
      successors in interest at any time, without diminution because of the
      insolvency of the Company or the Reinsurer, but only for one or more of
      the following purposes:

      1.    To reimburse itself for the Reinsurer's share of unearned premiums
            returned to insureds on account of policy cancellations, unless paid
            in cash by the Reinsurer;

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                                                                 [BENFIELD LOGO]

      2.    To reimburse itself for the Reinsurer's share of losses and/or loss
            adjustment expense paid under the terms of policies reinsured
            hereunder, unless paid in cash by the Reinsurer;

      3.    To reimburse itself for the Reinsurer's share of any other amounts
            claimed to be due hereunder, unless paid in cash by the Reinsurer;

      4.    To fund a cash account in an amount equal to the Reinsurer's share
            of any ceded unearned premium and/or outstanding loss and loss
            adjustment expense reserves (including all case reserves plus any
            reasonable amount estimated to be unreported from known loss
            occurrences) funded by means of a letter of credit which is under
            non-renewal notice, if said letter of credit has not been renewed or
            replaced by the Reinsurer 10 days prior to its expiration date;

      5.    To refund to the Reinsurer any sum in excess of the actual amount
            required to fund the Reinsurer's share of the Company's ceded
            unearned premium and/or outstanding loss and loss adjustment expense
            reserves (including all case reserves plus any reasonable amount
            estimated to be unreported from known loss occurrences), if so
            requested by the Reinsurer.

      In the event the amount drawn by the Company on any letter of credit is in
      excess of the actual amount required for C(1), C(2) or C(4), or in the
      case of C(3), the actual amount determined to be due, the Company shall
      promptly return to the Reinsurer the excess amount so drawn.

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.

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.

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                                                                 [BENFIELD LOGO]

GOVERNING LAW

This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Pennsylvania exclusive of the rules
with respect to conflicts of law, except as to rules with respect to credit for
reinsurance in which case the applicable rules of all states shall apply.

CONFIDENTIALITY

The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly, communicate, disclose or divulge to any third
party, any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company's books, records and
papers. The restrictions as outlined in this Article shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, retrocessionaires, legal counsel, arbitrators involved in
any arbitration procedures under this Contract or disclosures required upon
subpoena or other dully-issued order of a court or other governmental agency or
regulatory authority.

SEVERABILITY

If any provision of this Contract should be invalid under applicable laws, the
latter shall control but only to the extent of the conflict without affecting
the remaining provisions of this Contract.

SERVICE OF SUIT

(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. This
Article is not intended to conflict with or override the parties' obligations to
arbitrate their disputes in accordance with the Arbitration Article)

      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 any 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 therefore, 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.

Page 12



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                          ELECTRONIC DATA ENDORSEMENT B

1.    ELECTRONIC DATA EXCLUSION

      Notwithstanding any provision to the contrary within the Policy or any
      endorsement thereto, it is understood and agreed as follows:

            (a)   This Policy does not insure loss, damage, destruction,
                  distortion, erasure, corruption or alteration of ELECTRONIC
                  DATA from any cause whatsoever (including but not limited to
                  COMPUTER VIRUS) or loss of use, reduction in functionality,
                  cost, expense of whatsoever nature resulting therefrom,
                  regardless of any other cause or event contributing
                  concurrently or in any other sequence to the loss.

                  ELECTRONIC DATA means facts, concepts and information
                  converted to a form useable for communications, interpretation
                  or processing by electronic and electromechanical data
                  processing or electronically controlled equipment and includes
                  programs, software and other coded instructions for the
                  processing and manipulation of data or the direction and
                  manipulation of such equipment.

                  COMPUTER VIRUS means a set of corrupting, harmful or otherwise
                  unauthorized instructions or code including a set of
                  maliciously introduced unauthorized instructions or code,
                  programmatic or otherwise, that propagate themselves through a
                  computer system or network of whatsoever nature. COMPUTER
                  VIRUS includes but is not limited to 'Trojan Horses', 'worms'
                  and 'time or logic bombs'.

            (b)   However, in the event that a peril listed below results from
                  any of the matters described in paragraph (a) above, this
                  Policy, subject to all its terms, conditions and exclusions,
                  will cover physical damage occurring during the Policy period
                  to property insured by this Policy directly caused by such
                  listed peril.

Listed Perils

            Fire

            Explosion

2.    ELECTRONIC DATA PROCESSING MEDIA VALUATION

      Notwithstanding any provision to the contrary within the Policy or any
      endorsement thereto, it is understood and agreed as follows:

      Should electronic data processing media insured by this Policy suffer
      physical loss or damage insured by this Policy, then the basis of
      valuation shall be the cost of the blank media plus the costs of copying
      the ELECTRONIC DATA from back-up or from originals of a previous
      generation. These costs will not include research and engineering nor any
      costs of recreating, gathering or assembling such ELECTRONIC DATA. If the
      media is not repaired, replaced or restored the basis of valuation shall
      be the cost of the blank media. However this Policy does not insure any
      amount pertaining to the value of such ELECTRONIC DATA to the Assured or
      any other party, even if such ELECTRONIC DATA cannot be recreated,
      gathered or assembled.

25/01/01
NMA2915

Page 13



                                                                 [BENFIELD LOGO]

                                   SCHEDULE A

               THIRD EVENT EXCESS CATASTROPHE REINSURANCE CONTRACT
                          EFFECTIVE: SEPTEMBER 3, 2004

                                    issued to

                        Philadelphia Insurance Companies



             COVERAGE REINSURER'S PER   COMPANY'S     REINSURER'S FUNDS OTHERWISE             INSTALLMENT ADDITIONAL
   LAYER      PERCENT OCCURRENCE LIMIT  RETENTION      TERM LIMIT   RECOVERABLE     PREMIUM     PREMIUM    PREMIUM
- ------------ -------- ---------------- ------------ ------------- --------------- ----------- ----------- -----------
                                                                                  
Underlying     100%     $  3,000,000   $  7,000,000 $   3,000,000  $  6,000,000   $   540,000   $ 270,000 $   660,000
   First       100%     $ 10,000,000   $ 10,000,000 $  10,000,000  $ 20,000,000   $ 1,200,000   $ 600,000 $ 1,550,000


Page 14

EX-10.18

                                                                   EXHIBIT 10.18

               THIRD EVENT EXCESS CATASTROPHE REINSURANCE CONTRACT
                          EFFECTIVE: SEPTEMBER 3, 2004

                                    issued to

                         Philadelphia Insurance Company
                            Bala Cynwyd, Pennsylvania
                    Philadelphia Indemnity Insurance Company
                            Bala Cynwyd, Pennsylvania
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                        Philadelphia Insurance Companies

                                                                 [BENFIELD LOGO]



                                TABLE OF CONTENTS


ARTICLE                                                                                                 PAGE
                                                                                                     
     I      Classes of Business Reinsured                                                                 1

    II      Term                                                                                          1

   III      Territory (BRMA 51A)                                                                          2

    IV      Exclusions                                                                                    2

     V      Retention and Limit                                                                           4

    VI      Definitions                                                                                   5

   VII      Other Reinsurance                                                                             6

  VIII      Florida Hurricane Catastrophe Fund                                                            6

    IX      Loss Occurrence                                                                               7

     X      Loss Notices and Settlements                                                                  8

    XI      Salvage and Subrogation                                                                       8

   XII      Reinsurance Premium                                                                           9

  XIII      Late Payments                                                                                 9

   XIV      Offset (BRMA 36D)                                                                            11

    XV      Access to Records (BRMA 1D)                                                                  11

   XVI      Liability of the Reinsurer                                                                   11

  XVII      Net Retained Lines (BRMA 32B)                                                                11

 XVIII      Errors and Omissions (BRMA 14F)                                                              11

   XIX      Currency (BRMA 12A)                                                                          12

    XX      Taxes (BRMA 50C)                                                                             12

   XXI      Federal Excise Tax (BRMA 17A)                                                                12

  XXII      Reserve Requirements                                                                         12

 XXIII      Insolvency                                                                                   14

  XXIV      Arbitration                                                                                  15

   XXV      Service of Suit                                                                              16

  XXVI      Agency Agreement                                                                             16

 XXVII      Governing Law                                                                                16

XXVIII      Confidentiality                                                                              17

  XXIX      Severability                                                                                 17

   XXX      Intermediary (BRMA 23A)                                                                      17
            Schedule A


                                                                 [BENFIELD LOGO]



               THIRD EVENT EXCESS CATASTROPHE REINSURANCE CONTRACT
                          EFFECTIVE: SEPTEMBER 3, 2004

                                    issued to

                         Philadelphia Insurance Company
                            Bala Cynwyd, Pennsylvania
                    Philadelphia Indemnity Insurance Company
                            Bala Cynwyd, Pennsylvania
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                        Philadelphia Insurance Companies
             (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 Property 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 - TERM

A.    This Contract shall become effective on September 3, 2004, with respect to
      losses arising out of loss occurrences commencing on or after that date,
      and shall remain in force until May 31, 2005, both days inclusive.

B.    If this Contract expires while a loss occurrence covered hereunder is in
      progress, the Reinsurer's liability hereunder shall, subject to the other
      terms and conditions of this Contract, be determined as if the entire loss
      occurrence had occurred prior to the expiration of this Contract, provided
      that no part of such loss occurrence is claimed against any renewal or
      replacement of this Contract.

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                                     Page 1



ARTICLE III - TERRITORY (BRMA 51A)

The territorial limits of this Contract shall be identical with those of the
Company's policies.

ARTICLE IV - EXCLUSIONS

This Contract does not apply to and specifically excludes the following:

      1.    Assumed reinsurance except for a 50.0% quota share of the First
            American Property and Casualty Insurance Company Florida Homeowners
            Program produced and underwritten by Mobile Homeowners Insurance
            Agencies, Inc.

      2.    Financial guarantee and insolvency.

      3.    Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
            Physical Damage - Reinsurance (U.S.A.)" and the "Nuclear Incident
            Exclusion Clause - Physical Damage - Reinsurance (Canada)" attached
            to and forming part of this Contract.

      4.    Loss or damage caused by or resulting from 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, but
            this exclusion shall not apply to loss or damage covered under a
            standard policy with a standard War Exclusion Clause.

      5.    Loss or liability excluded under the provisions of the "Pools,
            Associations and Syndicates Exclusion Clause" attached to and
            forming part of this Contract.

      6.    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.

      7.    Losses in respect of overhead transmission and distribution lines
            and their supporting structures other than those on or within 300
            meters (or 1,000 feet) of the insured premises. It is understood and
            agreed that public utilities extension and/or suppliers extension
            and/or contingent business interruption coverages are not subject to
            this exclusion, provided that these are not part of a transmitters'
            or distributors' policy.

      8.    Accident and Health, Casualty, Fidelity and/or Surety business.

      9.    Pollution and seepage coverages excluded under the provisions of the
            "Pollution and Seepage Exclusion Clause (BRMA 39A)" attached to and
            forming part of this Contract.

                                                                 [BENFIELD LOGO]

                                     Page 2


      10.   Notwithstanding any other provision to the contrary within this
            Contract or any amendment thereto, it is agreed that this Contract
            excludes loss, damage, cost or expense directly or indirectly caused
            by, contributed to by, resulting from, or arising out of or in
            connection with any act of terrorism, as defined herein, regardless
            of any other cause or event contributing concurrently or in any
            other sequence to the loss.

            An "act of terrorism" includes any act, or preparation in respect of
            action, or threat of action, designed to influence the government de
            jure or de facto of any nation or any political division thereof, or
            in pursuit of political, religious, ideological, or similar purposes
            to intimidate the public or a section of the public of any nation by
            any person or group(s) of persons, whether acting alone or on behalf
            of or in connection with any organization(s) or government(s) de
            jure or de facto, and which:

            a.    Involves violence against one or more persons; or

            b.    Involves damage to property; or

            c.    Endangers life other than that of the person committing the
                  action; or

            d.    Creates a risk to health or safety of the public or a section
                  of the public; or

            e.    Is designed to interfere with or to disrupt an electronic
                  system.

            This Contract also excludes loss, damage, cost or expense directly
            or indirectly caused by, contributed to by, resulting from, or
            arising out of or in connection with any action in controlling,
            preventing, suppressing, retaliating against or responding to any
            act of terrorism.

            Notwithstanding the above and subject otherwise to the terms,
            conditions, and limitations of this Contract, in respect only of
            personal lines this Contract will pay actual loss or damage (but not
            related cost or expense) caused by any act of terrorism provided
            such act is not directly or indirectly caused by, contributed to by,
            resulting from, or arising out of or in connection with biological,
            chemical, or nuclear pollution or contamination.

      11.   Loss or liability in any way or to any extent arising out of the
            actual or alleged presence or actual, alleged or threatened presence
            of fungi including, but not limited to, mold, mildew, mycotoxins,
            microbial volatile organic compounds or other "microbial
            contaminations." This includes:

            a.    Any supervision, instruction, recommendations, warnings or
                  advice given or which should have been given in connection
                  with the above; and

            b.    Any obligation to share damages with or repay someone else who
                  must pay damages because of such injury or damage.

            For purposes of this exclusion, "microbial contamination" means any
            contamination, either airborne or surface, which arises out of or is
            related to the presence of fungi,

                                                                 [BENFIELD LOGO]

                                     Page 3


            mold, mildew, mycotoxins, microbial volatile organic compounds or
            spores, including, without limitation, Penicillium, Aspergillus,
            Fusarium, Aspergillus Flavus and Stachybotrys chartarum.

            Losses resulting from the above causes do not in and of themselves
            constitute an event unless arising out of one or more of the
            following perils, in which case this exclusion does not apply:

                  Fire, lightning, explosion, aircraft or vehicle impact,
                  falling objects, windstorm, hail, tornado, cyclone, hurricane,
                  earthquake, volcano, tsunami, flood, freeze or weight of snow.

            Notice of any claims for mold-related losses must be given by the
            Company to the Reinsurer, in writing, within 24 months after the
            commencement date of the loss occurrence to which such claims
            relate.

      12.   Loss or liability excluded under the provisions of the "Electronic
            Data Endorsement B" (N.M.A. 2915) attached to and forming part of
            this Contract.

ARTICLE V - 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 each loss occurrence. Subject
      to the provisions of paragraph B and C below, 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 Limit" for that excess layer in Schedule A
      attached hereto, as respects any one loss occurrence or in all during the
      term of this Contract.

B.    No claim shall be made under any excess layer of reinsurance coverage
      provided by this Contract as respects any one loss occurrence unless at
      least two risks insured or reinsured by the Company are involved in such
      loss occurrence. For purposes of this Contract, the Company shall be the
      sole judge of what constitutes one risk.

C.    No claim shall be made under the underlying excess layer of coverage
      provided by this Contract unless the amount, shown as "Funds Otherwise
      Recoverable" in Schedule A attached hereto, for the underlying excess
      layer has been paid or scheduled to be paid by the reinsurers under the
      underlying excess layer of the Company's Underlying Excess Catastrophe
      Reinsurance Contract, effective July 1, 2004. No claim shall be made under
      the first excess layer of coverage provided by this Contract unless the
      amount, shown as "Funds Otherwise Recoverable" in Schedule A attached
      hereto, has been paid or scheduled to be paid by the reinsurers under the
      first excess layer of the Company's Excess Catastrophe Reinsurance
      Contract, effective June 1, 2004.

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ARTICLE VI - 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 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 any 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.

      Notwithstanding anything stated herein, the amount included in the
      ultimate net loss for any one loss occurrence as respects loss in excess
      of policy limits and extra contractual obligations shall not exceed 25.0%
      of the Company's indemnity loss hereunder arising out of that loss
      occurrence.

      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.

      If any provision of this paragraph B shall be rendered illegal or
      unenforceable by the laws, regulations or public policy of any state, such
      provision shall be considered void in such

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      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.

C.    "Loss adjustment expense" as used herein shall mean expenses assignable to
      the investigation, appraisal, adjustment, settlement, litigation, defense
      and/or appeal of specific claims, regardless of how such expenses are
      classified for statutory reporting purposes. Loss adjustment expense shall
      include, but not be limited to, declaratory judgments, interest on
      judgments, expenses of outside adjusters, and a pro rata share of the
      salaries and expenses of the Company's field employees according to the
      time occupied adjusting such losses and expenses of the Company's
      officials incurred in connection with the losses, but shall not include
      office expenses or salaries of the Company's regular employees.

ARTICLE VII - OTHER REINSURANCE

A.    The Company shall be permitted to carry excess reinsurance, recoveries
      under which shall inure to the benefit of this Contract.

B.    The Company shall be permitted to carry net quota share reinsurance,
      recoveries under which shall inure solely to the benefit of the Company.

ARTICLE VIII - FLORIDA HURRICANE CATASTROPHE FUND

A.    Any loss reimbursement paid or payable to the Company under the Florida
      Hurricane Catastrophe Fund ("FHCF") as a result of loss occurrences
      commencing during the term of this Contract shall inure to the benefit of
      this Contract. Further, any FHCF loss reimbursement shall be deemed to be
      paid to the Company in accordance with the reimbursement contract between
      the Company and the State Board of Administration of the State of Florida
      at the full payout level set forth therein and will be deemed not to be
      reduced by any reduction or exhaustion of the FHCF's claims paying
      capacity.

B.    Prior to the determination of the Company's FHCF retention and payout, if
      any, under the reimbursement contract, the Reinsurer's liability hereunder
      will be determined provisionally based on the projected payout, determined
      in accordance with the provisions of the reimbursement contract. Following
      determination of the payout under the reimbursement contract, the ultimate
      net loss under this Contract will be recalculated. If, as a result of such
      calculation, the loss to the Reinsurer under any excess layer of this
      Contract in any one loss occurrence is less than the amount previously
      paid by the Reinsurer under that excess layer, the Company shall promptly
      remit the difference to the Reinsurer. If the loss to the Reinsurer under
      any excess layer in any one loss occurrence is greater than the amount
      previously paid by the Reinsurer, the Reinsurer shall promptly remit the
      difference to the Company.

C.    If an FHCF reimbursement amount is based on the Company's losses in more
      than one loss occurrence and the FHCF does not designate the amount
      allocable to each loss occurrence, the FHCF reimbursement amount shall be
      prorated in the proportion that the Company's losses in each loss
      occurrence bear to the Company's total losses arising out of all loss
      occurrences to which the FHCF reimbursement applies.

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D.    Any reimbursement premiums or emergency assessment paid by the Company
      under the FHCF shall be deemed to be premiums paid for inuring
      reinsurance.

ARTICLE IX - LOSS OCCURRENCE

A.    The term "loss occurrence" shall mean the sum of all individual losses
      directly occasioned by any one disaster, accident or loss or series of
      disasters, accidents or losses arising out of one event which occurs
      within the area of one state of the United States or province of Canada
      and states or provinces contiguous thereto and to one another. However,
      the duration and extent of any one "loss occurrence" shall be limited to
      all individual losses sustained by the Company occurring during any period
      of 168 consecutive hours arising out of and directly occasioned by the
      same event, except that the term "loss occurrence" shall be further
      defined as follows:

      1.    As regards windstorm, hail, tornado, hurricane, cyclone, including
            ensuing collapse and water damage, all individual losses sustained
            by the Company occurring during any period of 72 consecutive hours
            arising out of and directly occasioned by the same event. However,
            the event need not be limited to one state or province or states or
            provinces contiguous thereto.

      2.    As regards riot, riot attending a strike, civil commotion, vandalism
            and malicious mischief, all individual losses sustained by the
            Company occurring during any period of 72 consecutive hours within
            the area of one municipality or county and the municipalities or
            counties contiguous thereto arising out of and directly occasioned
            by the same event. The maximum duration of 72 consecutive hours may
            be extended in respect of individual losses which occur beyond such
            72 consecutive hours during the continued occupation of an insured's
            premises by strikers, provided such occupation commenced during the
            aforesaid period.

      3.    As regards earthquake (the epicentre of which need not necessarily
            be within the territorial confines referred to in the introductory
            portion of this paragraph) and fire following directly occasioned by
            the earthquake, only those individual fire losses which commence
            during the period of 168 consecutive hours may be included in the
            Company's "loss occurrence."

      4.    As regards "freeze," only individual losses directly occasioned by
            collapse, breakage of glass and water damage (caused by bursting
            frozen pipes and tanks) may be included in the Company's "loss
            occurrence."

      5.    As regards firestorms, brush fires, and other fires or series of
            fires, irrespective of origin (except as provided in subparagraphs 2
            and 3 above), which spread through trees, grassland or other
            vegetation, all individual losses sustained by the Company which
            occur during any period of 168 consecutive hours within a 100-mile
            radius of any one fixed point selected by the Company may be
            included in the Company's "loss occurrence." However, an individual
            loss subject to this subparagraph cannot be included in more than
            one "loss occurrence."

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B.    For all those "loss occurrences," other than those referred to in
      subparagraph 2 of paragraph A above, the Company may choose the date and
      time when any such period of consecutive hours commences, provided that it
      is not earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss, and provided that only one such period of 168
      consecutive hours shall apply with respect to one event, except for any
      "loss occurrence" referred to in subparagraph 1 of paragraph A above where
      only one such period of 72 consecutive hours shall apply with respect to
      one event, regardless of the duration of the event.

C.    As respects those "loss occurrences" referred to in subparagraph 2 of
      paragraph A above, if the disaster, accident or loss occasioned by the
      event is of greater duration than 72 consecutive hours, then the Company
      may divide that disaster, accident or loss into two or more "loss
      occurrences," provided no two periods overlap and no individual loss is
      included in more than one such period and provided that no period
      commences earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss.

D.    No individual losses occasioned by an event that would be covered by 72
      hours clauses may be included in any "loss occurrence" claimed under the
      168 hours provision.

ARTICLE X - LOSS NOTICES AND SETTLEMENTS

A.    Whenever losses sustained by the Company appear likely to result in a
      claim hereunder, the Company shall notify the Reinsurer, and the Reinsurer
      shall have the right to participate in the adjustment of such losses at
      its own expense.

B.    All loss settlements made by the Company, provided they are within the
      terms of this Contract, shall be binding upon the Reinsurer, and the
      Reinsurer agrees to pay all amounts for which it may be liable upon
      receipt of reasonable evidence of the amount paid (or scheduled to be
      paid) by the Company.

ARTICLE XI - 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) on account of claims
and settlements involving reinsurance hereunder. Salvage 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 relating to any loss, a part of which loss was sustained
by the Reinsurer, and to prosecute all claims arising out of such rights.

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                                     Page 8



ARTICLE XII - REINSURANCE PREMIUM

A.    As premium for each excess layer of reinsurance coverage provided by this
      Contract, the Company shall pay the Reinsurer the amount, shown as
      "Premium" for that excess layer in Schedule A attached hereto, in two
      equal installments of the amount, shown as "Installment Premium" for that
      excess layer in Schedule A attached hereto, on September 3, 2004 and March
      1, 2005.

B.    The Company shall remit additional premium, if any, on December 1, 2004.
      The additional premium shall be calculated by multiplying the "Additional
      Premium" for each excess layer in Schedule A attached hereto, by the
      following:

      1.    As respects the underlying excess layer of coverage provided by this
            Contract, the ratio of the ultimate net loss resulting from
            Hurricane Frances incurred by reinsurers under the underlying layer
            of the Company's Underlying Excess Catastrophe Reinsurance Contract,
            effective July 1, 2004, to the amount, shown as "Reinsurer's Limit"
            in Schedule A attached hereto, for the underlying excess layer.

      2.    As respects the first excess layer of coverage provided by this
            Contract, the ratio of ultimate net loss resulting from Hurricane
            Frances incurred by reinsurers under the first excess layer of the
            Company's Excess Catastrophe Reinsurance Contract, effective June 1,
            2004, to the amount, shown as "Reinsurer's Limit" in Schedule A
            attached hereto for the first excess layer.

      Quarterly recalculations and remittances of the additional premium, if
      any, due for each excess layer shall be made until all losses subject
      hereto have been finally settled.

ARTICLE XIII - 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 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.

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      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 10 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 10 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.

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ARTICLE XIV - OFFSET (BRMA 36D)

The Company and the Reinsurer, each at its option, may offset any balance or
balances, whether on account of premiums, claims and losses, loss expenses or
salvages due from one party to the other under this Contract; provided, however,
that in the event of the insolvency of a party hereto, offsets shall only be
allowed in accordance with applicable statutes and regulations.

ARTICLE XV - 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 XVI - 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. However, in no event shall this be construed
      in any way to provide coverage outside the terms and conditions set forth
      in this Contract.

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 XVII - NET RETAINED LINES (BRMA 32B)

A.    This Contract applies only to that portion of any policy which the Company
      retains net for its own account, 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 XVIII - 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.

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ARTICLE XIX - CURRENCY (BRMA 12A)

A.    Whenever the word "Dollars" or the "$" sign appears in this Contract, they
      shall be construed to mean United States Dollars and all transactions
      under this Contract shall be in United States Dollars.

B.    Amounts paid or received by the Company in any other currency shall be
      converted to United States Dollars at the rate of exchange at the date
      such transaction is entered on the books of the Company.

ARTICLE XX - TAXES (BRMA 50C)

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, the District of Columbia or Canada.

ARTICLE XXI - FEDERAL EXCISE TAX (BRMA 17A)

(Applicable to those reinsurers, excepting Underwriters at Lloyd's London and
other reinsurers exempt from Federal Excise Tax, who are domiciled outside the
United States of America.)

A.    The Reinsurer has agreed to allow for the purpose of paying the Federal
      Excise Tax the applicable percentage of the premium payable hereon as
      imposed under Section 4371 of the Internal Revenue Code to the extent such
      premium is subject to the Federal Excise Tax.

B.    In the event of any return of premium becoming due hereunder the Reinsurer
      will deduct the applicable percentage from the return premium payable
      hereon and the Company or its agent should take steps to recover the tax
      from the United States Government.

ARTICLE XXII - RESERVE REQUIREMENTS

A.    If the Reinsurer is unauthorized in any state of the United States of
      America or the District of Columbia, the Reinsurer agrees to fund, on or
      before December 31, 2004, its share of the Company's ceded United States
      unearned premium and outstanding loss and loss adjustment expense reserves
      (including all case reserves plus any reasonable amount estimated to be
      unreported, as determined by the Company, from known loss occurrences) by:

      1.    Clean, irrevocable and unconditional letters of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a bank or banks meeting the NAIC Securities
            Valuation Office credit standards for issuers of letters of credit
            and acceptable to said insurance regulatory authorities; and/or

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                                    Page 12



      2.    Escrow accounts for the benefit of the Company; and/or

      3.    Cash advances;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved. The Reinsurer, at its sole option, may fund in other
      than cash if its method and form of funding are acceptable to the
      insurance regulatory authorities involved.

B.    If the Reinsurer is unauthorized in any province or jurisdiction of
      Canada, the Reinsurer agrees to fund, on or before December 31, 2004, 115%
      of its share of the Company's ceded Canadian unearned premium and
      outstanding loss and loss adjustment expense reserves (including all case
      reserves plus any reasonable amount estimated to be unreported, as
      determined by the Company, from known loss occurrences) by:

      1.    A clean, irrevocable and unconditional letter of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a Canadian bank or banks meeting the NAIC
            Securities Valuation Office credit standards for issuers of letters
            of credit and acceptable to said insurance regulatory authorities,
            for no more than 15/115ths of the total funding required; and/or

      2.    Cash advances for the remaining balance of the funding required;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved.

C.    With regard to funding in whole or in part by letters of credit, it is
      agreed that each letter of credit will be in a form acceptable to
      insurance regulatory authorities involved, will be issued for a term of at
      least one year and will include an "evergreen clause," which automatically
      extends the term for at least one additional year at each expiration date
      unless written notice of non-renewal is given to the Company not less than
      30 days prior to said expiration date or longer where required by
      insurance regulatory authorities. The Company and the Reinsurer further
      agree, notwithstanding anything to the contrary in this Contract, that
      said letters of credit may be drawn upon by the Company or its successors
      in interest at any time, without diminution because of the insolvency of
      the Company or the Reinsurer, but only for one or more of the following
      purposes:

      1.    To reimburse itself for the Reinsurer's share of unearned premiums
            returned to insureds on account of policy cancellations, unless paid
            in cash by the Reinsurer;

      2.    To reimburse itself for the Reinsurer's share of losses and/or loss
            adjustment expense paid under the terms of policies reinsured
            hereunder, unless paid in cash by the Reinsurer;

      3.    To reimburse itself for the Reinsurer's share of any other amounts
            claimed to be due hereunder, unless paid in cash by the Reinsurer;

      4.    To fund a cash account in an amount equal to the Reinsurer's share
            of any ceded unearned premium and/or outstanding loss and loss
            adjustment expense reserves

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                                    Page 13



            (including all case reserves plus any reasonable amount estimated to
            be unreported, as determined by the Company, from known loss
            occurrences) funded by means of a letter of credit which is under
            non-renewal notice, if said letter of credit has not been renewed or
            replaced by the Reinsurer 10 days prior to its expiration date;

      5.    To refund to the Reinsurer any sum in excess of the actual amount
            required to fund the Reinsurer's share of the Company's ceded
            unearned premium and/or outstanding loss and loss adjustment expense
            reserves (including all case reserves plus any reasonable amount
            estimated to be unreported, as determined by the Company, from known
            loss occurrences), if so requested by the Reinsurer.

      In the event the amount drawn by the Company on any letter of credit is in
      excess of the actual amount required for C(1) or C(2) or C(4), in the case
      of C(3), the actual amount determined to be due, the Company shall
      promptly return to the Reinsurer the excess amount so drawn.

ARTICLE XXIII - 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

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      Reinsurer to the payees under such policies and in substitution for the
      obligations of the company to such payees.

ARTICLE XXIV - ARBITRATION

A.    As a condition precedent to any right of action hereunder, any dispute or
      difference between the Company and any Reinsurer relating to the
      interpretation or performance of this Contract, including its formation or
      validity, or any transaction under this Contract, whether arising before
      or after termination, shall be submitted to arbitration.

B.    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 provided that communication shall be made by the Company to each
      of the reinsurers constituting the one party, and provided, however, that
      nothing therein 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 Reinsurer under the terms of this Contract
      from several to joint.

C.    Upon written request of any party, each party shall choose an arbitrator
      and the two chosen shall select a third arbitrator. If either party
      refuses or neglects to appoint an arbitrator within 30 days after receipt
      of the written request for arbitration, the requesting party may appoint a
      second arbitrator. If the two arbitrators fail to agree on the selection
      of a third arbitrator within 30 days of their appointment, the Company
      shall petition the American Arbitration Association to appoint the third
      arbitrator. If the American Arbitration Association fails to appoint the
      third arbitrator within 30 days after it has been requested to do so,
      either party may request a justice of a court of general jurisdiction of
      the state in which the arbitration is to be held to appoint the third
      arbitrator. All arbitrators shall be active or retired officers of
      insurance or reinsurance companies, or Lloyd's London Underwriters, and
      disinterested in the outcome of the arbitration. Each party shall submit
      its case to the arbitrators within 30 days of the appointment of the third
      arbitrator.

D.    The parties hereby waive all objections to the method of selection of the
      arbitrators, it being the intention of both sides that all the arbitrators
      be chosen from those submitted by the parties.

E.    The arbitrators shall have the power to determine all procedural rules for
      the holding of the arbitration including but not limited to inspection of
      documents, examination of witnesses and any other matter relating to the
      conduct of the arbitration. The arbitrators shall interpret this Contract
      as an honorable engagement and not as merely a legal obligation; they are
      relieved of all judicial formalities and may abstain from following the
      strict rules of law. The arbitrators may award interest and costs. Each
      party shall bear the expense of its own arbitrator and shall share equally
      with the other party the expenses of the third arbitrator and of the
      arbitration.

F.    The decision in writing of the majority of the arbitrators shall be final
      and binding upon both parties. Judgment may be entered upon the final
      decision of the arbitrators in any court having jurisdiction. The
      arbitration shall take place in Bala Cynwyd, Pennsylvania, unless
      otherwise mutually agreed between the Company and the Reinsurer.

                                                                 [BENFIELD LOGO]

                                    Page 15


G.    This Article shall remain in full force and effect in the event any other
      provision of this Contract shall be found invalid or non-binding.

H.    All time limitations stated in this Article may be amended by mutual
      consent of the parties, and will be amended automatically to the extent
      made necessary by any circumstances beyond the control of the parties.

ARTICLE XXV - SERVICE OF SUIT

(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. This
Article is not intended to conflict with or override the parties obligations to
arbitrate their disputes in accordance with Article XXIV.)

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 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 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 - GOVERNING LAW

This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Pennsylvania exclusive of the rules
with respect to conflicts of law, except as to rules with respect to credit for
reinsurance in which case the applicable rules of all the states shall apply.

                                                                 [BENFIELD LOGO]

                                    Page 16



ARTICLE XXVIII - CONFIDENTIALITY

The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly communicate, disclose or divulge to any third
party any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company's books, records and
papers. The restrictions as outlined in this Article shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, retrocessionaires, legal counsel, arbitrators involved in
any arbitration procedures under this Contract or disclosures required upon
subpoena or other duly-issued order of a court or other governmental agency or
regulatory authority.

ARTICLE XXIX - SEVERABILITY

If any provision of this Contract should be invalid under applicable laws, the
latter shall control but only to the extent of the conflict without affecting
the remaining provisions of this Contract.

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:

Bala Cynwyd, Pennsylvania, this ________ day of _________________ in the year
________.

           _____________________________________________________________________
           Philadelphia Insurance Companies (for and on behalf of the "Company")

                                                                 [BENFIELD LOGO]

                                    Page 17



                                   SCHEDULE A

               THIRD EVENT EXCESS CATASTROPHE REINSURANCE CONTRACT
                          EFFECTIVE: SEPTEMBER 3, 2004

                                    issued to

                         Philadelphia Insurance Company
                            Bala Cynwyd, Pennsylvania
                    Philadelphia Indemnity Insurance Company
                            Bala Cynwyd, Pennsylvania
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                        Philadelphia Insurance Companies



                                                           UNDERLYING                       FIRST
                                                             EXCESS                         EXCESS
                                                           ----------                     -----------
                                                                                    
Company's Retention                                        $7,000,000                     $10,000,000

Reinsurer's Limit                                          $3,000,000                     $10,000,000

Funds Otherwise Recoverable                                $6,000,000                     $20,000,000

Premium                                                    $  465,000                     $ 1,100,000

Installment Premium                                        $  232,500                     $   550,000

Additional Premium                                         $  735,000                     $ 1,900,000


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.

                                                                 [BENFIELD LOGO]



   NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (U.S.A.)

1.    This Reinsurance does not cover any loss or liability accruing to the
      Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph (1) of this
      Clause, this Reinsurance does not cover any loss or liability accruing to
      the Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      I.    Nuclear reactor power plants including all auxiliary property on the
            site, or

      II.   Any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and "critical facilities" as such, or

      III.  Installations for fabricating complete fuel elements or for
            processing substantial quantities of "special nuclear material," and
            for reprocessing, salvaging, chemically separating, storing or
            disposing of "spent" nuclear fuel or waste materials, or

      IV.   Installations other than those listed in paragraph (2) III above
            using substantial quantities of radioactive isotopes or other
            products of nuclear fission.

3.    Without in any way restricting the operations of paragraphs (1) and (2)
      hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, from any insurance on
      property which is on the same site as a nuclear reactor power plant or
      other nuclear installation and which normally would be insured therewith
      except that this paragraph (3) shall not operate

      (a)   where Reassured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused. However on and after 1st January 1960
            this sub-paragraph (b) shall only apply provided the said
            radioactive contamination exclusion provision has been approved by
            the Governmental Authority having jurisdiction thereof.

4.    Without in any way restricting the operations of paragraphs (1), (2) and
      (3) hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    It is understood and agreed that this Clause shall not extend to risks
      using radioactive isotopes in any form where the nuclear exposure is not
      considered by the Reassured to be the primary hazard.

6.    The term "special nuclear material" shall have the meaning given it in the
      Atomic Energy Act of 1954 or by any law amendatory thereof.

7.    Reassured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

Note.-Without in any way restricting the operation of paragraph (1) hereof, it
is understood and agreed that

      (a)   all policies issued by the Reassured on or before 31st December 1957
            shall be free from the application of the other provisions of this
            Clause until expiry date or 31st December 1960 whichever first
            occurs whereupon all the provisions of this Clause shall apply.

      (b)   with respect to any risk located in Canada policies issued by the
            Reassured on or before 31st December 1958 shall be free from the
            application of the other provisions of this Clause until expiry date
            or 31st December 1960 whichever first occurs whereupon all the
            provisions of this Clause shall apply.

12/12/57
N.M.A. 1119
BRMA 35B



   NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE (CANADA)

1.    This Agreement does not cover any loss or liability accruing to the
      Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph 1 of this
      clause, this Agreement does not cover any loss or liability accruing to
      the Reinsured, directly or indirectly, and whether as Insurer or
      Reinsurer, from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      (a)   nuclear reactor power plants including all auxiliary property on the
            site, or

      (b)   any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and critical facilities as such, or

      (c)   installations for fabricating complete fuel elements or for
            processing substantial quantities of prescribed substances, and for
            reprocessing, salvaging, chemically separating, storing or disposing
            of spent nuclear fuel or waste materials, or

      (d)   installations other than those listed in (c) above using substantial
            quantities of radioactive isotopes or other products of nuclear
            fission.

3.    Without in any way restricting the operation of paragraphs 1 and 2 of this
      clause, this Agreement does not cover any loss or liability by radioactive
      contamination accruing to the Reinsured, directly or indirectly, and
      whether as Insurer or Reinsurer, from any insurance on property which is
      on the same site as a nuclear reactor power plant or other nuclear
      installation and which normally would be insured therewith, except that
      this paragraph 3 shall not operate:

      (a)   where the Reinsured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where the said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused.

4.    Without in any way restricting the operation of paragraphs 1, 2 and 3 of
      this clause, this Agreement does not cover any loss or liability by
      radioactive contamination accruing to the Reinsured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    This clause shall not extend to risks using radioactive isotopes in any
      form where the nuclear exposure is not considered by the Reinsured to be
      the primary hazard.

6.    The term "prescribed substances" shall have the meaning given to it by the
      Atomic Energy Control Act R.S.C. 1985(c), A-16 or by any law amendatory
      thereof.

7.    Reinsured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

8.    Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, this Agreement does not cover any loss or liability
      accruing to the Reinsured, directly or indirectly, and whether as Insurer
      or Reinsurer, caused:

      (1)   by any nuclear incident, as defined in the Nuclear Liability Act or
            any other nuclear liability act, law or statute, or any law
            amendatory thereof or nuclear explosion, except for ensuing loss or
            damage which results directly from fire, lightning or explosion of
            natural, coal or manufactured gas;

      (2)   by contamination by radioactive material.

NOTE: Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, paragraph 8 of this clause shall only apply to all
      original contracts of the Reinsured, whether new, renewal or replacement,
      which become effective on or after December 31, 1992.

N.M.A. 1980 (2/19/93)



               POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE

SECTION A:

Excluding:

      (a)   All business derived directly or indirectly from any Pool,
            Association or Syndicate which maintains its own reinsurance
            facilities.

      (b)   Any Pool or Scheme (whether voluntary or mandatory) formed after
            March 1, 1968 for the purpose of insuring property whether on a
            country-wide basis or in respect of designated areas. This exclusion
            shall not apply to so-called Automobile Insurance Plans or other
            Pools formed to provide coverage for Automobile Physical Damage.

SECTION B:

It is agreed that business written by the Company for the same perils, which is
known at the time to be insured by, or in excess of underlying amounts placed in
the following Pools, Associations or Syndicates, whether by way of insurance or
reinsurance, is excluded hereunder:

         Industrial Risk Insurers,
         Associated Factory Mutuals,
         Improved Risk Mutuals,

         Any Pool, Association or Syndicate formed for the purpose of
                  writing Oil, Gas or Petro-Chemical Plants and/or Oil or Gas
                  Drilling Rigs,
         United States Aircraft Insurance Group,
         Canadian Aircraft Insurance Group,
         Associated Aviation Underwriters,
         American Aviation Underwriters.

Section B does not apply:

      (a)   Where The Total Insured Value over all interests of the risk in
            question is less than $250,000,000.

      (b)   To interests traditionally underwritten as Inland Marine or stock
            and/or contents written on a blanket basis.

      (c)   To Contingent Business Interruption, except when the Company is
            aware that the key location is known at the time to be insured in
            any Pool, Association or Syndicate named above, other than as
            provided for under Section B(a).

      (d)   To risks as follows:

            Offices, Hotels, Apartments, Hospitals, Educational Establishments,
            Public Utilities (other than railroad schedules) and builder's risks
            on the classes of risks specified in this subsection (d) only.

Where this clause attaches to Catastrophe Excesses, the following Section C is
added:

SECTION C:

Nevertheless the Reinsurer specifically agrees that liability accruing to the
Company from its participation in residual market mechanisms including but not
limited to:

      (1)   The following so-called "Coastal Pools":

            Alabama Insurance Underwriting Association
            Louisiana Insurance Underwriting Association
            Mississippi Windstorm Underwriting Association
            North Carolina Insurance Underwriting Association
            South Carolina Windstorm and Hail Underwriting Association
            Texas Windstorm Insurance Association

AND

      (2)   All "Fair Plan" and "Rural Risk Plan" business

                                  Page 1 of 2



AND

      (3)   Citizens Property Insurance Corporation ("CPIC") and the California
            Earthquake Authority ("CEA")

for all perils otherwise protected hereunder shall not be excluded, except,
however, that this reinsurance does not include any increase in such liability
resulting from:

      (i)   The inability of any other participant in such "Coastal Pool" and/or
            "Fair Plan" and/or "Rural Risk Plan" and/or Residual Market
            Mechanisms to meet its liability.

      (ii)  Any claim against such "Coastal Pool" and/or "Fair Plan" and/or
            "Rural Risk Plan" and/or Residual Market Mechanisms, or any
            participant therein, including the Company, whether by way of
            subrogation or otherwise, brought by or on behalf of any insolvency
            fund (as defined in the Insolvency Fund Exclusion Clause
            incorporated in this Contract).

SECTION D:

      (1)   Notwithstanding Section C above, in respect of the CEA, where an
            assessment is made against the Company by the CEA, the Company may
            include in its Ultimate Net Loss only that assessment directly
            attributable to each separate loss occurrence covered hereunder. The
            Company's initial capital contribution to the CEA shall not be
            included in the Ultimate Net Loss.

      (2)   Notwithstanding Section C above, in respect of CPIC, where an
            assessment is made against the Company by CPIC, the maximum loss
            that the Company may include in the Ultimate Net Loss in respect of
            any loss occurrence hereunder shall not exceed the lesser of:

            (a)   The Company's assessment from CPIC for the accounting year in
                  which the loss occurrence commenced, or

            (b)   The product of the following:

                  (i)   The Company's percentage participation in CPIC for the
                        accounting year in which the loss occurrence commenced;
                        and

                  (ii)  CPIC's total losses in such loss occurrence.

Any assessments for accounting years subsequent to that in which the loss
occurrence commenced may not be included in the Ultimate Net Loss hereunder.
Moreover, notwithstanding Section C above, in respect of CPIC, the Ultimate Net
Loss hereunder shall not include any monies expended to purchase or retire bonds
as a consequence of being a member of CPIC. For the purposes of this Contract,
the Company may not include in the Ultimate Net Loss any assessment or any
percentage assessment levied by CPIC to meet the obligations of an insolvent
insurer member or other party, or to meet any obligations arising from the
deferment by CPIC of the collection of monies.

NOTES:     Wherever used herein the terms:

           "Company"       shall be understood to mean "Company," "Reinsured,"
                           "Reassured" or whatever other term is used in the
                           attached reinsurance document to designate the
                           reinsured company or companies.

           "Agreement"     shall be understood to mean "Agreement," "Contract,"
                           "Policy" or whatever other term is used to designate
                           the attached reinsurance document.

           "Reinsurers"    shall be understood to mean "Reinsurers,"
                           "Underwriters" or whatever other term is used in the
                           attached reinsurance document to designate the
                           reinsurer or reinsurers.

                                  Page 2 of 2



                     POLLUTION AND SEEPAGE EXCLUSION CLAUSE

This Contract excludes loss and/or damage and/or costs and/or expenses arising
from seepage and/or pollution and/or contamination, other than contamination
from smoke. Nevertheless, this exclusion does not preclude payment of the cost
of removing debris of property damaged by a loss otherwise covered hereunder,
subject always to a limit of 25% of the Company's property loss under the
applicable original policy.

BRMA 39A



                          ELECTRONIC DATA ENDORSEMENT B

1.    ELECTRONIC DATA EXCLUSION

      Notwithstanding any provision to the contrary within the Contract or any
      endorsement thereto, it is understood and agreed as follows:-

      a)    This Contract does not insure loss, damage, destruction, distortion,
            erasure, corruption or alteration of ELECTRONIC DATA from any cause
            whatsoever (including but not limited to COMPUTER VIRUS) or loss of
            use, reduction in functionality, cost, expense of whatsoever nature
            resulting therefrom, regardless of any other cause or event
            contributing concurrently or in any other sequence to the loss.

            ELECTRONIC DATA means facts, concepts and information converted to a
            form useable for communications, interpretation or processing by
            electronic and electromechanical data processing or electronically
            controlled equipment and includes programs, software and other coded
            instructions for the processing and manipulation of data or the
            direction and manipulation of such equipment.

            COMPUTER VIRUS means a set of corrupting, harmful or otherwise
            unauthorized instructions or code including a set of maliciously
            introduced unauthorized instructions or code, programmatic or
            otherwise, that propagate themselves through a computer system or
            network of whatsoever nature. COMPUTER VIRUS includes but is not
            limited to "Trojan Horses," "worms" and "time or logic bombs."

      b)    However, in the event that a peril listed below results from any of
            the matters described in paragraph a) above, this Contract, subject
            to all its terms, conditions and exclusions, will cover physical
            damage occurring during the Contract period to property insured by
            this Contract directly caused by such listed peril.

            Listed Perils

            Fire
            Explosion

2.    ELECTRONIC DATA PROCESSING MEDIA VALUATION

      Notwithstanding any provision to the contrary within the Contract or any
      endorsement thereto, it is understood and agreed as follows:-

      Should electronic data processing media insured by this Contract suffer
      physical loss or damage insured by this Contract, then the basis of
      valuation shall be the cost of the blank media plus the costs of copying
      the ELECTRONIC DATA from back-up or from originals of a previous
      generation. These costs will not include research and engineering nor any
      costs of recreating, gathering or assembling such ELECTRONIC DATA. If the
      media is not repaired, replaced or restored the basis of valuation shall
      be the cost of the blank media. However this Contract does not insure any
      amount pertaining to the value of such ELECTRONIC DATA to the Assured or
      any other party, even if such ELECTRONIC DATA cannot be recreated,
      gathered or assembled.

N.M.A. 2915 (25.1.01)

EX-10.19

                                                                   EXHIBIT 10.19

                                                                 [BENFIELD LOGO]

                       Liberty American Insurance Company
                             Pinellas Park, Florida
                          Mobile USA Insurance Company
                             Pinellas Park, Florida
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                     Liberty American Insurance Group, Inc.
              Hereinafter referred to collectively as the "Company"

                         $50,000,000 EXCESS $140,000,000
                  FLORIDA ONLY CATASTROPHE REINSURANCE CONTRACT

                          EFFECTIVE: SEPTEMBER 3, 2004

                            REINSURANCE CONFIRMATION

BUSINESS REINSURED

Business classified by the Company as Property business. In force, new and
renewal business.

TERM

Effective September 3, 2004, with respect to losses arising out of loss
occurrences commencing on or after that date, through May 31, 2005 both days
inclusive. Extended expiration in the event a loss occurrence is in progress at
expiration.

TERRITORY

State of Florida and extra territorial limits of the Company's policies.

EXCLUSIONS

See attached.

RETENTION AND LIMIT

100% of $50,000,000 ultimate net loss each loss occurrence excess of
$140,000,000 ultimate net loss each loss occurrence, not to exceed $50,000,000
in all during the term of this Contract.

No claim shall be made as respects any one loss occurrence unless at least two
risks insured or reinsured by the Company are involved in such loss occurrence.
For purposes hereof, the Company shall be the sole judge of what constitutes one
risk.

Page 1


                                                                 [BENFIELD LOGO]

FLORIDA HURRICANE CAT FUND (FHCF)

FHCF inuring to Catastrophe Reinsurance Program. Recoveries deemed in place,
however, the full payout limit may be reduced by prior loss occurrences for
which recoveries were made from the FHCF.

OTHER REINSURANCE

The Company shall carry a 15% quota share reinsurance of its direct personal
lines business, recoveries under which to inure to the benefit of this Contract,
or so deemed.

DEFINITIONS

UNL includes LAE.  See attached.

LOSS OCCURRENCE

No reinstatement same wind event.  See attached.

LOSS NOTICES AND SETTLEMENTS

Individual loss notices and settlements.

PREMIUM

In consideration for coverage provided hereunder, the Company shall pay the
Reinsurer a provisional premium of $3,000,000 in three equal installments of
$1,000,000 on September 1, 2004, December 1, 2004 and March 1, 2005.

The provisional premium shall be adjusted as follows based on the Company's
remaining inuring FHCF protection after the deduction of recoveries resulting
from Hurricane Charley and/or Hurricane Frances:

                                                  
Full estimated FHCF inuring                          5.00% ROL or $2,500,000
At least $150,000,000 FHCF inuring                   5.75% ROL or $2,875,000
At least $100,000,000 FHCF inuring (provisional)     6.00% ROL or $3,000,000
At least $50,000,000 FHCF inuring                    6.70% ROL or $3,350,000
Less than $50,000,000 FHCF inuring                   7.30% ROL or $3,650,000



Any additional premium resulting from the ROL adjustment will be payable by the
Company to the Reinsurer on December 1, 2004. Adjustments to be made quarterly
thereafter until finally settled. The Reinsurer will allow return premiums at
the same rates and quarterly adjustment dates.

LATE PAYMENTS

See attached. Interest penalty based on 6-month United States Treasury Bill
Rate. Interest penalty of less than $100 shall be waived.

OTHER PROVISIONS

Salvage and Subrogation
Offset (BRMA 36D)
Access to Records (BRMA 1D)

Page 2


                                                                 [BENFIELD LOGO]

Liability of the Reinsurer
Net Retained Lines (BRMA 32E)
Errors and Omissions (BRMA 14F)
Currency (BRMA 12A)
Taxes (BRMA 50C)
Federal Excise Tax (BRMA 17A)
Reserve Requirements (Evergreen LOC for unearned premium, outstanding
losses/LAE, including all case reserves plus any reasonable amount estimated to
be unreported from known loss occurrences)
Insolvency
Arbitration
Service of Suit
Agency Agreement
Governing Law (State of Florida)
Confidentiality
Severability
Intermediary (BRMA 23A)

ALLOCATION OF FINAL SHARES

The Company shall have the right to review all authorizations and the full
authority to allocate final shares. Such decisions will be at the sole
discretion of the Company and may result in other than a "proportional signdown"
of authorizations. As respects signdowns within the London marketplace, the
final allocation of shares to individual companies or syndicates may not be
proportionate to the original authorizations.

Page 3


                                                                 [BENFIELD LOGO]

                                   EXCLUSIONS

This Contract does not apply to and specifically excludes the following:

      1.    Losses incurred from Hurricane Frances and any subsequent
            downgrades.

      2.    Financial Guarantee and Insolvency.

      3.    Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
            Physical Damage - Reinsurance (U.S.A.)" and "Nuclear Incident
            Exclusion Clause - Physical Damage - Reinsurance (Canada)" attached
            to and forming part of this Contract.

      4.    Loss or damage caused by or resulting from 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, but
            this exclusion shall not apply to loss or damage covered under a
            standard policy with a standard War Exclusion Clause.

      5.    Loss or liability excluded under the provisions of the "Pools,
            Associations and Syndicates Exclusion Clause" attached to and
            forming part of this Contract.

      6.    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.

      7.    Losses in respect of overhead transmission and distribution lines
            and their supporting structures, other than those on or within 300
            meters (or 1,000 feet) of the insured premises. It is understood and
            agreed that public utilities extension and/or suppliers extension
            and/or contingent business interruption coverages are not subject to
            this exclusion, provided that these are not part of a transmitters'
            or distributors' Policy.

      8.    Accident and Health, Casualty, Fidelity and/or Surety business.

      9.    Pollution and seepage coverages excluded under the provisions of the
            "Pollution and Seepage Exclusion Clause (BRMA 39A)" attached to and
            forming part of this Contract.

      10.   Notwithstanding any other provision to the contrary within this
            Contract or any amendment thereto, it is agreed that this Contract
            excludes loss, damage, cost or expense directly or indirectly caused
            by, contributed to by, resulting from, or arising out of or in
            connection with any act of terrorism, as defined herein, regardless
            of any other cause or event contributing concurrently or in any
            other sequence to the loss.

            An "act of terrorism" includes any act, or preparation in respect of
            action, or threat of action, designed to influence the government de
            jure or de facto of any nation or any political division thereof, or
            in pursuit of political, religious, ideological, or similar purposes
            to intimidate the public or a section of the public of any nation by
            any person or group(s) of persons, whether acting alone or on behalf
            of or in connection with any organization(s) or government(s) de
            jure or de facto, and which:

                  a.    Involves violence against one or more persons; or

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                                                                 [BENFIELD LOGO]

                  b.    Involves damage to property; or

                  c.    Endangers life other than that of the person committing
                        the action; or

                  d.    Creates a risk to health or safety of the public or a
                        section of the public; or

                  e.    Is designed to interfere with or to disrupt an
                        electronic system.

            This Contract also excludes loss, damage, cost or expense directly
            or indirectly caused by, contributed to by, resulting from, or
            arising out of or in connection with any action in controlling,
            preventing, suppressing, retaliating against or responding to any
            act of terrorism.

            Notwithstanding the above and subject otherwise to the terms,
            conditions, and limitations of this Contract, in respect only of
            personal lines this Contract will pay actual loss or damage (but not
            related cost or expense) caused by any act of terrorism provided
            such act is not directly or indirectly caused by, contributed to by,
            resulting from, or arising out of or in connection with biological,
            chemical, or nuclear pollution or contamination.

      11.   Loss or liability in any way or to any extent arising out of the
            actual or alleged presence or actual, alleged or threatened presence
            of fungi including, but not limited to, mold, mildew, mycotoxins,
            microbial volatile organic compounds or other "microbial
            contamination". This includes:

                  a.    Any supervision, instruction, recommendations, warnings
                        or advice given or which should have been given in
                        connection with the above; and

                  b.    Any obligation to share damages with or repay someone
                        else who must pay damages because of such injury or
                        damage.

            For purposes of this exclusion, "microbial contamination" means any
            contamination, either airborne or surface, which arises out of or is
            related to the presence of fungi, mold, mildew, mycotoxins,
            microbial volatile organic compounds or spores, including, without
            limitation, Penicillium, Aspergillus, Fusarium, Aspergillus Flavus
            and Stachybotrys chartarum.

            Losses resulting from the above causes do not in and of themselves
            constitute an event unless arising out of one or more of the
            following perils, in which case this exclusion does not apply:

                        Fire, lightning, explosion, aircraft or vehicle impact,
                        falling objects, windstorm, hail, tornado, cyclone,
                        hurricane, earthquake, volcano, tsunami, flood, freeze
                        or weight of snow.

            Notice of any claims for mold-related losses must be given by the
            Company to the Reinsurer, in writing, within 24 months after the
            commencement date of the loss occurrence to which such claims
            relate.

      12.   Loss or liability excluded under the provisions of the "Electronic
            Data Endorsement B" (NMA 2915) attached to and forming part of this
            Contract.

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                                  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 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 any 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.

      Notwithstanding anything stated herein, the amount included in the
      ultimate net loss for any one loss occurrence as respects loss in excess
      of policy limits and extra contractual obligations shall not exceed 25.0%
      of the Company's indemnity loss hereunder arising out of that loss
      occurrence.

      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.

      If any provision of this paragraph B 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.

C.    "Loss adjustment expense" as used herein shall mean expenses assignable to
      the investigation, appraisal, adjustment, settlement, litigation, defense
      and/or appeal of specific claims, regardless of how such expenses are
      classified for statutory reporting purposes. Loss adjustment expense shall
      include, but not be limited to, declaratory judgments, interest on
      judgments, expenses of outside adjusters, and a pro rata share of the
      salaries and expenses of the Company's field employees according to the
      time occupied adjusting such losses and expenses of the Company's
      officials incurred in connection with the losses, but shall not include
      office expenses or salaries of the Company's regular employees.

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                                                                 [BENFIELD LOGO]

                                  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 herein (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 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 10 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 10 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

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                                                                 [BENFIELD LOGO]

      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.

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                                                                 [BENFIELD LOGO]

                                NON BRMA ARTICLES

LOSS OCCURRENCE

A.    The term "loss occurrence" shall mean the sum of all individual losses
      directly occasioned by any one disaster, accident or loss or series of
      disasters, accidents or losses arising out of one event which occurs
      within the area of one state of the United States or province of Canada
      and states or provinces contiguous thereto and to one another. However,
      the duration and extent of any one "loss occurrence" shall be limited to
      all individual losses sustained by the Company occurring during any period
      of 168 consecutive hours arising out of and directly occasioned by the
      same event, except that the term "loss occurrence" shall be further
      defined as follows:

      1.    As regards windstorm, hail, tornado, hurricane, cyclone, including
            ensuing collapse and water damage, all individual losses sustained
            by the Company occurring during any period of 72 consecutive hours
            arising out of and directly occasioned by the same event. However,
            the event need not be limited to one state or province or states or
            provinces contiguous thereto.

      2.    As regards riot, riot attending a strike, civil commotion, vandalism
            and malicious mischief, all individual losses sustained by the
            Company occurring during any period of 72 consecutive hours within
            the area of one municipality or county and the municipalities or
            counties contiguous thereto arising out of and directly occasioned
            by the same event. The maximum duration of 72 consecutive hours may
            be extended in respect of individual losses which occur beyond such
            72 consecutive hours during the continued occupation of an insured's
            premises by strikers, provided such occupation commenced during the
            aforesaid period.

      3.    As regards earthquake (the epicenter of which need not necessarily
            be within the territorial confines referred to in the introductory
            portion of this paragraph) and fire following directly occasioned by
            the earthquake, only those individual fire losses which commence
            during the period of 168 consecutive hours may be included in the
            Company's "loss occurrence."

      4.    As regards "freeze," only individual losses directly occasioned by
            collapse, breakage of glass and water damage (caused by bursting
            frozen pipes and tanks) may be included in the Company's "loss
            occurrence."

      5.    As regards firestorms, brush fires, and other fires or series of
            fires, irrespective of origin (except as provided in subparagraphs 2
            and 3 above), which spread through trees, grassland or other
            vegetation, all individual losses sustained by the Company which
            occur during any period of 168 consecutive hours within a 100-mile
            radius of any one fixed point selected by the Company may be
            included in the Company's "loss occurrence." However, an individual
            loss subject to this subparagraph cannot be included in more than
            one "loss occurrence."

B.    For all those "loss occurrences," other than those referred to in
      subparagraph 2 of paragraph A above, the Company may choose the date and
      time when any such period of consecutive hours commences, provided that it
      is not earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss, and provided that only one such period of 168
      consecutive hours shall apply with respect to one event, except for any
      "loss occurrence" referred to in subparagraph 1 of paragraph A above where
      only one such period of 72 consecutive hours shall apply with respect to
      one event, regardless of the duration of the event.

C.    As respects those "loss occurrences" referred to in subparagraph 2 of
      paragraph A above, if the disaster, accident or loss occasioned by the
      event is of greater duration than 72 consecutive hours, then the Company
      may divide that disaster, accident or loss into two or more "loss
      occurrences," provided no two periods overlap and no individual loss is
      included in more than one such period and

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                                                                 [BENFIELD LOGO]

      provided that no period commences earlier than the date and time of the
      occurrence of the first recorded individual loss sustained by the Company
      arising out of that disaster, accident or loss.

D.    No individual losses occasioned by an event that would be covered by 72
      hours clauses may be included in any "loss occurrence" claimed under the
      168 hours provision.

FLORIDA HURRICANE CATASTROPHE FUND

A.    Any loss reimbursement paid or payable to the Company under the Florida
      Hurricane Catastrophe Fund (FHCF) as a result of loss occurrences
      commencing during the term of this Contract shall inure to the benefit of
      this Contract. Further, any FHCF loss reimbursement shall be deemed to be
      paid to the Company in accordance with the reimbursement contract between
      the Company and the State Board of Administration of the State of Florida
      at the full payout level set forth therein and will be deemed not to be
      reduced by any reduction or exhaustion of the FHCF's claims paying
      capacity.

B.    Prior to the determination of the Company's FHCF retention and payout, if
      any, under the reimbursement contract, the Reinsurer's liability hereunder
      will be determined provisionally based on the projected payout, determined
      in accordance with the provisions of the reimbursement contract. Following
      determination of the payout under the reimbursement contract, the ultimate
      net loss under this Contract will be recalculated. If, as a result of such
      calculation, the loss to the Reinsurer in any one loss occurrence is less
      than the amount previously paid by the Reinsurer, the Company shall
      promptly remit the difference to the Reinsurer. If the loss to the
      Reinsurer in any one loss occurrence is greater than the amount previously
      paid by the Reinsurer, the Reinsurer shall promptly remit the difference
      to the Company.

C.    If an FHCF reimbursement amount is based on the Company's losses in more
      than one loss occurrence and the FHCF does not designate the amount
      allocable to each loss occurrence, the FHCF reimbursement amount shall be
      prorated in the proportion that the Company's losses in each loss
      occurrence bear to the Company's total losses arising out of all loss
      occurrences to which the FHCF reimbursement applies.

D.    Any reimbursement premiums or emergency assessment paid by the Company
      under the FHCF shall be deemed to be premiums paid for inuring
      reinsurance.

LOSS NOTICES AND SETTLEMENTS

A.    Whenever losses sustained by the Company appear likely to result in a
      claim hereunder, the Company shall notify the Reinsurer, and the Reinsurer
      shall have the right to participate in the adjustment of such losses at
      its own expense.

B.    All loss settlements made by the Company, provided they are within the
      terms of this Contract, shall be binding upon the Reinsurer, and the
      Reinsurer agrees to pay all amounts for which it may be liable upon
      receipt of reasonable evidence of the amount paid (or scheduled to be
      paid) by the Company.

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) on account of claims
and settlements involving reinsurance hereunder. Salvage 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

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                                                                 [BENFIELD LOGO]

      enforce its rights to salvage or subrogation relating to any loss, a part
      of which loss was sustained by the Reinsurer, and to prosecute all claims
      arising out of such rights.

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. However, in no event shall this be construed
      in any way to provide coverage outside the terms and conditions set forth
      in this Contract.

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.

RESERVE REQUIREMENTS

A.    If the Reinsurer is unauthorized in any state of the United States of
      America or the District of Columbia, the Reinsurer agrees to fund its
      share of the Company's ceded United States unearned premium and
      outstanding loss and loss adjustment expense reserves (including all case
      reserves plus any reasonable amount estimated to be unreported from known
      loss occurrences) by:

      1.    Clean, irrevocable and unconditional letters of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a bank or banks meeting the NAIC Securities
            Valuation Office credit standards for issuers of letters of credit
            and acceptable to said insurance regulatory authorities; and/or

      2.    Escrow accounts for the benefit of the Company; and/or

      3.    Cash advances;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved. The Reinsurer, at its sole option, may fund in other
      than cash if its method and form of funding are acceptable to the
      insurance regulatory authorities involved.

B.    If the Reinsurer is unauthorized in any province or jurisdiction of
      Canada, the Reinsurer agrees to fund 115% of its share of the Company's
      ceded Canadian unearned premium and outstanding loss and loss adjustment
      expense reserves (including all case reserves plus any reasonable amount
      estimated to be unreported from known loss occurrences) by:

      1.    A clean, irrevocable and unconditional letter of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a Canadian bank or banks meeting the NAIC
            Securities Valuation Office credit standards for issuers of letters
            of credit and acceptable to said insurance regulatory authorities,
            for no more than 15/115ths of the total funding required; and/or

      2.    Cash advances for the remaining balance of the funding required;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved.

C.    With regard to funding in whole or in part by letters of credit, it is
      agreed that each letter of credit will be in a form acceptable to
      insurance regulatory authorities involved, will be issued for a term of at
      least one year and will include an "evergreen clause," which automatically
      extends the term for at least one additional year at each expiration date
      unless written notice of non-renewal is given to the

Page 11


                                                                 [BENFIELD LOGO]

      Company not less than 30 days prior to said expiration date. The Company
      and the Reinsurer further agree, notwithstanding anything to the contrary
      in this Contract, that said letters of credit may be drawn upon by the
      Company or its successors in interest at any time, without diminution
      because of the insolvency of the Company or the Reinsurer, but only for
      one or more of the following purposes:

      1.    To reimburse itself for the Reinsurer's share of unearned premiums
            returned to insureds on account of policy cancellations, unless paid
            in cash by the Reinsurer;

      2.    To reimburse itself for the Reinsurer's share of losses and/or loss
            adjustment expense paid under the terms of policies reinsured
            hereunder, unless paid in cash by the Reinsurer;

      3.    To reimburse itself for the Reinsurer's share of any other amounts
            claimed to be due hereunder, unless paid in cash by the Reinsurer;

      4.    To fund a cash account in an amount equal to the Reinsurer's share
            of any ceded unearned premium and/or outstanding loss and loss
            adjustment expense reserves (including all case reserves plus any
            reasonable amount estimated to be unreported from known loss
            occurrences) funded by means of a letter of credit which is under
            non-renewal notice, if said letter of credit has not been renewed or
            replaced by the Reinsurer 10 days prior to its expiration date;

      5.    To refund to the Reinsurer any sum in excess of the actual amount
            required to fund the Reinsurer's share of the Company's ceded
            unearned premium and/or outstanding loss and loss adjustment expense
            reserves (including all case reserves plus any reasonable amount
            estimated to be unreported from known loss occurrences), if so
            requested by the Reinsurer.

      In the event the amount drawn by the Company on any letter of credit is in
      excess of the actual amount required for C(1), C(2) or C(4), or in the
      case of C(3), the actual amount determined to be due, the Company shall
      promptly return to the Reinsurer the excess amount so drawn.

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

Page 12


                                                                 [BENFIELD LOGO]

      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.

ARBITRATION

A.    As a condition precedent to any right of action hereunder, any dispute or
      difference between the Company and any Reinsurer relating to the
      interpretation or performance of this Contract, including its formation or
      validity, or any transaction under this Contract, whether arising before
      or after termination, shall be submitted to arbitration.

B.    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 provided that communication shall be made by the Company to each
      of the reinsurers constituting the one party, and provided, however, that
      nothing therein 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 Reinsurer under the terms of this Contract
      from several to joint.

C.    Upon written request of any party, each party shall choose an arbitrator
      and the two chosen shall select a third arbitrator. If either party
      refuses or neglects to appoint an arbitrator within 30 days after receipt
      of the written request for arbitration, the requesting party may appoint a
      second arbitrator. If the two arbitrators fail to agree on the selection
      of a third arbitrator within 30 days of their appointment, the Company
      shall petition the American Arbitration Association to appoint the third
      arbitrator. If the American Arbitration Association fails to appoint the
      third arbitrator within 30 days after it has been requested to do so,
      either party may request a justice of a court of general jurisdiction of
      the state in which the arbitration is to be held to appoint the third
      arbitrator. All arbitrators shall be active or retired officers of
      insurance or reinsurance companies, or Lloyd's London Underwriters, and
      disinterested in the outcome of the arbitration. Each party shall submit
      its case to the arbitrators within 30 days of the appointment of the third
      arbitrator.

D.    The parties hereby waive all objections to the method of selection of the
      arbitrators, it being the intention of both sides that all the arbitrators
      be chosen from those submitted by the parties.

E.    The arbitrators shall have the power to determine all procedural rules for
      the holding of the arbitration including but not limited to inspection of
      documents, examination of witnesses and any other matter relating to the
      conduct of the arbitration. The arbitrators shall interpret this Contract
      as an honorable engagement and not as merely a legal obligation; they are
      relieved of all judicial formalities and may abstain from following the
      strict rules of law. The arbitrators may award interest and costs. Each
      party shall bear the expense of its own arbitrator and shall share equally
      with the other party the expenses of the third arbitrator and of the
      arbitration.

F.    The decision in writing of the majority of the arbitrators shall be final
      and binding upon both parties. Judgment may be entered upon the final
      decision of the arbitrators in any court having jurisdiction. The
      arbitration shall take place in Pinellas Park, Florida, unless otherwise
      mutually agreed between the Company and the Reinsurer.

G.    This Article shall remain in full force and effect in the event any other
      provision of this Contract shall be found invalid or non-binding.

H.    All time limitations stated in this Article may be amended by mutual
      consent of the parties, and will be amended automatically to the extent
      made necessary by any circumstances beyond the control of the parties.

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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.

GOVERNING LAW

This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Florida exclusive of the rules with
respect to conflicts of law, except as to rules with respect to credit for
reinsurance in which case the applicable rules of all states shall apply.

CONFIDENTIALITY

The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly, communicate, disclose or divulge to any third
party, any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company's books, records and
papers. The restrictions as outlined in this Article shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, retrocessionaires, legal counsel, arbitrators involved in
any arbitration procedures under this Contract or disclosures required upon
subpoena or other dully-issued order of a court or other governmental agency or
regulatory authority.

SEVERABILITY

If any provision of this Contract should be invalid under applicable laws, the
latter shall control but only to the extent of the conflict without affecting
the remaining provisions of this Contract.

SERVICE OF SUIT

(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. This
Article is not intended to conflict with or override the parties' obligations to
arbitrate their disputes in accordance with the Arbitration Article)

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 any 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 therefore, 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.

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                                                                 [BENFIELD LOGO]

        NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE
                                    (U.S.A.)

1.    This Reinsurance does not cover any loss or liability accruing to the
      Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph (1) of this
      Clause, this Reinsurance does not cover any loss or liability accruing to
      the Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      I.    Nuclear reactor power plants including all auxiliary property on the
            site, or

      II.   Any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and "critical facilities" as such, or

      III.  Installations for fabricating complete fuel elements or for
            processing substantial quantities of "special nuclear material," and
            for reprocessing, salvaging, chemically separating, storing or
            disposing of "spent" nuclear fuel or waste materials, or

      IV.   Installations other than those listed in paragraph (2) III above
            using substantial quantities of radioactive isotopes or other
            products of nuclear fission.

3.    Without in any way restricting the operations of paragraphs (1) and (2)
      hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, from any insurance on
      property which is on the same site as a nuclear reactor power plant or
      other nuclear installation and which normally would be insured therewith
      except that this paragraph (3) shall not operate

      (a)   where Reassured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused. However on and after 1st January 1960
            this sub-paragraph (b) shall only apply provided the said
            radioactive contamination exclusion provision has been approved by
            the Governmental Authority having jurisdiction thereof.

4.    Without in any way restricting the operations of paragraphs (1), (2) and
      (3) hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    It is understood and agreed that this Clause shall not extend to risks
      using radioactive isotopes in any form where the nuclear exposure is not
      considered by the Reassured to be the primary hazard.

6.    The term "special nuclear material" shall have the meaning given it in the
      Atomic Energy Act of 1954 or by any law amendatory thereof.

7.    Reassured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

Note.-Without in any way restricting the operation of paragraph (1) hereof, it
is understood and agreed that

      (a)   all policies issued by the Reassured on or before 31st December 1957
            shall be free from the application of the other provisions of this
            Clause until expiry date or 31st December 1960 whichever first
            occurs whereupon all the provisions of this Clause shall apply.

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                                                                 [BENFIELD LOGO]

      (b)   with respect to any risk located in Canada policies issued by the
            Reassured on or before 31st December 1958 shall be free from the
            application of the other provisions of this Clause until expiry date
            or 31st December 1960 whichever first occurs whereupon all the
            provisions of this Clause shall apply.

12/12/57
N.M.A. 1119
BRMA 35B

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                                                                 [BENFIELD LOGO]

        NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE
                                    (CANADA)

1.    This Agreement does not cover any loss or liability accruing to the
      Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph 1 of this
      clause, this Agreement does not cover any loss or liability accruing to
      the Reinsured, directly or indirectly, and whether as Insurer or
      Reinsurer, from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      (a)   nuclear reactor power plants including all auxiliary property on the
            site, or

      (b)   any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and critical facilities as such, or

      (c)   installations for fabricating complete fuel elements or for
            processing substantial quantities of prescribed substances, and for
            reprocessing, salvaging, chemically separating, storing or disposing
            of spent nuclear fuel or waste materials, or

      (d)   installations other than those listed in (c) above using substantial
            quantities of radioactive isotopes or other products of nuclear
            fission.

3.    Without in any way restricting the operation of paragraphs 1 and 2 of this
      clause, this Agreement does not cover any loss or liability by radioactive
      contamination accruing to the Reinsured, directly or indirectly, and
      whether as Insurer or Reinsurer, from any insurance on property which is
      on the same site as a nuclear reactor power plant or other nuclear
      installation and which normally would be insured therewith, except that
      this paragraph 3 shall not operate:

      (a)   where the Reinsured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where the said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused.

4.    Without in any way restricting the operation of paragraphs 1, 2 and 3 of
      this clause, this Agreement does not cover any loss or liability by
      radioactive contamination accruing to the Reinsured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    This clause shall not extend to risks using radioactive isotopes in any
      form where the nuclear exposure is not considered by the Reinsured to be
      the primary hazard.

6.    The term "prescribed substances" shall have the meaning given to it by the
      Atomic Energy Control Act R.S.C. 1985(c), A-16 or by any law amendatory
      thereof.

7.    Reinsured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

8.    Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, this Agreement does not cover any loss or liability
      accruing to the Reinsured, directly or indirectly, and whether as Insurer
      or Reinsurer, caused:

      (1)   by any nuclear incident, as defined in the Nuclear Liability Act or
            any other nuclear liability act, law or statute, or any law
            amendatory thereof or nuclear explosion, except for ensuing loss or
            damage which results directly from fire, lightning or explosion of
            natural, coal or manufactured gas;

Page 17


                                                                 [BENFIELD LOGO]

      (2)   by contamination by radioactive material.

   NOTE: Without in any way restricting the operation of paragraphs 1, 2, 3
         and 4 of this clause, paragraph 8 of this clause shall only apply to
         all original contracts of the Reinsured, whether new, renewal or
         replacement, which become effective on or after December 31, 1992.

N.M.A. 1980 (2/19/93)

Page 18


                                                                 [BENFIELD LOGO]

               POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE

SECTION A:

Excluding:

      (a)   All business derived directly or indirectly from any Pool,
            Association or Syndicate which maintains its own reinsurance
            facilities.

      (b)   Any Pool or Scheme (whether voluntary or mandatory) formed after
            March 1, 1968 for the purpose of insuring property whether on a
            country-wide basis or in respect of designated areas. This exclusion
            shall not apply to so-called Automobile Insurance Plans or other
            Pools formed to provide coverage for Automobile Physical Damage.

SECTION B:

It is agreed that business written by the Company for the same perils, which is
known at the time to be insured by, or in excess of underlying amounts placed in
the following Pools, Associations or Syndicates, whether by way of insurance or
reinsurance, is excluded hereunder:

          Industrial Risk Insurers,
          Associated Factory Mutuals,
          Improved Risk Mutuals,
          Any Pool, Association or Syndicate formed for the purpose of
                  writing Oil, Gas or Petro-Chemical Plants and/or Oil or Gas
                  Drilling Rigs,
          United States Aircraft Insurance Group,
          Canadian Aircraft Insurance Group,
          Associated Aviation Underwriters,
          American Aviation Underwriters.

Section B does not apply:

      (a)   Where The Total Insured Value over all interests of the risk in
            question is less than $250,000,000.

      (b)   To interests traditionally underwritten as Inland Marine or stock
            and/or contents written on a blanket basis.

      (c)   To Contingent Business Interruption, except when the Company is
            aware that the key location is known at the time to be insured in
            any Pool, Association or Syndicate named above, other than as
            provided for under Section B(a).

      (d)   To risks as follows:

            Offices, Hotels, Apartments, Hospitals, Educational Establishments,
            Public Utilities (other than railroad schedules) and builder's risks
            on the classes of risks specified in this subsection (d) only.

Where this clause attaches to Catastrophe Excesses, the following Section C is
added:

SECTION C:

Nevertheless the Reinsurer specifically agrees that liability accruing to the
Company from its participation in residual market mechanisms including but not
limited to:

      (1)   The following so-called "Coastal Pools":

            Alabama Insurance Underwriting Association
            Louisiana Insurance Underwriting Association
            Mississippi Windstorm Underwriting Association
            North Carolina Insurance Underwriting Association
            South Carolina Windstorm and Hail Underwriting Association

Page 19


                                                                 [BENFIELD LOGO]

            Texas Windstorm Insurance Association

AND

      (2)   All "Fair Plan" and "Rural Risk Plan" business

AND

      (3)   Citizens Property Insurance Corporation ("CPIC") and the California
            Earthquake Authority ("CEA")

for all perils otherwise protected hereunder shall not be excluded, except,
however, that this reinsurance does not include any increase in such liability
resulting from:

      (i)   The inability of any other participant in such "Coastal Pool" and/or
            "Fair Plan" and/or "Rural Risk Plan" and/or Residual Market
            Mechanisms to meet its liability.

      (ii)  Any claim against such "Coastal Pool" and/or "Fair Plan" and/or
            "Rural Risk Plan" and/or Residual Market Mechanisms, or any
            participant therein, including the Company, whether by way of
            subrogation or otherwise, brought by or on behalf of any insolvency
            fund (as defined in the Insolvency Fund Exclusion Clause
            incorporated in this Contract).

SECTION D:

      (1)   Notwithstanding Section C above, in respect of the CEA, where an
            assessment is made against the Company by the CEA, the Company may
            include in its Ultimate Net Loss only that assessment directly
            attributable to each separate loss occurrence covered hereunder. The
            Company's initial capital contribution to the CEA shall not be
            included in the Ultimate Net Loss.

      (2)   Notwithstanding Section C above, in respect of CPIC, where an
            assessment is made against the Company by CPIC, the maximum loss
            that the Company may include in the Ultimate Net Loss in respect of
            any loss occurrence hereunder shall not exceed the lesser of:

            (a)   The Company's assessment from CPIC for the accounting year in
                  which the loss occurrence commenced, or

            (b)   The product of the following:

                        (i) The Company's percentage participation in CPIC for
                        the accounting year in which the loss occurrence
                        commenced; and

                        (ii) CPIC's total losses in such loss occurrence.

Any assessments for accounting years subsequent to that in which the loss
occurrence commenced may not be included in the Ultimate Net Loss hereunder.
Moreover, notwithstanding Section C above, in respect of CPIC, the Ultimate Net
Loss hereunder shall not include any monies expended to purchase or retire bonds
as a consequence of being a member of CPIC. For the purposes of this Contract,
the Company may not include in the Ultimate Net Loss any assessment or any
percentage assessment levied by CPIC to meet the obligations of an insolvent
insurer member or other party, or to meet any obligations arising from the
deferment by CPIC of the collection of monies.

NOTES: Wherever used herein the terms:

       "Company"       shall be understood to mean "Company," "Reinsured,"
                       "Reassured" or whatever other term is used in the
                       attached reinsurance document to designate the
                       reinsured company or companies.

       "Agreement"     shall be understood to mean "Agreement," "Contract,"
                       "Policy" or whatever other term is used to designate
                       the attached reinsurance document.

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                                                                 [BENFIELD LOGO]

       "Reinsurers"    shall be understood to mean "Reinsurers,"
                       "Underwriters" or whatever other term is used in the
                       attached reinsurance document to designate the
                       reinsurer or reinsurers.

Page 21


                                                                 [BENFIELD LOGO]

                     POLLUTION AND SEEPAGE EXCLUSION CLAUSE

This Contract excludes loss and/or damage and/or costs and/or expenses arising
from seepage and/or pollution and/or contamination, other than contamination
from smoke. Nevertheless, this exclusion does not preclude payment of the cost
of removing debris of property damaged by a loss otherwise covered hereunder,
subject always to a limit of 25% of the Company's property loss under the
applicable original policy.

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                                                                 [BENFIELD LOGO]

                          ELECTRONIC DATA ENDORSEMENT B

1.    ELECTRONIC DATA EXCLUSION

      Notwithstanding any provision to the contrary within the Policy or any
      endorsement thereto, it is understood and agreed as follows:

            (a)   This Policy does not insure loss, damage, destruction,
                  distortion, erasure, corruption or alteration of ELECTRONIC
                  DATA from any cause whatsoever (including but not limited to
                  COMPUTER VIRUS) or loss of use, reduction in functionality,
                  cost, expense of whatsoever nature resulting therefrom,
                  regardless of any other cause or event contributing
                  concurrently or in any other sequence to the loss.

                  ELECTRONIC DATA means facts, concepts and information
                  converted to a form useable for communications, interpretation
                  or processing by electronic and electromechanical data
                  processing or electronically controlled equipment and includes
                  programs, software and other coded instructions for the
                  processing and manipulation of data or the direction and
                  manipulation of such equipment.

                  COMPUTER VIRUS means a set of corrupting, harmful or otherwise
                  unauthorized instructions or code including a set of
                  maliciously introduced unauthorized instructions or code,
                  programmatic or otherwise, that propagate themselves through a
                  computer system or network of whatsoever nature. COMPUTER
                  VIRUS includes but is not limited to 'Trojan Horses', 'worms'
                  and 'time or logic bombs'.

            (b)   However, in the event that a peril listed below results from
                  any of the matters described in paragraph (a) above, this
                  Policy, subject to all its terms, conditions and exclusions,
                  will cover physical damage occurring during the Policy period
                  to property insured by this Policy directly caused by such
                  listed peril.

Listed Perils
             Fire
             Explosion

2.    ELECTRONIC DATA PROCESSING MEDIA VALUATION

      Notwithstanding any provision to the contrary within the Policy or any
      endorsement thereto, it is understood and agreed as follows:

      Should electronic data processing media insured by this Policy suffer
      physical loss or damage insured by this Policy, then the basis of
      valuation shall be the cost of the blank media plus the costs of copying
      the ELECTRONIC DATA from back-up or from originals of a previous
      generation. These costs will not include research and engineering nor any
      costs of recreating, gathering or assembling such ELECTRONIC DATA. If the
      media is not repaired, replaced or restored the basis of valuation shall
      be the cost of the blank media. However this Policy does not insure any
      amount pertaining to the value of such ELECTRONIC DATA to the Assured or
      any other party, even if such ELECTRONIC DATA cannot be recreated,
      gathered or assembled.

Page 23

EX-10.20

                                                                   EXHIBIT 10.20

                                                                 [BENFIELD LOGO]

                       Liberty American Insurance Company
                             Pinellas Park, Florida
                          Mobile USA Insurance Company
                             Pinellas Park, Florida
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                     Liberty American Insurance Group, Inc.
              Hereinafter referred to collectively as the "Company"

                         $5,000,000 EXCESS $190,000,000
              FLORIDA ONLY EXCESS CATASTROPHE REINSURANCE CONTRACT
                          EFFECTIVE: SEPTEMBER 10, 2004
                            REINSURANCE CONFIRMATION

BUSINESS REINSURED

Business classified by the Company as Property business. In force, new and
renewal business.

TERM

Effective September 10, 2004, with respect to losses arising out of loss
occurrences commencing on or after that date, through May 31, 2005 both days
inclusive. Extended expiration in the event a loss occurrence is in progress at
expiration.

TERRITORY

State of Florida and extra territorial limits of the Company's policies.

EXCLUSIONS

See attached.

RETENTION AND LIMIT

100% of $5,000,000 ultimate net loss each loss occurrence excess of $190,000,000
ultimate net loss each loss occurrence.

No claim shall be made as respects any one loss occurrence unless at least two
risks insured or reinsured by the Company are involved in such loss occurrence.
For purposes hereof, the Company shall be the sole judge of what constitutes one
risk.

FLORIDA HURRICANE CAT FUND

FHCF inuring to Catastrophe Reinsurance Program. Recoveries deemed in place,
however, the full payout limit may be reduced by prior loss occurrences for
which recoveries were made from the FHCF.

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                                                                 [BENFIELD LOGO]

OTHER REINSURANCE

The Company shall carry a 15% quota share reinsurance of its direct personal
lines business, recoveries under which to inure to the benefit of this Contract,
or so deemed.

DEFINITIONS

UNL includes LAE.  See attached.

LOSS OCCURRENCE

No reinstatement same wind event.  See attached.

REINSTATEMENT

One full reinstatement during the contract year, with additional premium
calculated 100% as to time and pro rata as to amount.

LOSS NOTICES AND SETTLEMENTS

Individual loss notices and settlements.

PREMIUM

$175,000 payable in installments of $58,333.33 on September 10, 2004 and
December 1, 2004 and $58,333.34 on March 1, 2005.

LATE PAYMENTS

See attached. Interest penalty based on 6-month United States Treasury Bill
Rate. Interest penalty of less than $100 shall be waived.

OTHER PROVISIONS

Salvage and Subrogation
Offset (BRMA 36D)
Access to Records (BRMA 1D)
Liability of the Reinsurer
Net Retained Lines (BRMA 32E)
Errors and Omissions (BRMA 14F)
Currency (BRMA 12A)
Taxes (BRMA 50C)
Federal Excise Tax (BRMA 17A)
Reserve Requirements (Evergreen LOC for unearned premium, outstanding
losses/LAE, including all case reserves plus any reasonable amount estimated to
be unreported from known loss occurrences)
Insolvency
Arbitration
Service of Suit
Agency Agreement

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                                                                 [BENFIELD LOGO]

Governing Law (State of Florida)
Confidentiality
Severability
Intermediary (BRMA 23A)

ALLOCATION OF FINAL SHARES

The Company shall have the right to review all authorizations and the full
authority to allocate final shares. Such decisions will be at the sole
discretion of the Company and may result in other than a "proportional signdown"
of authorizations. As respects signdowns within the London marketplace, the
final allocation of shares to individual companies or syndicates may not be
proportionate to the original authorizations.

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                                                                 [BENFIELD LOGO]

                                   EXCLUSIONS

This Contract does not apply to and specifically excludes the following:

   1. Financial Guarantee and Insolvency.

   2. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
      Physical Damage - Reinsurance (U.S.A.)" and "Nuclear Incident Exclusion
      Clause - Physical Damage - Reinsurance (Canada)" attached to and forming
      part of this Contract.

   3. Loss or damage caused by or resulting from 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, but this exclusion shall not apply to loss or damage
      covered under a standard policy with a standard War Exclusion Clause.

   4. Loss or liability excluded under the provisions of the "Pools,
      Associations and Syndicates Exclusion Clause" attached to and forming part
      of this Contract.

   5. 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.

   6. Losses in respect of overhead transmission and distribution lines and
      their supporting structures, other than those on or within 300 meters (or
      1,000 feet) of the insured premises. It is understood and agreed that
      public utilities extension and/or suppliers extension and/or contingent
      business interruption coverages are not subject to this exclusion,
      provided that these are not part of a transmitters' or distributors'
      Policy.

   7. Accident and Health, Casualty, Fidelity and/or Surety business.

   8. Pollution and seepage coverages excluded under the provisions of the
      "Pollution and Seepage Exclusion Clause (BRMA 39A)" attached to and
      forming part of this Contract.

   9. Notwithstanding any other provision to the contrary within this Contract
      or any amendment thereto, it is agreed that this Contract excludes loss,
      damage, cost or expense directly or indirectly caused by, contributed to
      by, resulting from, or arising out of or in connection with any act of
      terrorism, as defined herein, regardless of any other cause or event
      contributing concurrently or in any other sequence to the loss.

      An "act of terrorism" includes any act, or preparation in respect of
      action, or threat of action, designed to influence the government de jure
      or de facto of any nation or any political division thereof, or in pursuit
      of political, religious, ideological, or similar purposes to intimidate
      the public or a section of the public of any nation by any person or
      group(s) of persons, whether acting alone or on behalf of or in connection
      with any organization(s) or government(s) de jure or de facto, and which:

         a. Involves violence against one or more persons; or

         b. Involves damage to property; or

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                                                                 [BENFIELD LOGO]

         c. Endangers life other than that of the person committing the action;
            or

         d. Creates a risk to health or safety of the public or a section of the
            public; or

         e. Is designed to interfere with or to disrupt an electronic system.

      This Contract also excludes loss, damage, cost or expense directly or
      indirectly caused by, contributed to by, resulting from, or arising out of
      or in connection with any action in controlling, preventing, suppressing,
      retaliating against or responding to any act of terrorism.

      Notwithstanding the above and subject otherwise to the terms, conditions,
      and limitations of this Contract, in respect only of personal lines this
      Contract will pay actual loss or damage (but not related cost or expense)
      caused by any act of terrorism provided such act is not directly or
      indirectly caused by, contributed to by, resulting from, or arising out of
      or in connection with biological, chemical, or nuclear pollution or
      contamination.

  10. Loss or liability in any way or to any extent arising out of the actual
      or alleged presence or actual, alleged or threatened presence of fungi
      including, but not limited to, mold, mildew, mycotoxins, microbial
      volatile organic compounds or other "microbial contamination". This
      includes:

         a. Any supervision, instruction, recommendations, warnings or advice
            given or which should have been given in connection with the above;
            and

         b. Any obligation to share damages with or repay someone else who must
            pay damages because of such injury or damage.

      For purposes of this exclusion, "microbial contamination" means any
      contamination, either airborne or surface, which arises out of or is
      related to the presence of fungi, mold, mildew, mycotoxins, microbial
      volatile organic compounds or spores, including, without limitation,
      Penicillium, Aspergillus, Fusarium, Aspergillus Flavus and Stachybotrys
      chartarum.

      Losses resulting from the above causes do not in and of themselves
      constitute an event unless arising out of one or more of the following
      perils, in which case this exclusion does not apply:

            Fire, lightning, explosion, aircraft or vehicle impact, falling
            objects, windstorm, hail, tornado, cyclone, hurricane, earthquake,
            volcano, tsunami, flood, freeze or weight of snow.

      Notice of any claims for mold-related losses must be given by the Company
      to the Reinsurer, in writing, within 24 months after the commencement date
      of the loss occurrence to which such claims relate.

  11. Loss or liability excluded under the provisions of the "Electronic Data
      Endorsement B" (NMA 2915) attached to and forming part of this Contract.

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                                   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 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 any 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.

   Notwithstanding anything stated herein, the amount included in the ultimate
   net loss for any one loss occurrence as respects loss in excess of policy
   limits and extra contractual obligations shall not exceed 25.0% of the
   Company's indemnity loss hereunder arising out of that loss occurrence.

   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.

   If any provision of this paragraph B 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.

C. "Loss adjustment expense" as used herein shall mean expenses assignable to
   the investigation, appraisal, adjustment, settlement, litigation, defense
   and/or appeal of specific claims, regardless of how such expenses are
   classified for statutory reporting purposes. Loss adjustment expense shall
   include, but not be limited to, declaratory judgments, interest on judgments,
   expenses of outside adjusters, and a pro rata share of the salaries and
   expenses of the Company's field employees according to the time occupied
   adjusting such losses and expenses of the Company's officials

Page 6


                                                                 [BENFIELD LOGO]

   incurred in connection with the losses, but shall not include office expenses
   or salaries of the Company's regular employees.

Page 7


                                                                 [BENFIELD LOGO]

                                  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 herein (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 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 10
      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
      10 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.

Page 8


                                                                 [BENFIELD LOGO]

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 9


                                                                 [BENFIELD LOGO]

                                NON BRMA ARTICLES

LOSS OCCURRENCE

A. The term "loss occurrence" shall mean the sum of all individual losses
   directly occasioned by any one disaster, accident or loss or series of
   disasters, accidents or losses arising out of one event which occurs within
   the area of one state of the United States or province of Canada and states
   or provinces contiguous thereto and to one another. However, the duration and
   extent of any one "loss occurrence" shall be limited to all individual losses
   sustained by the Company occurring during any period of 168 consecutive hours
   arising out of and directly occasioned by the same event, except that the
   term "loss occurrence" shall be further defined as follows:

   1. As regards windstorm, hail, tornado, hurricane, cyclone, including ensuing
      collapse and water damage, all individual losses sustained by the Company
      occurring during any period of 72 consecutive hours arising out of and
      directly occasioned by the same event. However, the event need not be
      limited to one state or province or states or provinces contiguous
      thereto.

   2. As regards riot, riot attending a strike, civil commotion, vandalism and
      malicious mischief, all individual losses sustained by the Company
      occurring during any period of 72 consecutive hours within the area of one
      municipality or county and the municipalities or counties contiguous
      thereto arising out of and directly occasioned by the same event. The
      maximum duration of 72 consecutive hours may be extended in respect of
      individual losses which occur beyond such 72 consecutive hours during the
      continued occupation of an insured's premises by strikers, provided such
      occupation commenced during the aforesaid period.

   3. As regards earthquake (the epicenter of which need not necessarily be
      within the territorial confines referred to in the introductory portion of
      this paragraph) and fire following directly occasioned by the earthquake,
      only those individual fire losses which commence during the period of 168
      consecutive hours may be included in the Company's "loss occurrence."

   4. As regards "freeze," only individual losses directly occasioned by
      collapse, breakage of glass and water damage (caused by bursting frozen
      pipes and tanks) may be included in the Company's "loss occurrence."

   5. As regards firestorms, brush fires, and other fires or series of fires,
      irrespective of origin (except as provided in subparagraphs 2 and 3
      above), which spread through trees, grassland or other vegetation, all
      individual losses sustained by the Company which occur during any period
      of 168 consecutive hours within a 100-mile radius of any one fixed point
      selected by the Company may be included in the Company's "loss
      occurrence." However, an individual loss subject to this subparagraph
      cannot be included in more than one "loss occurrence."

B. For all those "loss occurrences," other than those referred to in
   subparagraph 2 of paragraph A above, the Company may choose the date and time
   when any such period of consecutive hours commences, provided that it is not
   earlier than the date and time of the occurrence of the first recorded
   individual loss sustained by the Company arising out of that disaster,
   accident or loss, and provided that only one such period of 168 consecutive
   hours shall apply with respect to one event, except for any "loss occurrence"
   referred to in subparagraph 1 of paragraph A above where only one such period
   of 72 consecutive hours shall apply with respect to one event, regardless of
   the duration of the event.

C. As respects those "loss occurrences" referred to in subparagraph 2 of
   paragraph A above, if the disaster, accident or loss occasioned by the event
   is of greater duration than 72 consecutive hours, then the Company may divide
   that disaster, accident or loss into two or more "loss occurrences," provided
   no two periods overlap and no individual loss is included in more than one
   such period and

Page 10


                                                                 [BENFIELD LOGO]

   provided that no period commences earlier than the date and time of the
   occurrence of the first recorded individual loss sustained by the Company
   arising out of that disaster, accident or loss.

D. No individual losses occasioned by an event that would be covered by 72 hours
   clauses may be included in any "loss occurrence" claimed under the 168 hours
   provision.

FLORIDA HURRICANE CATASTROPHE FUND

A. Any loss reimbursement paid or payable to the Company under the Florida
   Hurricane Catastrophe Fund (FHCF) as a result of loss occurrences commencing
   during the term of this Contract shall inure to the benefit of this Contract.
   Further, any FHCF loss reimbursement shall be deemed to be paid to the
   Company in accordance with the reimbursement contract between the Company and
   the State Board of Administration of the State of Florida at the full payout
   level set forth therein and will be deemed not to be reduced by any reduction
   or exhaustion of the FHCF's claims paying capacity.

B. Prior to the determination of the Company's FHCF retention and payout, if
   any, under the reimbursement contract, the Reinsurer's liability hereunder
   will be determined provisionally based on the projected payout, determined in
   accordance with the provisions of the reimbursement contract. Following
   determination of the payout under the reimbursement contract, the ultimate
   net loss under this Contract will be recalculated. If, as a result of such
   calculation, the loss to the Reinsurer in any one loss occurrence is less
   than the amount previously paid by the Reinsurer, the Company shall promptly
   remit the difference to the Reinsurer. If the loss to the Reinsurer in any
   one loss occurrence is greater than the amount previously paid by the
   Reinsurer, the Reinsurer shall promptly remit the difference to the Company.

C. If an FHCF reimbursement amount is based on the Company's losses in more than
   one loss occurrence and the FHCF does not designate the amount allocable to
   each loss occurrence, the FHCF reimbursement amount shall be prorated in the
   proportion that the Company's losses in each loss occurrence bear to the
   Company's total losses arising out of all loss occurrences to which the FHCF
   reimbursement applies.

D. Any reimbursement premiums or emergency assessment paid by the Company under
   the FHCF shall be deemed to be premiums paid for inuring reinsurance.

LOSS NOTICES AND SETTLEMENTS

A. Whenever losses sustained by the Company appear likely to result in a claim
   hereunder, the Company shall notify the Reinsurer, and the Reinsurer shall
   have the right to participate in the adjustment of such losses at its own
   expense.

B. All loss settlements made by the Company, provided they are within the terms
   of this Contract, shall be binding upon the Reinsurer, and the Reinsurer
   agrees to pay all amounts for which it may be liable upon receipt of
   reasonable evidence of the amount paid (or scheduled to be paid) by the
   Company.

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) on account of claims
and settlements involving reinsurance hereunder. Salvage 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

Page 11


                                                                 [BENFIELD LOGO]

enforce its rights to salvage or subrogation relating to any loss, a part of
which loss was sustained by the Reinsurer, and to prosecute all claims arising
out of such rights.

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. However, in no event shall this be construed in any way
   to provide coverage outside the terms and conditions set forth in this
   Contract.

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.

RESERVE REQUIREMENTS

A. If the Reinsurer is unauthorized in any state of the United States of America
   or the District of Columbia, the Reinsurer agrees to fund its share of the
   Company's ceded United States unearned premium and outstanding loss and loss
   adjustment expense reserves (including all case reserves plus any reasonable
   amount estimated to be unreported from known loss occurrences) by:

   1. Clean, irrevocable and unconditional letters of credit issued and
      confirmed, if confirmation is required by the insurance regulatory
      authorities involved, by a bank or banks meeting the NAIC Securities
      Valuation Office credit standards for issuers of letters of credit and
      acceptable to said insurance regulatory authorities; and/or

   2. Escrow accounts for the benefit of the Company; and/or

   3. Cash advances;

   if, without such funding, a penalty would accrue to the Company on any
   financial statement it is required to file with the insurance regulatory
   authorities involved. The Reinsurer, at its sole option, may fund in other
   than cash if its method and form of funding are acceptable to the insurance
   regulatory authorities involved.

B. If the Reinsurer is unauthorized in any province or jurisdiction of Canada,
   the Reinsurer agrees to fund 115% of its share of the Company's ceded
   Canadian unearned premium and outstanding loss and loss adjustment expense
   reserves (including all case reserves plus any reasonable amount estimated to
   be unreported from known loss occurrences) by:

   1. A clean, irrevocable and unconditional letter of credit issued and
      confirmed, if confirmation is required by the insurance regulatory
      authorities involved, by a Canadian bank or banks meeting the NAIC
      Securities Valuation Office credit standards for issuers of letters of
      credit and acceptable to said insurance regulatory authorities, for no
      more than 15/115ths of the total funding required; and/or

   2. Cash advances for the remaining balance of the funding required;

   if, without such funding, a penalty would accrue to the Company on any
   financial statement it is required to file with the insurance regulatory
   authorities involved.

C. With regard to funding in whole or in part by letters of credit, it is agreed
   that each letter of credit will be in a form acceptable to insurance
   regulatory authorities involved, will be issued for a term of at least one
   year and will include an "evergreen clause," which automatically extends the
   term for at least one additional year at each expiration date unless written
   notice of non-renewal is given to the

Page 12


                                                                 [BENFIELD LOGO]

   Company not less than 30 days prior to said expiration date. The Company and
   the Reinsurer further agree, notwithstanding anything to the contrary in this
   Contract, that said letters of credit may be drawn upon by the Company or its
   successors in interest at any time, without diminution because of the
   insolvency of the Company or the Reinsurer, but only for one or more of the
   following purposes:

   1. To reimburse itself for the Reinsurer's share of unearned premiums
      returned to insureds on account of policy cancellations, unless paid in
      cash by the Reinsurer;

   2. To reimburse itself for the Reinsurer's share of losses and/or loss
      adjustment expense paid under the terms of policies reinsured hereunder,
      unless paid in cash by the Reinsurer;

   3. To reimburse itself for the Reinsurer's share of any other amounts claimed
      to be due hereunder, unless paid in cash by the Reinsurer;

   4. To fund a cash account in an amount equal to the Reinsurer's share of any
      ceded unearned premium and/or outstanding loss and loss adjustment expense
      reserves (including all case reserves plus any reasonable amount estimated
      to be unreported from known loss occurrences) funded by means of a letter
      of credit which is under non-renewal notice, if said letter of credit has
      not been renewed or replaced by the Reinsurer 10 days prior to its
      expiration date;

   5. To refund to the Reinsurer any sum in excess of the actual amount required
      to fund the Reinsurer's share of the Company's ceded unearned premium
      and/or outstanding loss and loss adjustment expense reserves (including
      all case reserves plus any reasonable amount estimated to be unreported
      from known loss occurrences), if so requested by the Reinsurer.

   In the event the amount drawn by the Company on any letter of credit is in
   excess of the actual amount required for C(1), C(2) or C(4), or in the case
   of C(3), the actual amount determined to be due, the Company shall promptly
   return to the Reinsurer the excess amount so drawn.

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

Page 13


                                                                 [BENFIELD LOGO]

   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.

ARBITRATION

A. As a condition precedent to any right of action hereunder, any dispute or
   difference between the Company and any Reinsurer relating to the
   interpretation or performance of this Contract, including its formation or
   validity, or any transaction under this Contract, whether arising before or
   after termination, shall be submitted to arbitration.

B. 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
   provided that communication shall be made by the Company to each of the
   reinsurers constituting the one party, and provided, however, that nothing
   therein 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 Reinsurer under the terms of this Contract from several to joint.

C. Upon written request of any party, each party shall choose an arbitrator and
   the two chosen shall select a third arbitrator. If either party refuses or
   neglects to appoint an arbitrator within 30 days after receipt of the written
   request for arbitration, the requesting party may appoint a second
   arbitrator. If the two arbitrators fail to agree on the selection of a third
   arbitrator within 30 days of their appointment, the Company shall petition
   the American Arbitration Association to appoint the third arbitrator. If the
   American Arbitration Association fails to appoint the third arbitrator within
   30 days after it has been requested to do so, either party may request a
   justice of a court of general jurisdiction of the state in which the
   arbitration is to be held to appoint the third arbitrator. All arbitrators
   shall be active or retired officers of insurance or reinsurance companies, or
   Lloyd's London Underwriters, and disinterested in the outcome of the
   arbitration. Each party shall submit its case to the arbitrators within 30
   days of the appointment of the third arbitrator.

D. The parties hereby waive all objections to the method of selection of the
   arbitrators, it being the intention of both sides that all the arbitrators be
   chosen from those submitted by the parties.

E. The arbitrators shall have the power to determine all procedural rules for
   the holding of the arbitration including but not limited to inspection of
   documents, examination of witnesses and any other matter relating to the
   conduct of the arbitration. The arbitrators shall interpret this Contract as
   an honorable engagement and not as merely a legal obligation; they are
   relieved of all judicial formalities and may abstain from following the
   strict rules of law. The arbitrators may award interest and costs. Each party
   shall bear the expense of its own arbitrator and shall share equally with the
   other party the expenses of the third arbitrator and of the arbitration.

F. The decision in writing of the majority of the arbitrators shall be final and
   binding upon both parties. Judgment may be entered upon the final decision of
   the arbitrators in any court having jurisdiction. The arbitration shall take
   place in Pinellas Park, Florida, unless otherwise mutually agreed between the
   Company and the Reinsurer.

G. This Article shall remain in full force and effect in the event any other
   provision of this Contract shall be found invalid or non-binding.

H. All time limitations stated in this Article may be amended by mutual consent
   of the parties, and will be amended automatically to the extent made
   necessary by any circumstances beyond the control of the parties.

Page 14


                                                                 [BENFIELD LOGO]

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.

GOVERNING LAW

This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Florida exclusive of the rules with
respect to conflicts of law, except as to rules with respect to credit for
reinsurance in which case the applicable rules of all states shall apply.

CONFIDENTIALITY

The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly, communicate, disclose or divulge to any third
party, any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company's books, records and
papers. The restrictions as outlined in this Article shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, retrocessionaires, legal counsel, arbitrators involved in
any arbitration procedures under this Contract or disclosures required upon
subpoena or other dully-issued order of a court or other governmental agency or
regulatory authority.

SEVERABILITY

If any provision of this Contract should be invalid under applicable laws, the
latter shall control but only to the extent of the conflict without affecting
the remaining provisions of this Contract.

SERVICE OF SUIT

(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. This
Article is not intended to conflict with or override the parties' obligations to
arbitrate their disputes in accordance with the Arbitration Article)

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 any 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 therefore, 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.

Page 15


                                                                 [BENFIELD LOGO]

        NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE
                                    (U.S.A.)

1. This Reinsurance does not cover any loss or liability accruing to the
   Reassured, directly or indirectly and whether as Insurer or Reinsurer, from
   any Pool of Insurers or Reinsurers formed for the purpose of covering Atomic
   or Nuclear Energy risks.

2. Without in any way restricting the operation of paragraph (1) of this Clause,
   this Reinsurance does not cover any loss or liability accruing to the
   Reassured, directly or indirectly and whether as Insurer or Reinsurer, from
   any insurance against Physical Damage (including business interruption or
   consequential loss arising out of such Physical Damage) to:

   I.   Nuclear reactor power plants including all auxiliary property on the
        site, or

   II.  Any other nuclear reactor installation, including laboratories handling
        radioactive materials in connection with reactor installations, and
        "critical facilities" as such, or

   III. Installations for fabricating complete fuel elements or for processing
        substantial quantities of "special nuclear material," and for
        reprocessing, salvaging, chemically separating, storing or disposing of
        "spent" nuclear fuel or waste materials, or

   IV.  Installations other than those listed in paragraph (2) III above using
        substantial quantities of radioactive isotopes or other products of
        nuclear fission.

3. Without in any way restricting the operations of paragraphs (1) and (2)
   hereof, this Reinsurance does not cover any loss or liability by radioactive
   contamination accruing to the Reassured, directly or indirectly, and whether
   as Insurer or Reinsurer, from any insurance on property which is on the same
   site as a nuclear reactor power plant or other nuclear installation and which
   normally would be insured therewith except that this paragraph (3) shall not
   operate

   (a)  where Reassured does not have knowledge of such nuclear reactor power
        plant or nuclear installation, or

   (b)  where said insurance contains a provision excluding coverage for damage
        to property caused by or resulting from radioactive contamination,
        however caused. However on and after 1st January 1960 this sub-paragraph
        (b) shall only apply provided the said radioactive contamination
        exclusion provision has been approved by the Governmental Authority
        having jurisdiction thereof.

4. Without in any way restricting the operations of paragraphs (1), (2) and (3)
   hereof, this Reinsurance does not cover any loss or liability by radioactive
   contamination accruing to the Reassured, directly or indirectly, and whether
   as Insurer or Reinsurer, when such radioactive contamination is a named
   hazard specifically insured against.

5. It is understood and agreed that this Clause shall not extend to risks using
   radioactive isotopes in any form where the nuclear exposure is not considered
   by the Reassured to be the primary hazard.

6. The term "special nuclear material" shall have the meaning given it in the
   Atomic Energy Act of 1954 or by any law amendatory thereof.

7. Reassured to be sole judge of what constitutes:

   (a)  substantial quantities, and

   (b)  the extent of installation, plant or site.

Note.-Without in any way restricting the operation of paragraph (1) hereof, it
is understood and agreed that

   (a)  all policies issued by the Reassured on or before 31st December 1957
        shall be free from the application of the other provisions of this
        Clause until expiry date or 31st December 1960 whichever first occurs
        whereupon all the provisions of this Clause shall apply.

Page 16


                                                                 [BENFIELD LOGO]

   (b)  with respect to any risk located in Canada policies issued by the
        Reassured on or before 31st December 1958 shall be free from the
        application of the other provisions of this Clause until expiry date or
        31st December 1960 whichever first occurs whereupon all the provisions
        of this Clause shall apply.

12/12/57
N.M.A. 1119
BRMA 35B

Page 17


                                                                 [BENFIELD LOGO]

        NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE
                                    (CANADA)

1. This Agreement does not cover any loss or liability accruing to the
   Reinsured, directly or indirectly, and whether as Insurer or Reinsurer, from
   any Pool of Insurers or Reinsurers formed for the purpose of covering Atomic
   or Nuclear Energy risks.

2. Without in any way restricting the operation of paragraph 1 of this clause,
   this Agreement does not cover any loss or liability accruing to the
   Reinsured, directly or indirectly, and whether as Insurer or Reinsurer, from
   any insurance against Physical Damage (including business interruption or
   consequential loss arising out of such Physical Damage) to:

   (a) nuclear reactor power plants including all auxiliary property on the
       site, or

   (b) any other nuclear reactor installation, including laboratories handling
       radioactive materials in connection with reactor installations, and
       critical facilities as such, or

   (c) installations for fabricating complete fuel elements or for processing
       substantial quantities of prescribed substances, and for reprocessing,
       salvaging, chemically separating, storing or disposing of spent nuclear
       fuel or waste materials, or

   (d) installations other than those listed in (c) above using substantial
       quantities of radioactive isotopes or other products of nuclear fission.

3. Without in any way restricting the operation of paragraphs 1 and 2 of this
   clause, this Agreement does not cover any loss or liability by radioactive
   contamination accruing to the Reinsured, directly or indirectly, and whether
   as Insurer or Reinsurer, from any insurance on property which is on the same
   site as a nuclear reactor power plant or other nuclear installation and which
   normally would be insured therewith, except that this paragraph 3 shall not
   operate:

   (a) where the Reinsured does not have knowledge of such nuclear reactor power
       plant or nuclear installation, or

   (b) where the said insurance contains a provision excluding coverage for
       damage to property caused by or resulting from radioactive contamination,
       however caused.

4. Without in any way restricting the operation of paragraphs 1, 2 and 3 of this
   clause, this Agreement does not cover any loss or liability by radioactive
   contamination accruing to the Reinsured, directly or indirectly, and whether
   as Insurer or Reinsurer, when such radioactive contamination is a named
   hazard specifically insured against.

5. This clause shall not extend to risks using radioactive isotopes in any form
   where the nuclear exposure is not considered by the Reinsured to be the
   primary hazard.

6. The term "prescribed substances" shall have the meaning given to it by the
   Atomic Energy Control Act R.S.C. 1985(c), A-16 or by any law amendatory
   thereof.

7. Reinsured to be sole judge of what constitutes:

   (a) substantial quantities, and

   (b) the extent of installation, plant or site.

8. Without in any way restricting the operation of paragraphs 1, 2, 3 and 4 of
   this clause, this Agreement does not cover any loss or liability accruing to
   the Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
   caused:

Page 18


                                                                 [BENFIELD LOGO]

   (1) by any nuclear incident, as defined in the Nuclear Liability Act or any
       other nuclear liability act, law or statute, or any law amendatory
       thereof or nuclear explosion, except for ensuing loss or damage which
       results directly from fire, lightning or explosion of natural, coal or
       manufactured gas;

   (2) by contamination by radioactive material.

NOTE: Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, paragraph 8 of this clause shall only apply to all
      original contracts of the Reinsured, whether new, renewal or replacement,
      which become effective on or after December 31, 1992.

N.M.A. 1980 (2/19/93)

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                                                                 [BENFIELD LOGO]

               POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE

SECTION A:

Excluding:

   (a) All business derived directly or indirectly from any Pool, Association or
       Syndicate which maintains its own reinsurance facilities.

   (b) Any Pool or Scheme (whether voluntary or mandatory) formed after March 1,
       1968 for the purpose of insuring property whether on a country-wide basis
       or in respect of designated areas. This exclusion shall not apply to
       so-called Automobile Insurance Plans or other Pools formed to provide
       coverage for Automobile Physical Damage.

SECTION B:

It is agreed that business written by the Company for the same perils, which is
known at the time to be insured by, or in excess of underlying amounts placed in
the following Pools, Associations or Syndicates, whether by way of insurance or
reinsurance, is excluded hereunder:

      Industrial Risk Insurers,
      Associated Factory Mutuals,
      Improved Risk Mutuals,
      Any Pool, Association or Syndicate formed for the purpose of writing
            Oil, Gas or Petro-Chemical Plants and/or Oil or Gas Drilling Rigs,
      United States Aircraft Insurance Group,
      Canadian Aircraft Insurance Group,
      Associated Aviation Underwriters,
      American Aviation Underwriters.

Section B does not apply:

   (a) Where The Total Insured Value over all interests of the risk in question
       is less than $250,000,000.

   (b) To interests traditionally underwritten as Inland Marine or stock and/or
       contents written on a blanket basis.

   (c) To Contingent Business Interruption, except when the Company is aware
       that the key location is known at the time to be insured in any Pool,
       Association or Syndicate named above, other than as provided for under
       Section B(a).

   (d) To risks as follows:

      Offices, Hotels, Apartments, Hospitals, Educational Establishments, Public
      Utilities (other than railroad schedules) and builder's risks on the
      classes of risks specified in this subsection (d) only.

Where this clause attaches to Catastrophe Excesses, the following Section C is
added:

SECTION C:

Nevertheless the Reinsurer specifically agrees that liability accruing to the
Company from its participation in residual market mechanisms including but not
limited to:

   (1) The following so-called "Coastal Pools":

       Alabama Insurance Underwriting Association
       Louisiana Insurance Underwriting Association
       Mississippi Windstorm Underwriting Association
       North Carolina Insurance Underwriting Association

Page 20


                                                                 [BENFIELD LOGO]

        South Carolina Windstorm and Hail Underwriting Association Texas
        Windstorm Insurance Association

AND

   (2)  All "Fair Plan" and "Rural Risk Plan" business

AND

   (3)  Citizens Property Insurance Corporation ("CPIC") and the California
        Earthquake Authority ("CEA")

for all perils otherwise protected hereunder shall not be excluded, except,
however, that this reinsurance does not include any increase in such liability
resulting from:

   (i)  The inability of any other participant in such "Coastal Pool" and/or
        "Fair Plan" and/or "Rural Risk Plan" and/or Residual Market Mechanisms
        to meet its liability.

   (ii) Any claim against such "Coastal Pool" and/or "Fair Plan" and/or "Rural
        Risk Plan" and/or Residual Market Mechanisms, or any participant
        therein, including the Company, whether by way of subrogation or
        otherwise, brought by or on behalf of any insolvency fund (as defined in
        the Insolvency Fund Exclusion Clause incorporated in this Contract).

SECTION D:

   (1)  Notwithstanding Section C above, in respect of the CEA, where an
        assessment is made against the Company by the CEA, the Company may
        include in its Ultimate Net Loss only that assessment directly
        attributable to each separate loss occurrence covered hereunder. The
        Company's initial capital contribution to the CEA shall not be included
        in the Ultimate Net Loss.

   (2)  Notwithstanding Section C above, in respect of CPIC, where an assessment
        is made against the Company by CPIC, the maximum loss that the Company
        may include in the Ultimate Net Loss in respect of any loss occurrence
        hereunder shall not exceed the lesser of:

        (a) The Company's assessment from CPIC for the accounting year in which
            the loss occurrence commenced, or

        (b) The product of the following:

            (i)  The Company's percentage participation in CPIC for the
            accounting year in which the loss occurrence commenced; and

            (ii) CPIC's total losses in such loss occurrence.

Any assessments for accounting years subsequent to that in which the loss
occurrence commenced may not be included in the Ultimate Net Loss hereunder.
Moreover, notwithstanding Section C above, in respect of CPIC, the Ultimate Net
Loss hereunder shall not include any monies expended to purchase or retire bonds
as a consequence of being a member of CPIC. For the purposes of this Contract,
the Company may not include in the Ultimate Net Loss any assessment or any
percentage assessment levied by CPIC to meet the obligations of an insolvent
insurer member or other party, or to meet any obligations arising from the
deferment by CPIC of the collection of monies.

- ---------------------------

NOTES: Wherever used herein the terms:

      "Company" shall be understood to mean "Company," "Reinsured," "Reassured"
                or whatever other term is used in the attached reinsurance
                document to designate the reinsured company or companies.

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                                                                 [BENFIELD LOGO]

      "Agreement" shall be understood to mean "Agreement," "Contract," "Policy"
                  or whatever other term is used to designate the attached
                  reinsurance document.

      "Reinsurers" shall be understood to mean "Reinsurers," "Underwriters" or
                  whatever other term is used in the attached reinsurance
                  document to designate the reinsurer or reinsurers.

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                                                                 [BENFIELD LOGO]

                     POLLUTION AND SEEPAGE EXCLUSION CLAUSE

This Contract excludes loss and/or damage and/or costs and/or expenses arising
from seepage and/or pollution and/or contamination, other than contamination
from smoke. Nevertheless, this exclusion does not preclude payment of the cost
of removing debris of property damaged by a loss otherwise covered hereunder,
subject always to a limit of 25% of the Company's property loss under the
applicable original policy.

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                                                                 [BENFIELD LOGO]

                          ELECTRONIC DATA ENDORSEMENT B

1. ELECTRONIC DATA EXCLUSION

   Notwithstanding any provision to the contrary within the Policy or any
   endorsement thereto, it is understood and agreed as follows:

      (a) This Policy does not insure loss, damage, destruction, distortion,
          erasure, corruption or alteration of ELECTRONIC DATA from any cause
          whatsoever (including but not limited to COMPUTER VIRUS) or loss of
          use, reduction in functionality, cost, expense of whatsoever nature
          resulting therefrom, regardless of any other cause or event
          contributing concurrently or in any other sequence to the loss.

          ELECTRONIC DATA means facts, concepts and information converted to a
          form useable for communications, interpretation or processing by
          electronic and electromechanical data processing or electronically
          controlled equipment and includes programs, software and other coded
          instructions for the processing and manipulation of data or the
          direction and manipulation of such equipment.

          COMPUTER VIRUS means a set of corrupting, harmful or otherwise
          unauthorized instructions or code including a set of maliciously
          introduced unauthorized instructions or code, programmatic or
          otherwise, that propagate themselves through a computer system or
          network of whatsoever nature. COMPUTER VIRUS includes but is not
          limited to 'Trojan Horses', 'worms' and 'time or logic bombs'.

      (b) However, in the event that a peril listed below results from any of
          the matters described in paragraph (a) above, this Policy, subject to
          all its terms, conditions and exclusions, will cover physical damage
          occurring during the Policy period to property insured by this Policy
          directly caused by such listed peril.

Listed Perils
            Fire
            Explosion

2. ELECTRONIC DATA PROCESSING MEDIA VALUATION

   Notwithstanding any provision to the contrary within the Policy or any
   endorsement thereto, it is understood and agreed as follows:

   Should electronic data processing media insured by this Policy suffer
   physical loss or damage insured by this Policy, then the basis of valuation
   shall be the cost of the blank media plus the costs of copying the ELECTRONIC
   DATA from back-up or from originals of a previous generation. These costs
   will not include research and engineering nor any costs of recreating,
   gathering or assembling such ELECTRONIC DATA. If the media is not repaired,
   replaced or restored the basis of valuation shall be the cost of the blank
   media. However this Policy does not insure any amount pertaining to the value
   of such ELECTRONIC DATA to the Assured or any other party, even if such
   ELECTRONIC DATA cannot be recreated, gathered or assembled.

25/01/01
NMA2915

Page 24

EX-10.21

                                                                   EXHIBIT 10.21

                                                                 [BENFIELD LOGO]

                       Liberty American Insurance Company
                             Pinellas Park, Florida
                          Mobile USA Insurance Company
                             Pinellas Park, Florida
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                     Liberty American Insurance Group, Inc.
              Hereinafter referred to collectively as the "Company"

                        $45,000,000 EXCESS $195,000,000
                  FLORIDA ONLY CATASTROPHE REINSURANCE CONTRACT
                          EFFECTIVE: SEPTEMBER 10, 2004
                            REINSURANCE CONFIRMATION

BUSINESS REINSURED

Business classified by the Company as Property business. In force, new and
renewal business.

TERM

Effective September 10, 2004, with respect to losses arising out of loss
occurrences commencing on or after that date, through May 31, 2005 both days
inclusive. Extended expiration in the event a loss occurrence is in progress at
expiration.

TERRITORY

State of Florida and extra territorial limits of the Company's policies.

EXCLUSIONS

See attached.

RETENTION AND LIMIT

100% of $45,000,000 ultimate net loss each loss occurrence excess of
$195,000,000 ultimate net loss each loss occurrence.

No claim shall be made as respects any one loss occurrence unless at least two
risks insured or reinsured by the Company are involved in such loss occurrence.
For purposes hereof, the Company shall be the sole judge of what constitutes one
risk.

FLORIDA HURRICANE CAT FUND

FHCF inuring to Catastrophe Reinsurance Program. Recoveries deemed in place,
however, the full payout limit may be reduced by prior loss occurrences for
which recoveries were made from the FHCF.

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                                                                 [BENFIELD LOGO]

OTHER REINSURANCE

The Company shall carry a 15% quota share reinsurance of its direct personal
lines business, recoveries under which to inure to the benefit of this Contract,
or so deemed.

DEFINITIONS

UNL includes LAE.  See attached.

LOSS OCCURRENCE

No reinstatement same wind event.  See attached.

REINSTATEMENT

One full reinstatement during the contract year, with additional premium
calculated 100% as to time and pro rata as to amount.

LOSS NOTICES AND SETTLEMENTS

Individual loss notices and settlements.

PREMIUM

$1,912,500 payable at inception.

LATE PAYMENTS

See attached. Interest penalty based on 6-month United States Treasury Bill
Rate. Interest penalty of less than $100 shall be waived.

OTHER PROVISIONS

Salvage and Subrogation
Offset (BRMA 36D)
Access to Records (BRMA 1D)
Liability of the Reinsurer
Net Retained Lines (BRMA 32E)
Errors and Omissions (BRMA 14F)
Currency (BRMA 12A)
Taxes (BRMA 50C)
Federal Excise Tax (BRMA 17A)
Reserve Requirements (Evergreen LOC for unearned premium, outstanding
losses/LAE, including all case reserves plus any reasonable amount estimated to
be unreported from known loss occurrences) Insolvency
Arbitration
Service of Suit
Agency Agreement
Governing Law (State of Florida)

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                                                                 [BENFIELD LOGO]

Confidentiality
Severability
Intermediary (BRMA 23A)

ALLOCATION OF FINAL SHARES

The Company shall have the right to review all authorizations and the full
authority to allocate final shares. Such decisions will be at the sole
discretion of the Company and may result in other than a "proportional signdown"
of authorizations. As respects signdowns within the London marketplace, the
final allocation of shares to individual companies or syndicates may not be
proportionate to the original authorizations.

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                                                                 [BENFIELD LOGO]

                                   EXCLUSIONS

This Contract does not apply to and specifically excludes the following:

      1.    Losses incurred from Hurricane Ivan and any subsequent downgrades.

      2.    Financial Guarantee and Insolvency.

      3.    Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
            Physical Damage - Reinsurance (U.S.A.)" and "Nuclear Incident
            Exclusion Clause - Physical Damage - Reinsurance (Canada)" attached
            to and forming part of this Contract.

      4.    Loss or damage caused by or resulting from 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, but
            this exclusion shall not apply to loss or damage covered under a
            standard policy with a standard War Exclusion Clause.

      5.    Loss or liability excluded under the provisions of the "Pools,
            Associations and Syndicates Exclusion Clause" attached to and
            forming part of this Contract.

      6.    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.

      7.    Losses in respect of overhead transmission and distribution lines
            and their supporting structures, other than those on or within 300
            meters (or 1,000 feet) of the insured premises. It is understood and
            agreed that public utilities extension and/or suppliers extension
            and/or contingent business interruption coverages are not subject to
            this exclusion, provided that these are not part of a transmitters'
            or distributors' Policy.

      8.    Accident and Health, Casualty, Fidelity and/or Surety business.

      9.    Pollution and seepage coverages excluded under the provisions of the
            "Pollution and Seepage Exclusion Clause (BRMA 39A)" attached to and
            forming part of this Contract.

      10.   Notwithstanding any other provision to the contrary within this
            Contract or any amendment thereto, it is agreed that this Contract
            excludes loss, damage, cost or expense directly or indirectly caused
            by, contributed to by, resulting from, or arising out of or in
            connection with any act of terrorism, as defined herein, regardless
            of any other cause or event contributing concurrently or in any
            other sequence to the loss.

            An "act of terrorism" includes any act, or preparation in respect of
            action, or threat of action, designed to influence the government de
            jure or de facto of any nation or any political division thereof, or
            in pursuit of political, religious, ideological, or similar purposes
            to intimidate the public or a section of the public of any nation by
            any person or group(s) of persons, whether acting alone or on behalf
            of or in connection with any organization(s) or government(s) de
            jure or de facto, and which:

                  a.    Involves violence against one or more persons; or

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                                                                 [BENFIELD LOGO]

                  b.    Involves damage to property; or

                  c.    Endangers life other than that of the person committing
                        the action; or

                  d.    Creates a risk to health or safety of the public or a
                        section of the public; or

                  e.    Is designed to interfere with or to disrupt an
                        electronic system.

            This Contract also excludes loss, damage, cost or expense directly
            or indirectly caused by, contributed to by, resulting from, or
            arising out of or in connection with any action in controlling,
            preventing, suppressing, retaliating against or responding to any
            act of terrorism.

            Notwithstanding the above and subject otherwise to the terms,
            conditions, and limitations of this Contract, in respect only of
            personal lines this Contract will pay actual loss or damage (but not
            related cost or expense) caused by any act of terrorism provided
            such act is not directly or indirectly caused by, contributed to by,
            resulting from, or arising out of or in connection with biological,
            chemical, or nuclear pollution or contamination.

      11.   Loss or liability in any way or to any extent arising out of the
            actual or alleged presence or actual, alleged or threatened presence
            of fungi including, but not limited to, mold, mildew, mycotoxins,
            microbial volatile organic compounds or other "microbial
            contamination". This includes:

                  a.    Any supervision, instruction, recommendations, warnings
                        or advice given or which should have been given in
                        connection with the above; and

                  b.    Any obligation to share damages with or repay someone
                        else who must pay damages because of such injury or
                        damage.

            For purposes of this exclusion, "microbial contamination" means any
            contamination, either airborne or surface, which arises out of or is
            related to the presence of fungi, mold, mildew, mycotoxins,
            microbial volatile organic compounds or spores, including, without
            limitation, Penicillium, Aspergillus, Fusarium, Aspergillus Flavus
            and Stachybotrys chartarum.

            Losses resulting from the above causes do not in and of themselves
            constitute an event unless arising out of one or more of the
            following perils, in which case this exclusion does not apply:

                        Fire, lightning, explosion, aircraft or vehicle impact,
                        falling objects, windstorm, hail, tornado, cyclone,
                        hurricane, earthquake, volcano, tsunami, flood, freeze
                        or weight of snow.

            Notice of any claims for mold-related losses must be given by the
            Company to the Reinsurer, in writing, within 24 months after the
            commencement date of the loss occurrence to which such claims
            relate.

      12.   Loss or liability excluded under the provisions of the "Electronic
            Data Endorsement B" (NMA 2915) attached to and forming part of this
            Contract.

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                                                                 [BENFIELD LOGO]

                                   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 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 any 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.

      Notwithstanding anything stated herein, the amount included in the
      ultimate net loss for any one loss occurrence as respects loss in excess
      of policy limits and extra contractual obligations shall not exceed 25.0%
      of the Company's indemnity loss hereunder arising out of that loss
      occurrence.

      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.

      If any provision of this paragraph B 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.

C.    "Loss adjustment expense" as used herein shall mean expenses assignable to
      the investigation, appraisal, adjustment, settlement, litigation, defense
      and/or appeal of specific claims, regardless of how such expenses are
      classified for statutory reporting purposes. Loss adjustment expense shall
      include, but not be limited to, declaratory judgments, interest on
      judgments, expenses of outside adjusters, and a pro rata share of the
      salaries and expenses of the Company's field employees according to the
      time occupied adjusting such losses and expenses of the Company's
      officials

Page 6



                                                                 [BENFIELD LOGO]

      incurred in connection with the losses, but shall not include office
      expenses or salaries of the Company's regular employees.

Page 7



                                                                 [BENFIELD LOGO]

                                  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 herein (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 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 10 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 10 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.

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                                                                 [BENFIELD LOGO]

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.

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                                                                 [BENFIELD LOGO]

                                NON BRMA ARTICLES

LOSS OCCURRENCE

A.    The term "loss occurrence" shall mean the sum of all individual losses
      directly occasioned by any one disaster, accident or loss or series of
      disasters, accidents or losses arising out of one event which occurs
      within the area of one state of the United States or province of Canada
      and states or provinces contiguous thereto and to one another. However,
      the duration and extent of any one "loss occurrence" shall be limited to
      all individual losses sustained by the Company occurring during any period
      of 168 consecutive hours arising out of and directly occasioned by the
      same event, except that the term "loss occurrence" shall be further
      defined as follows:

      1.    As regards windstorm, hail, tornado, hurricane, cyclone, including
            ensuing collapse and water damage, all individual losses sustained
            by the Company occurring during any period of 72 consecutive hours
            arising out of and directly occasioned by the same event. However,
            the event need not be limited to one state or province or states or
            provinces contiguous thereto.

      2.    As regards riot, riot attending a strike, civil commotion, vandalism
            and malicious mischief, all individual losses sustained by the
            Company occurring during any period of 72 consecutive hours within
            the area of one municipality or county and the municipalities or
            counties contiguous thereto arising out of and directly occasioned
            by the same event. The maximum duration of 72 consecutive hours may
            be extended in respect of individual losses which occur beyond such
            72 consecutive hours during the continued occupation of an insured's
            premises by strikers, provided such occupation commenced during the
            aforesaid period.

      3.    As regards earthquake (the epicenter of which need not necessarily
            be within the territorial confines referred to in the introductory
            portion of this paragraph) and fire following directly occasioned by
            the earthquake, only those individual fire losses which commence
            during the period of 168 consecutive hours may be included in the
            Company's "loss occurrence."

      4.    As regards "freeze," only individual losses directly occasioned by
            collapse, breakage of glass and water damage (caused by bursting
            frozen pipes and tanks) may be included in the Company's "loss
            occurrence."

      5.    As regards firestorms, brush fires, and other fires or series of
            fires, irrespective of origin (except as provided in subparagraphs 2
            and 3 above), which spread through trees, grassland or other
            vegetation, all individual losses sustained by the Company which
            occur during any period of 168 consecutive hours within a 100-mile
            radius of any one fixed point selected by the Company may be
            included in the Company's "loss occurrence." However, an individual
            loss subject to this subparagraph cannot be included in more than
            one "loss occurrence."

B.    For all those "loss occurrences," other than those referred to in
      subparagraph 2 of paragraph A above, the Company may choose the date and
      time when any such period of consecutive hours commences, provided that it
      is not earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss, and provided that only one such period of 168
      consecutive hours shall apply with respect to one event, except for any
      "loss occurrence" referred to in subparagraph 1 of paragraph A above where
      only one such period of 72 consecutive hours shall apply with respect to
      one event, regardless of the duration of the event.

C.    As respects those "loss occurrences" referred to in subparagraph 2 of
      paragraph A above, if the disaster, accident or loss occasioned by the
      event is of greater duration than 72 consecutive hours, then the Company
      may divide that disaster, accident or loss into two or more "loss
      occurrences," provided no two periods overlap and no individual loss is
      included in more than one such period and

Page 10



                                                                 [BENFIELD LOGO]

      provided that no period commences earlier than the date and time of the
      occurrence of the first recorded individual loss sustained by the Company
      arising out of that disaster, accident or loss.

D.    No individual losses occasioned by an event that would be covered by 72
      hours clauses may be included in any "loss occurrence" claimed under the
      168 hours provision.

FLORIDA HURRICANE CATASTROPHE FUND

A.    Any loss reimbursement paid or payable to the Company under the Florida
      Hurricane Catastrophe Fund (FHCF) as a result of loss occurrences
      commencing during the term of this Contract shall inure to the benefit of
      this Contract. Further, any FHCF loss reimbursement shall be deemed to be
      paid to the Company in accordance with the reimbursement contract between
      the Company and the State Board of Administration of the State of Florida
      at the full payout level set forth therein and will be deemed not to be
      reduced by any reduction or exhaustion of the FHCF's claims paying
      capacity.

B.    Prior to the determination of the Company's FHCF retention and payout, if
      any, under the reimbursement contract, the Reinsurer's liability hereunder
      will be determined provisionally based on the projected payout, determined
      in accordance with the provisions of the reimbursement contract. Following
      determination of the payout under the reimbursement contract, the ultimate
      net loss under this Contract will be recalculated. If, as a result of such
      calculation, the loss to the Reinsurer in any one loss occurrence is less
      than the amount previously paid by the Reinsurer, the Company shall
      promptly remit the difference to the Reinsurer. If the loss to the
      Reinsurer in any one loss occurrence is greater than the amount previously
      paid by the Reinsurer, the Reinsurer shall promptly remit the difference
      to the Company.

C.    If an FHCF reimbursement amount is based on the Company's losses in more
      than one loss occurrence and the FHCF does not designate the amount
      allocable to each loss occurrence, the FHCF reimbursement amount shall be
      prorated in the proportion that the Company's losses in each loss
      occurrence bear to the Company's total losses arising out of all loss
      occurrences to which the FHCF reimbursement applies.

D.    Any reimbursement premiums or emergency assessment paid by the Company
      under the FHCF shall be deemed to be premiums paid for inuring
      reinsurance.

LOSS NOTICES AND SETTLEMENTS

A.    Whenever losses sustained by the Company appear likely to result in a
      claim hereunder, the Company shall notify the Reinsurer, and the Reinsurer
      shall have the right to participate in the adjustment of such losses at
      its own expense.

B.    All loss settlements made by the Company, provided they are within the
      terms of this Contract, shall be binding upon the Reinsurer, and the
      Reinsurer agrees to pay all amounts for which it may be liable upon
      receipt of reasonable evidence of the amount paid (or scheduled to be
      paid) by the Company.

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) on account of claims
and settlements involving reinsurance hereunder. Salvage 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

Page 11



                                                                 [BENFIELD LOGO]

enforce its rights to salvage or subrogation relating to any loss, a part of
which loss was sustained by the Reinsurer, and to prosecute all claims arising
out of such rights.

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. However, in no event shall this be construed
      in any way to provide coverage outside the terms and conditions set forth
      in this Contract.

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.

RESERVE REQUIREMENTS

A.    If the Reinsurer is unauthorized in any state of the United States of
      America or the District of Columbia, the Reinsurer agrees to fund its
      share of the Company's ceded United States unearned premium and
      outstanding loss and loss adjustment expense reserves (including all case
      reserves plus any reasonable amount estimated to be unreported from known
      loss occurrences) by:

      1.    Clean, irrevocable and unconditional letters of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a bank or banks meeting the NAIC Securities
            Valuation Office credit standards for issuers of letters of credit
            and acceptable to said insurance regulatory authorities; and/or

      2.    Escrow accounts for the benefit of the Company; and/or

      3.    Cash advances;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved. The Reinsurer, at its sole option, may fund in other
      than cash if its method and form of funding are acceptable to the
      insurance regulatory authorities involved.

B.    If the Reinsurer is unauthorized in any province or jurisdiction of
      Canada, the Reinsurer agrees to fund 115% of its share of the Company's
      ceded Canadian unearned premium and outstanding loss and loss adjustment
      expense reserves (including all case reserves plus any reasonable amount
      estimated to be unreported from known loss occurrences) by:

      1.    A clean, irrevocable and unconditional letter of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a Canadian bank or banks meeting the NAIC
            Securities Valuation Office credit standards for issuers of letters
            of credit and acceptable to said insurance regulatory authorities,
            for no more than 15/115ths of the total funding required; and/or

      2.    Cash advances for the remaining balance of the funding required;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved.

C.    With regard to funding in whole or in part by letters of credit, it is
      agreed that each letter of credit will be in a form acceptable to
      insurance regulatory authorities involved, will be issued for a term of at
      least one year and will include an "evergreen clause," which automatically
      extends the term for at least one additional year at each expiration date
      unless written notice of non-renewal is given to the

Page 12



                                                                 [BENFIELD LOGO]

      Company not less than 30 days prior to said expiration date. The Company
      and the Reinsurer further agree, notwithstanding anything to the contrary
      in this Contract, that said letters of credit may be drawn upon by the
      Company or its successors in interest at any time, without diminution
      because of the insolvency of the Company or the Reinsurer, but only for
      one or more of the following purposes:

      1.    To reimburse itself for the Reinsurer's share of unearned premiums
            returned to insureds on account of policy cancellations, unless paid
            in cash by the Reinsurer;

      2.    To reimburse itself for the Reinsurer's share of losses and/or loss
            adjustment expense paid under the terms of policies reinsured
            hereunder, unless paid in cash by the Reinsurer;

      3.    To reimburse itself for the Reinsurer's share of any other amounts
            claimed to be due hereunder, unless paid in cash by the Reinsurer;

      4.    To fund a cash account in an amount equal to the Reinsurer's share
            of any ceded unearned premium and/or outstanding loss and loss
            adjustment expense reserves (including all case reserves plus any
            reasonable amount estimated to be unreported from known loss
            occurrences) funded by means of a letter of credit which is under
            non-renewal notice, if said letter of credit has not been renewed or
            replaced by the Reinsurer 10 days prior to its expiration date;

      5.    To refund to the Reinsurer any sum in excess of the actual amount
            required to fund the Reinsurer's share of the Company's ceded
            unearned premium and/or outstanding loss and loss adjustment expense
            reserves (including all case reserves plus any reasonable amount
            estimated to be unreported from known loss occurrences), if so
            requested by the Reinsurer.

      In the event the amount drawn by the Company on any letter of credit is in
      excess of the actual amount required for C(1), C(2) or C(4), or in the
      case of C(3), the actual amount determined to be due, the Company shall
      promptly return to the Reinsurer the excess amount so drawn.

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

Page 13



                                                                 [BENFIELD LOGO]

      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.

ARBITRATION

A.    As a condition precedent to any right of action hereunder, any dispute or
      difference between the Company and any Reinsurer relating to the
      interpretation or performance of this Contract, including its formation or
      validity, or any transaction under this Contract, whether arising before
      or after termination, shall be submitted to arbitration.

B.    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 provided that communication shall be made by the Company to each
      of the reinsurers constituting the one party, and provided, however, that
      nothing therein 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 Reinsurer under the terms of this Contract
      from several to joint.

C.    Upon written request of any party, each party shall choose an arbitrator
      and the two chosen shall select a third arbitrator. If either party
      refuses or neglects to appoint an arbitrator within 30 days after receipt
      of the written request for arbitration, the requesting party may appoint a
      second arbitrator. If the two arbitrators fail to agree on the selection
      of a third arbitrator within 30 days of their appointment, the Company
      shall petition the American Arbitration Association to appoint the third
      arbitrator. If the American Arbitration Association fails to appoint the
      third arbitrator within 30 days after it has been requested to do so,
      either party may request a justice of a court of general jurisdiction of
      the state in which the arbitration is to be held to appoint the third
      arbitrator. All arbitrators shall be active or retired officers of
      insurance or reinsurance companies, or Lloyd's London Underwriters, and
      disinterested in the outcome of the arbitration. Each party shall submit
      its case to the arbitrators within 30 days of the appointment of the third
      arbitrator.

D.    The parties hereby waive all objections to the method of selection of the
      arbitrators, it being the intention of both sides that all the arbitrators
      be chosen from those submitted by the parties.

E.    The arbitrators shall have the power to determine all procedural rules for
      the holding of the arbitration including but not limited to inspection of
      documents, examination of witnesses and any other matter relating to the
      conduct of the arbitration. The arbitrators shall interpret this Contract
      as an honorable engagement and not as merely a legal obligation; they are
      relieved of all judicial formalities and may abstain from following the
      strict rules of law. The arbitrators may award interest and costs. Each
      party shall bear the expense of its own arbitrator and shall share equally
      with the other party the expenses of the third arbitrator and of the
      arbitration.

F.    The decision in writing of the majority of the arbitrators shall be final
      and binding upon both parties. Judgment may be entered upon the final
      decision of the arbitrators in any court having jurisdiction. The
      arbitration shall take place in Pinellas Park, Florida, unless otherwise
      mutually agreed between the Company and the Reinsurer.

G.    This Article shall remain in full force and effect in the event any other
      provision of this Contract shall be found invalid or non-binding.

H.    All time limitations stated in this Article may be amended by mutual
      consent of the parties, and will be amended automatically to the extent
      made necessary by any circumstances beyond the control of the parties.

Page 14



                                                                 [BENFIELD LOGO]

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.

GOVERNING LAW

This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Florida exclusive of the rules with
respect to conflicts of law, except as to rules with respect to credit for
reinsurance in which case the applicable rules of all states shall apply.

CONFIDENTIALITY

The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly, communicate, disclose or divulge to any third
party, any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company's books, records and
papers. The restrictions as outlined in this Article shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, retrocessionaires, legal counsel, arbitrators involved in
any arbitration procedures under this Contract or disclosures required upon
subpoena or other dully-issued order of a court or other governmental agency or
regulatory authority.

SEVERABILITY

If any provision of this Contract should be invalid under applicable laws, the
latter shall control but only to the extent of the conflict without affecting
the remaining provisions of this Contract.

SERVICE OF SUIT

(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. This
Article is not intended to conflict with or override the parties' obligations to
arbitrate their disputes in accordance with the Arbitration Article)

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 any 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 therefore, 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.

Page 15



                                                                 [BENFIELD LOGO]

       NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE
                                    (U.S.A.)

1.    This Reinsurance does not cover any loss or liability accruing to the
      Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph (1) of this
      Clause, this Reinsurance does not cover any loss or liability accruing to
      the Reassured, directly or indirectly and whether as Insurer or Reinsurer,
      from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      I.    Nuclear reactor power plants including all auxiliary property on the
            site, or

      II.   Any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and "critical facilities" as such, or

      III.  Installations for fabricating complete fuel elements or for
            processing substantial quantities of "special nuclear material," and
            for reprocessing, salvaging, chemically separating, storing or
            disposing of "spent" nuclear fuel or waste materials, or

      IV.   Installations other than those listed in paragraph (2) III above
            using substantial quantities of radioactive isotopes or other
            products of nuclear fission.

3.    Without in any way restricting the operations of paragraphs (1) and (2)
      hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, from any insurance on
      property which is on the same site as a nuclear reactor power plant or
      other nuclear installation and which normally would be insured therewith
      except that this paragraph (3) shall not operate

      (a)   where Reassured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused. However on and after 1st January 1960
            this sub-paragraph (b) shall only apply provided the said
            radioactive contamination exclusion provision has been approved by
            the Governmental Authority having jurisdiction thereof.

4.    Without in any way restricting the operations of paragraphs (1), (2) and
      (3) hereof, this Reinsurance does not cover any loss or liability by
      radioactive contamination accruing to the Reassured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    It is understood and agreed that this Clause shall not extend to risks
      using radioactive isotopes in any form where the nuclear exposure is not
      considered by the Reassured to be the primary hazard.

6.    The term "special nuclear material" shall have the meaning given it in the
      Atomic Energy Act of 1954 or by any law amendatory thereof.

7.    Reassured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

Note.-Without in any way restricting the operation of paragraph (1) hereof, it
is understood and agreed that

      (a)   all policies issued by the Reassured on or before 31st December 1957
            shall be free from the application of the other provisions of this
            Clause until expiry date or 31st December 1960 whichever first
            occurs whereupon all the provisions of this Clause shall apply.

Page 16



                                                                 [BENFIELD LOGO]

      (b)   with respect to any risk located in Canada policies issued by the
            Reassured on or before 31st December 1958 shall be free from the
            application of the other provisions of this Clause until expiry date
            or 31st December 1960 whichever first occurs whereupon all the
            provisions of this Clause shall apply.

12/12/57
N.M.A. 1119
BRMA 35B

Page 17



                                                                 [BENFIELD LOGO]

       NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE
                                    (CANADA)

1.    This Agreement does not cover any loss or liability accruing to the
      Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
      from any Pool of Insurers or Reinsurers formed for the purpose of covering
      Atomic or Nuclear Energy risks.

2.    Without in any way restricting the operation of paragraph 1 of this
      clause, this Agreement does not cover any loss or liability accruing to
      the Reinsured, directly or indirectly, and whether as Insurer or
      Reinsurer, from any insurance against Physical Damage (including business
      interruption or consequential loss arising out of such Physical Damage)
      to:

      (a)   nuclear reactor power plants including all auxiliary property on the
            site, or

      (b)   any other nuclear reactor installation, including laboratories
            handling radioactive materials in connection with reactor
            installations, and critical facilities as such, or

      (c)   installations for fabricating complete fuel elements or for
            processing substantial quantities of prescribed substances, and for
            reprocessing, salvaging, chemically separating, storing or disposing
            of spent nuclear fuel or waste materials, or

      (d)   installations other than those listed in (c) above using substantial
            quantities of radioactive isotopes or other products of nuclear
            fission.

3.    Without in any way restricting the operation of paragraphs 1 and 2 of this
      clause, this Agreement does not cover any loss or liability by radioactive
      contamination accruing to the Reinsured, directly or indirectly, and
      whether as Insurer or Reinsurer, from any insurance on property which is
      on the same site as a nuclear reactor power plant or other nuclear
      installation and which normally would be insured therewith, except that
      this paragraph 3 shall not operate:

      (a)   where the Reinsured does not have knowledge of such nuclear reactor
            power plant or nuclear installation, or

      (b)   where the said insurance contains a provision excluding coverage for
            damage to property caused by or resulting from radioactive
            contamination, however caused.

4.    Without in any way restricting the operation of paragraphs 1, 2 and 3 of
      this clause, this Agreement does not cover any loss or liability by
      radioactive contamination accruing to the Reinsured, directly or
      indirectly, and whether as Insurer or Reinsurer, when such radioactive
      contamination is a named hazard specifically insured against.

5.    This clause shall not extend to risks using radioactive isotopes in any
      form where the nuclear exposure is not considered by the Reinsured to be
      the primary hazard.

6.    The term "prescribed substances" shall have the meaning given to it by the
      Atomic Energy Control Act R.S.C. 1985(c), A-16 or by any law amendatory
      thereof.

7.    Reinsured to be sole judge of what constitutes:

      (a)   substantial quantities, and

      (b)   the extent of installation, plant or site.

8.    Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, this Agreement does not cover any loss or liability
      accruing to the Reinsured, directly or indirectly, and whether as Insurer
      or Reinsurer, caused:

Page 18



                                                                 [BENFIELD LOGO]

      (1)   by any nuclear incident, as defined in the Nuclear Liability Act or
            any other nuclear liability act, law or statute, or any law
            amendatory thereof or nuclear explosion, except for ensuing loss or
            damage which results directly from fire, lightning or explosion of
            natural, coal or manufactured gas;

      (2)   by contamination by radioactive material.

NOTE: Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, paragraph 8 of this clause shall only apply to all
      original contracts of the Reinsured, whether new, renewal or replacement,
      which become effective on or after December 31, 1992.

N.M.A. 1980 (2/19/93)

Page 19



                                                                 [BENFIELD LOGO]

               POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE

SECTION A:

Excluding:

      (a)   All business derived directly or indirectly from any Pool,
            Association or Syndicate which maintains its own reinsurance
            facilities.

      (b)   Any Pool or Scheme (whether voluntary or mandatory) formed after
            March 1, 1968 for the purpose of insuring property whether on a
            country-wide basis or in respect of designated areas. This exclusion
            shall not apply to so-called Automobile Insurance Plans or other
            Pools formed to provide coverage for Automobile Physical Damage.

SECTION B:

It is agreed that business written by the Company for the same perils, which is
known at the time to be insured by, or in excess of underlying amounts placed in
the following Pools, Associations or Syndicates, whether by way of insurance or
reinsurance, is excluded hereunder:

      Industrial Risk Insurers,
      Associated Factory Mutuals,
      Improved Risk Mutuals,
      Any Pool, Association or Syndicate formed for the purpose of writing Oil,
            Gas or Petro-Chemical Plants and/or Oil or Gas Drilling Rigs,
      United States Aircraft Insurance Group,
      Canadian Aircraft Insurance Group,
      Associated Aviation Underwriters,
      American Aviation Underwriters.

Section B does not apply:

      (a)   Where The Total Insured Value over all interests of the risk in
            question is less than $250,000,000.

      (b)   To interests traditionally underwritten as Inland Marine or stock
            and/or contents written on a blanket basis.

      (c)   To Contingent Business Interruption, except when the Company is
            aware that the key location is known at the time to be insured in
            any Pool, Association or Syndicate named above, other than as
            provided for under Section B(a).

      (d)   To risks as follows:

            Offices, Hotels, Apartments, Hospitals, Educational Establishments,
            Public Utilities (other than railroad schedules) and builder's risks
            on the classes of risks specified in this subsection (d) only.

Where this clause attaches to Catastrophe Excesses, the following Section C is
added:

SECTION C:

Nevertheless the Reinsurer specifically agrees that liability accruing to the
Company from its participation in residual market mechanisms including but not
limited to:

      (1)   The following so-called "Coastal Pools":

            Alabama Insurance Underwriting Association
            Louisiana Insurance Underwriting Association
            Mississippi Windstorm Underwriting Association
            North Carolina Insurance Underwriting Association

Page 20



                                                                 [BENFIELD LOGO]

            South Carolina Windstorm and Hail Underwriting Association
            Texas Windstorm Insurance Association

AND

      (2)   All "Fair Plan" and "Rural Risk Plan" business

AND

      (3)   Citizens Property Insurance Corporation ("CPIC") and the California
            Earthquake Authority ("CEA")

for all perils otherwise protected hereunder shall not be excluded, except,
however, that this reinsurance does not include any increase in such liability
resulting from:

      (i)   The inability of any other participant in such "Coastal Pool" and/or
            "Fair Plan" and/or "Rural Risk Plan" and/or Residual Market
            Mechanisms to meet its liability.

      (ii)  Any claim against such "Coastal Pool" and/or "Fair Plan" and/or
            "Rural Risk Plan" and/or Residual Market Mechanisms, or any
            participant therein, including the Company, whether by way of
            subrogation or otherwise, brought by or on behalf of any insolvency
            fund (as defined in the Insolvency Fund Exclusion Clause
            incorporated in this Contract).

SECTION D:

      (1)   Notwithstanding Section C above, in respect of the CEA, where an
            assessment is made against the Company by the CEA, the Company may
            include in its Ultimate Net Loss only that assessment directly
            attributable to each separate loss occurrence covered hereunder. The
            Company's initial capital contribution to the CEA shall not be
            included in the Ultimate Net Loss.

      (2)   Notwithstanding Section C above, in respect of CPIC, where an
            assessment is made against the Company by CPIC, the maximum loss
            that the Company may include in the Ultimate Net Loss in respect of
            any loss occurrence hereunder shall not exceed the lesser of:

            (a)   The Company's assessment from CPIC for the accounting year in
                  which the loss occurrence commenced, or

            (b)   The product of the following:

                       (i) The Company's percentage participation in CPIC for
                       the accounting year in which the loss occurrence
                       commenced; and

                       (ii) CPIC's total losses in such loss occurrence.

Any assessments for accounting years subsequent to that in which the loss
occurrence commenced may not be included in the Ultimate Net Loss hereunder.
Moreover, notwithstanding Section C above, in respect of CPIC, the Ultimate Net
Loss hereunder shall not include any monies expended to purchase or retire bonds
as a consequence of being a member of CPIC. For the purposes of this Contract,
the Company may not include in the Ultimate Net Loss any assessment or any
percentage assessment levied by CPIC to meet the obligations of an insolvent
insurer member or other party, or to meet any obligations arising from the
deferment by CPIC of the collection of monies.

- ----------------------------

NOTES: Wherever used herein the terms:

       "Company"  shall be understood to mean "Company," "Reinsured,"
                  "Reassured" or whatever other term is used in the attached
                  reinsurance document to designate the reinsured company or
                  companies.

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                                                                 [BENFIELD LOGO]

      "Agreement"  shall be understood to mean "Agreement," "Contract," "Policy"
                   or whatever other term is used to designate the attached
                   reinsurance document.

      "Reinsurers" shall be understood to mean "Reinsurers," "Underwriters" or
                   whatever other term is used in the attached reinsurance
                   document to designate the reinsurer or reinsurers.

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                                                                 [BENFIELD LOGO]

                     POLLUTION AND SEEPAGE EXCLUSION CLAUSE

This Contract excludes loss and/or damage and/or costs and/or expenses arising
from seepage and/or pollution and/or contamination, other than contamination
from smoke. Nevertheless, this exclusion does not preclude payment of the cost
of removing debris of property damaged by a loss otherwise covered hereunder,
subject always to a limit of 25% of the Company's property loss under the
applicable original policy.

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                                                                 [BENFIELD LOGO]

                          ELECTRONIC DATA ENDORSEMENT B

1.    ELECTRONIC DATA EXCLUSION

      Notwithstanding any provision to the contrary within the Policy or any
      endorsement thereto, it is understood and agreed as follows:

            (a)   This Policy does not insure loss, damage, destruction,
                  distortion, erasure, corruption or alteration of ELECTRONIC
                  DATA from any cause whatsoever (including but not limited to
                  COMPUTER VIRUS) or loss of use, reduction in functionality,
                  cost, expense of whatsoever nature resulting therefrom,
                  regardless of any other cause or event contributing
                  concurrently or in any other sequence to the loss.

                  ELECTRONIC DATA means facts, concepts and information
                  converted to a form useable for communications, interpretation
                  or processing by electronic and electromechanical data
                  processing or electronically controlled equipment and includes
                  programs, software and other coded instructions for the
                  processing and manipulation of data or the direction and
                  manipulation of such equipment.

                  COMPUTER VIRUS means a set of corrupting, harmful or otherwise
                  unauthorized instructions or code including a set of
                  maliciously introduced unauthorized instructions or code,
                  programmatic or otherwise, that propagate themselves through a
                  computer system or network of whatsoever nature. COMPUTER
                  VIRUS includes but is not limited to 'Trojan Horses', 'worms'
                  and 'time or logic bombs'.

            (b)   However, in the event that a peril listed below results from
                  any of the matters described in paragraph (a) above, this
                  Policy, subject to all its terms, conditions and exclusions,
                  will cover physical damage occurring during the Policy period
                  to property insured by this Policy directly caused by such
                  listed peril.

Listed Perils
            Fire
            Explosion

2.    ELECTRONIC DATA PROCESSING MEDIA VALUATION

      Notwithstanding any provision to the contrary within the Policy or any
      endorsement thereto, it is understood and agreed as follows:

      Should electronic data processing media insured by this Policy suffer
      physical loss or damage insured by this Policy, then the basis of
      valuation shall be the cost of the blank media plus the costs of copying
      the ELECTRONIC DATA from back-up or from originals of a previous
      generation. These costs will not include research and engineering nor any
      costs of recreating, gathering or assembling such ELECTRONIC DATA. If the
      media is not repaired, replaced or restored the basis of valuation shall
      be the cost of the blank media. However this Policy does not insure any
      amount pertaining to the value of such ELECTRONIC DATA to the Assured or
      any other party, even if such ELECTRONIC DATA cannot be recreated,
      gathered or assembled.

25/01/01
NMA2915

Page 24

EX-10.22

                                                                   EXHIBIT 10.22

                                                                 [BENFIELD LOGO]

                       Liberty American Insurance Company
                             Pinellas Park, Florida
                          Mobile USA Insurance Company
                             Pinellas Park, Florida
                                       and
                    any and all other companies which are now
                   or may hereafter become member companies of
                     Liberty American Insurance Group, Inc.
              Hereinafter referred to collectively as the "Company"

                          $6,500,000 EXCESS $3,500,000
            FLORIDA ONLY FIFTH EVENT CATASTROPHE REINSURANCE CONTRACT
                          EFFECTIVE: SEPTEMBER 24, 2004
                            REINSURANCE CONFIRMATION

BUSINESS REINSURED

Business classified by the Company as Property business. In force, new and
renewal business.

TERM

Effective September 24, 2004, with respect to losses arising out of loss
occurrences commencing on or after that date, through May 31, 2005 both days
inclusive. Extended expiration in the event a loss occurrence is in progress at
expiration.

TERRITORY

State of Florida and extra territorial limits of the Company's policies.

EXCLUSIONS

See attached.

RETENTION AND LIMIT

100% of $6,500,000 ultimate net loss each loss occurrence excess of $3,500,000
ultimate net loss each loss occurrence, not to exceed $6,500,000 in all during
the term of this Contract.

No claim shall be made under this Contract unless the amount shown as Funds
Otherwise Recoverable for each layer in the attached Schedule A has been paid or
scheduled to be paid under the first layer of the Company's Florida Only Excess
Catastrophe Reinsurance Contract effective June 1, 2004, Section I of the
Company's Underlying Excess Catastrophe and Reinstatement Premium Protection
Contract effective July 1, 2004, the underlying layer and first layer of the
Company's Florida Only Third and Fourth Event Excess Catastrophe Reinsurance
Contract effective September 1, 2004 and the underlying layer and first layer of
the Company's Florida Only Third and Fourth Event Excess Catastrophe Reinsurance
Contract effective September 2, 2004.

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                                                                 [BENFIELD LOGO]

No claim shall be made as respects any one loss occurrence unless at least two
risks insured or reinsured by the Company are involved in such loss occurrence.
For purposes hereof, the Company shall be the sole judge of what constitutes one
risk.

FLORIDA HURRICANE CAT FUND

FHCF inuring to Catastrophe Reinsurance Program. Recoveries deemed in place,
however, the full payout limit may be reduced by prior loss occurrences for
which recoveries were made from the FHCF.

OTHER REINSURANCE

The Company shall carry a 15% quota share reinsurance of its direct personal
lines business, recoveries under which to inure to the benefit of this Contract,
or so deemed.

DEFINITIONS

UNL includes LAE.  See attached.

LOSS OCCURRENCE

No reinstatement same wind event.  See attached.

LOSS NOTICES AND SETTLEMENTS

Individual loss notices and settlements.

PREMIUM

$487,500 payable at inception.

Should the Funds Otherwise Recoverable under the layers referenced in Schedule A
exceed $19,500,000, the Reinsurer shall promptly be due additional premium equal
to 20% of the ultimate net loss subject to the second limit of the underlying
layer and first layer of the Company's Florida Only Third and Fourth Event
Excess Catastrophe Reinsurance Contract effective September 1, 2004 and the
second limit of the underlying layer and first layer of the Company's Florida
Only Third and Fourth Event Excess Catastrophe Reinsurance Contract effective
September 2, 2004, not to exceed $1,300,000. Quarterly recalculations and
remittances until all losses are settled.

LATE PAYMENTS

See attached. Interest penalty based on 6-month United States Treasury Bill
Rate. Interest penalty of less than $100 shall be waived.

OTHER PROVISIONS


Salvage and Subrogation
Offset (BRMA 36D)
Access to Records (BRMA 1D)

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                                                                 [BENFIELD LOGO]

Liability of the Reinsurer
Net Retained Lines (BRMA 32E)
Errors and Omissions (BRMA 14F)
Currency (BRMA 12A)
Taxes (BRMA 50C)
Federal Excise Tax (BRMA 17A)
Reserve Requirements (Evergreen LOC for unearned premium, outstanding
losses/LAE, including all case reserves plus any reasonable amount estimated to
be unreported from known loss occurrences)
Insolvency
Arbitration
Service of Suit
Agency Agreement
Governing Law (State of Florida)
Confidentiality
Severability
Intermediary (BRMA 23A)

ALLOCATION OF FINAL SHARES

The Company shall have the right to review all authorizations and the full
authority to allocate final shares. Such decisions will be at the sole
discretion of the Company and may result in other than a "proportional signdown"
of authorizations. As respects signdowns within the London marketplace, the
final allocation of shares to individual companies or syndicates may not be
proportionate to the original authorizations.

Page 3



                                                                 [BENFIELD LOGO]

                                   EXCLUSIONS

This Contract does not apply to and specifically excludes the following:

      1.    Financial Guarantee and Insolvency.

      2.    Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
            Physical Damage - Reinsurance (U.S.A.)" and "Nuclear Incident
            Exclusion Clause - Physical Damage - Reinsurance (Canada)" attached
            to and forming part of this Contract.

      3.    Loss or damage caused by or resulting from 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, but
            this exclusion shall not apply to loss or damage covered under a
            standard policy with a standard War Exclusion Clause.

      4.    Loss or liability excluded under the provisions of the "Pools,
            Associations and Syndicates Exclusion Clause" attached to and
            forming part of this Contract.

      5.    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.

      6.    Losses in respect of overhead transmission and distribution lines
            and their supporting structures, other than those on or within 300
            meters (or 1,000 feet) of the insured premises. It is understood and
            agreed that public utilities extension and/or suppliers extension
            and/or contingent business interruption coverages are not subject to
            this exclusion, provided that these are not part of a transmitters'
            or distributors' Policy.

      7.    Accident and Health, Casualty, Fidelity and/or Surety business.

      8.    Pollution and seepage coverages excluded under the provisions of the
            "Pollution and Seepage Exclusion Clause (BRMA 39A)" attached to and
            forming part of this Contract.

      9.    Notwithstanding any other provision to the contrary within this
            Contract or any amendment thereto, it is agreed that this Contract
            excludes loss, damage, cost or expense directly or indirectly caused
            by, contributed to by, resulting from, or arising out of or in
            connection with any act of terrorism, as defined herein, regardless
            of any other cause or event contributing concurrently or in any
            other sequence to the loss.

            An "act of terrorism" includes any act, or preparation in respect of
            action, or threat of action, designed to influence the government de
            jure or de facto of any nation or any political division thereof, or
            in pursuit of political, religious, ideological, or similar purposes
            to intimidate the public or a section of the public of any nation by
            any person or group(s) of persons, whether acting alone or on behalf
            of or in connection with any organization(s) or government(s) de
            jure or de facto, and which:

                  a.    Involves violence against one or more persons; or

                  b.    Involves damage to property; or

Page 4



                                                                 [BENFIELD LOGO]

                  c.    Endangers life other than that of the person committing
                        the action; or

                  d.    Creates a risk to health or safety of the public or a
                        section of the public; or

                  e.    Is designed to interfere with or to disrupt an
                        electronic system.

            This Contract also excludes loss, damage, cost or expense directly
            or indirectly caused by, contributed to by, resulting from, or
            arising out of or in connection with any action in controlling,
            preventing, suppressing, retaliating against or responding to any
            act of terrorism.

            Notwithstanding the above and subject otherwise to the terms,
            conditions, and limitations of this Contract, in respect only of
            personal lines this Contract will pay actual loss or damage (but not
            related cost or expense) caused by any act of terrorism provided
            such act is not directly or indirectly caused by, contributed to by,
            resulting from, or arising out of or in connection with biological,
            chemical, or nuclear pollution or contamination.

      10.   Loss or liability in any way or to any extent arising out of the
            actual or alleged presence or actual, alleged or threatened presence
            of fungi including, but not limited to, mold, mildew, mycotoxins,
            microbial volatile organic compounds or other "microbial
            contamination". This includes:

                  a.    Any supervision, instruction, recommendations, warnings
                        or advice given or which should have been given in
                        connection with the above; and

                  b.    Any obligation to share damages with or repay someone
                        else who must pay damages because of such injury or
                        damage.

            For purposes of this exclusion, "microbial contamination" means any
            contamination, either airborne or surface, which arises out of or is
            related to the presence of fungi, mold, mildew, mycotoxins,
            microbial volatile organic compounds or spores, including, without
            limitation, Penicillium, Aspergillus, Fusarium, Aspergillus Flavus
            and Stachybotrys chartarum.

            Losses resulting from the above causes do not in and of themselves
            constitute an event unless arising out of one or more of the
            following perils, in which case this exclusion does not apply:

                  Fire, lightning, explosion, aircraft or vehicle impact,
                  falling objects, windstorm, hail, tornado, cyclone, hurricane,
                  earthquake, volcano, tsunami, flood, freeze or weight of snow.

            Notice of any claims for mold-related losses must be given by the
            Company to the Reinsurer, in writing, within 24 months after the
            commencement date of the loss occurrence to which such claims
            relate.

      11.   Loss or liability excluded under the provisions of the "Electronic
            Data Endorsement B" (NMA 2915) attached to and forming part of this
            Contract.

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                                                                 [BENFIELD LOGO]

                                   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 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 any 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.

      Notwithstanding anything stated herein, the amount included in the
      ultimate net loss for any one loss occurrence as respects loss in excess
      of policy limits and extra contractual obligations shall not exceed 25.0%
      of the Company's indemnity loss hereunder arising out of that loss
      occurrence.

      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.

      If any provision of this paragraph B 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.

C.    "Loss adjustment expense" as used herein shall mean expenses assignable to
      the investigation, appraisal, adjustment, settlement, litigation, defense
      and/or appeal of specific claims, regardless of how such expenses are
      classified for statutory reporting purposes. Loss adjustment expense shall
      include, but not be limited to, declaratory judgments, interest on
      judgments, expenses of outside adjusters, and a pro rata share of the
      salaries and expenses of the Company's field employees according to the
      time occupied adjusting such losses and expenses of the Company's
      officials

Page 6



                                                                 [BENFIELD LOGO]

      incurred in connection with the losses, but shall not include office
      expenses or salaries of the Company's regular employees.

Page 7



                                                                 [BENFIELD LOGO]

                                  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 herein (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 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 10 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 10 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.

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                                                                 [BENFIELD LOGO]

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.

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                                                                 [BENFIELD LOGO]

                                NON BRMA ARTICLES

LOSS OCCURRENCE

A.    The term "loss occurrence" shall mean the sum of all individual losses
      directly occasioned by any one disaster, accident or loss or series of
      disasters, accidents or losses arising out of one event which occurs
      within the area of one state of the United States or province of Canada
      and states or provinces contiguous thereto and to one another. However,
      the duration and extent of any one "loss occurrence" shall be limited to
      all individual losses sustained by the Company occurring during any period
      of 168 consecutive hours arising out of and directly occasioned by the
      same event, except that the term "loss occurrence" shall be further
      defined as follows:

      1.    As regards windstorm, hail, tornado, hurricane, cyclone, including
            ensuing collapse and water damage, all individual losses sustained
            by the Company occurring during any period of 72 consecutive hours
            arising out of and directly occasioned by the same event. However,
            the event need not be limited to one state or province or states or
            provinces contiguous thereto.

      2.    As regards riot, riot attending a strike, civil commotion, vandalism
            and malicious mischief, all individual losses sustained by the
            Company occurring during any period of 72 consecutive hours within
            the area of one municipality or county and the municipalities or
            counties contiguous thereto arising out of and directly occasioned
            by the same event. The maximum duration of 72 consecutive hours may
            be extended in respect of individual losses which occur beyond such
            72 consecutive hours during the continued occupation of an insured's
            premises by strikers, provided such occupation commenced during the
            aforesaid period.

      3.    As regards earthquake (the epicenter of which need not necessarily
            be within the territorial confines referred to in the introductory
            portion of this paragraph) and fire following directly occasioned by
            the earthquake, only those individual fire losses which commence
            during the period of 168 consecutive hours may be included in the
            Company's "loss occurrence."

      4.    As regards "freeze," only individual losses directly occasioned by
            collapse, breakage of glass and water damage (caused by bursting
            frozen pipes and tanks) may be included in the Company's "loss
            occurrence."

      5.    As regards firestorms, brush fires, and other fires or series of
            fires, irrespective of origin (except as provided in subparagraphs 2
            and 3 above), which spread through trees, grassland or other
            vegetation, all individual losses sustained by the Company which
            occur during any period of 168 consecutive hours within a 100-mile
            radius of any one fixed point selected by the Company may be
            included in the Company's "loss occurrence." However, an individual
            loss subject to this subparagraph cannot be included in more than
            one "loss occurrence."

B.    For all those "loss occurrences," other than those referred to in
      subparagraph 2 of paragraph A above, the Company may choose the date and
      time when any such period of consecutive hours commences, provided that it
      is not earlier than the date and time of the occurrence of the first
      recorded individual loss sustained by the Company arising out of that
      disaster, accident or loss, and provided that only one such period of 168
      consecutive hours shall apply with respect to one event, except for any
      "loss occurrence" referred to in subparagraph 1 of paragraph A above where
      only one such period of 72 consecutive hours shall apply with respect to
      one event, regardless of the duration of the event.

C.    As respects those "loss occurrences" referred to in subparagraph 2 of
      paragraph A above, if the disaster, accident or loss occasioned by the
      event is of greater duration than 72 consecutive hours, then the Company
      may divide that disaster, accident or loss into two or more "loss
      occurrences," provided no two periods overlap and no individual loss is
      included in more than one such period and

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                                                                 [BENFIELD LOGO]

      provided that no period commences earlier than the date and time of the
      occurrence of the first recorded individual loss sustained by the Company
      arising out of that disaster, accident or loss.

D.    No individual losses occasioned by an event that would be covered by 72
      hours clauses may be included in any "loss occurrence" claimed under the
      168 hours provision.

FLORIDA HURRICANE CATASTROPHE FUND

A.    Any loss reimbursement paid or payable to the Company under the Florida
      Hurricane Catastrophe Fund (FHCF) as a result of loss occurrences
      commencing during the term of this Contract shall inure to the benefit of
      this Contract. Further, any FHCF loss reimbursement shall be deemed to be
      paid to the Company in accordance with the reimbursement contract between
      the Company and the State Board of Administration of the State of Florida
      at the full payout level set forth therein and will be deemed not to be
      reduced by any reduction or exhaustion of the FHCF's claims paying
      capacity.

B.    Prior to the determination of the Company's FHCF retention and payout, if
      any, under the reimbursement contract, the Reinsurer's liability hereunder
      will be determined provisionally based on the projected payout, determined
      in accordance with the provisions of the reimbursement contract. Following
      determination of the payout under the reimbursement contract, the ultimate
      net loss under this Contract will be recalculated. If, as a result of such
      calculation, the loss to the Reinsurer in any one loss occurrence is less
      than the amount previously paid by the Reinsurer, the Company shall
      promptly remit the difference to the Reinsurer. If the loss to the
      Reinsurer in any one loss occurrence is greater than the amount previously
      paid by the Reinsurer, the Reinsurer shall promptly remit the difference
      to the Company.

C.    If an FHCF reimbursement amount is based on the Company's losses in more
      than one loss occurrence and the FHCF does not designate the amount
      allocable to each loss occurrence, the FHCF reimbursement amount shall be
      prorated in the proportion that the Company's losses in each loss
      occurrence bear to the Company's total losses arising out of all loss
      occurrences to which the FHCF reimbursement applies.

D.    Any reimbursement premiums or emergency assessment paid by the Company
      under the FHCF shall be deemed to be premiums paid for inuring
      reinsurance.

LOSS NOTICES AND SETTLEMENTS

A.    Whenever losses sustained by the Company appear likely to result in a
      claim hereunder, the Company shall notify the Reinsurer, and the Reinsurer
      shall have the right to participate in the adjustment of such losses at
      its own expense.

B.    All loss settlements made by the Company, provided they are within the
      terms of this Contract, shall be binding upon the Reinsurer, and the
      Reinsurer agrees to pay all amounts for which it may be liable upon
      receipt of reasonable evidence of the amount paid (or scheduled to be
      paid) by the Company.

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) on account of claims
and settlements involving reinsurance hereunder. Salvage 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

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                                                                 [BENFIELD LOGO]

enforce its rights to salvage or subrogation relating to any loss, a part of
which loss was sustained by the Reinsurer, and to prosecute all claims arising
out of such rights.

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. However, in no event shall this be construed
      in any way to provide coverage outside the terms and conditions set forth
      in this Contract.

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.

RESERVE REQUIREMENTS

A.    If the Reinsurer is unauthorized in any state of the United States of
      America or the District of Columbia, the Reinsurer agrees to fund its
      share of the Company's ceded United States unearned premium and
      outstanding loss and loss adjustment expense reserves (including all case
      reserves plus any reasonable amount estimated to be unreported from known
      loss occurrences) by:

      1.    Clean, irrevocable and unconditional letters of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a bank or banks meeting the NAIC Securities
            Valuation Office credit standards for issuers of letters of credit
            and acceptable to said insurance regulatory authorities; and/or

      2.    Escrow accounts for the benefit of the Company; and/or

      3.    Cash advances;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved. The Reinsurer, at its sole option, may fund in other
      than cash if its method and form of funding are acceptable to the
      insurance regulatory authorities involved.

B.    If the Reinsurer is unauthorized in any province or jurisdiction of
      Canada, the Reinsurer agrees to fund 115% of its share of the Company's
      ceded Canadian unearned premium and outstanding loss and loss adjustment
      expense reserves (including all case reserves plus any reasonable amount
      estimated to be unreported from known loss occurrences) by:

      1.    A clean, irrevocable and unconditional letter of credit issued and
            confirmed, if confirmation is required by the insurance regulatory
            authorities involved, by a Canadian bank or banks meeting the NAIC
            Securities Valuation Office credit standards for issuers of letters
            of credit and acceptable to said insurance regulatory authorities,
            for no more than 15/115ths of the total funding required; and/or

      2.    Cash advances for the remaining balance of the funding required;

      if, without such funding, a penalty would accrue to the Company on any
      financial statement it is required to file with the insurance regulatory
      authorities involved.

C.    With regard to funding in whole or in part by letters of credit, it is
      agreed that each letter of credit will be in a form acceptable to
      insurance regulatory authorities involved, will be issued for a term of at
      least one year and will include an "evergreen clause," which automatically
      extends the term for at least one additional year at each expiration date
      unless written notice of non-renewal is given to the

Page 12



                                                                 [BENFIELD LOGO]

      Company not less than 30 days prior to said expiration date. The Company
      and the Reinsurer further agree, notwithstanding anything to the contrary
      in this Contract, that said letters of credit may be drawn upon by the
      Company or its successors in interest at any time, without diminution
      because of the insolvency of the Company or the Reinsurer, but only for
      one or more of the following purposes:

      1.    To reimburse itself for the Reinsurer's share of unearned premiums
            returned to insureds on account of policy cancellations, unless paid
            in cash by the Reinsurer;

      2.    To reimburse itself for the Reinsurer's share of losses and/or loss
            adjustment expense paid under the terms of policies reinsured
            hereunder, unless paid in cash by the Reinsurer;

      3.    To reimburse itself for the Reinsurer's share of any other amounts
            claimed to be due hereunder, unless paid in cash by the Reinsurer;

      4.    To fund a cash account in an amount equal to the Reinsurer's share
            of any ceded unearned premium and/or outstanding loss and loss
            adjustment expense reserves (including all case reserves plus any
            reasonable amount estimated to be unreported from known loss
            occurrences) funded by means of a letter of credit which is under
            non-renewal notice, if said letter of credit has not been renewed or
            replaced by the Reinsurer 10 days prior to its expiration date;

      5.    To refund to the Reinsurer any sum in excess of the actual amount
            required to fund the Reinsurer's share of the Company's ceded
            unearned premium and/or outstanding loss and loss adjustment expense
            reserves (including all case reserves plus any reasonable amount
            estimated to be unreported from known loss occurrences), if so
            requested by the Reinsurer.

      In the event the amount drawn by the Company on any letter of credit is in
      excess of the actual amount required for C(1), C(2) or C(4), or in the
      case of C(3), the actual amount determined to be due, the Company shall
      promptly return to the Reinsurer the excess amount so drawn.

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

Page 13



                                                                 [BENFIELD LOGO]

      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.

ARBITRATION

A.    As a condition precedent to any right of action hereunder, any dispute or
      difference between the Company and any Reinsurer relating to the
      interpretation or performance of this Contract, including its formation or
      validity, or any transaction under this Contract, whether arising before
      or after termination, shall be submitted to arbitration.

B.    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 provided that communication shall be made by the Company to each
      of the reinsurers constituting the one party, and provided, however, that
      nothing therein 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 Reinsurer under the terms of this Contract
      from several to joint.

C.    Upon written request of any party, each party shall choose an arbitrator
      and the two chosen shall select a third arbitrator. If either party
      refuses or neglects to appoint an arbitrator within 30 days after receipt
      of the written request for arbitration, the requesting party may appoint a
      second arbitrator. If the two arbitrators fail to agree on the selection
      of a third arbitrator within 30 days of their appointment, the Company
      shall petition the American Arbitration Association to appoint the third
      arbitrator. If the American Arbitration Association fails to appoint the
      third arbitrator within 30 days after it has been requested to do so,
      either party may request a justice of a court of general jurisdiction of
      the state in which the arbitration is to be held to appoint the third
      arbitrator. All arbitrators shall be active or retired officers of
      insurance or reinsurance companies, or Lloyd's London Underwriters, and
      disinterested in the outcome of the arbitration. Each party shall submit
      its case to the arbitrators within 30 days of the appointment of the third
      arbitrator.

D.    The parties hereby waive all objections to the method of selection of the
      arbitrators, it being the intention of both sides that all the arbitrators
      be chosen from those submitted by the parties.

E.    The arbitrators shall have the power to determine all procedural rules for
      the holding of the arbitration including but not limited to inspection of
      documents, examination of witnesses and any other matter relating to the
      conduct of the arbitration. The arbitrators shall interpret this Contract
      as an honorable engagement and not as merely a legal obligation; they are
      relieved of all judicial formalities and may abstain from following the
      strict rules of law. The arbitrators may award interest and costs. Each
      party shall bear the expense of its own arbitrator and shall share equally
      with the other party the expenses of the third arbitrator and of the
      arbitration.

F.    The decision in writing of the majority of the arbitrators shall be final
      and binding upon both parties. Judgment may be entered upon the final
      decision of the arbitrators in any court having jurisdiction. The
      arbitration shall take place in Pinellas Park, Florida, unless otherwise
      mutually agreed between the Company and the Reinsurer.

G.    This Article shall remain in full force and effect in the event any other
      provision of this Contract shall be found invalid or non-binding.

H.    All time limitations stated in this Article may be amended by mutual
      consent of the parties, and will be amended automatically to the extent
      made necessary by any circumstances beyond the control of the parties.

Page 14



                                                                 [BENFIELD LOGO]

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.

GOVERNING LAW

This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Florida exclusive of the rules with
respect to conflicts of law, except as to rules with respect to credit for
reinsurance in which case the applicable rules of all states shall apply.

CONFIDENTIALITY

The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly, communicate, disclose or divulge to any third
party, any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company's books, records and
papers. The restrictions as outlined in this Article shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, retrocessionaires, legal counsel, arbitrators involved in
any arbitration procedures under this Contract or disclosures required upon
subpoena or other dully-issued order of a court or other governmental agency or
regulatory authority.

SEVERABILITY

If any provision of this Contract should be invalid under applicable laws, the
latter shall control but only to the extent of the conflict without affecting
the remaining provisions of this Contract.

SERVICE OF SUIT

(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. This
Article is not intended to conflict with or override the parties' obligations to
arbitrate their disputes in accordance with the Arbitration Article)

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 any 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 therefore, 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.

Page 15



                                                                 [BENFIELD LOGO]

                                   SCHEDULE A

                          $6,500,000 EXCESS $3,500,000
            FLORIDA ONLY FIFTH EVENT CATASTROPHE REINSURANCE CONTRACT
                          EFFECTIVE: SEPTEMBER 24, 2004

                                    issued to

                     Liberty American Insurance Group, Inc.
                             Pinellas Park, Florida



      LAYER         REINSURER'S PER OCCURRENCE LIMIT   COMPANY'S RETENTION    FUNDS OTHERWISE RECOVERABLE
- -----------------   --------------------------------   -------------------    ---------------------------
                                                                     
Underlying Excess             $ 3,500,000                   $3,500,000                $14,000,000
   First Excess               $13,000,000*                  $7,000,000                $12,000,000
                              ------------                                            -----------
                              $ 6,500,000                                             $26,000,000


*$3,000,000 part of $10,000,000 per occurrence applicable to Funds Otherwise
Recoverable under the first excess layer.

Page 16

EX-31.1

                                                                    EXHIBIT 31.1

                                  CERTIFICATION

I, James J. Maguire, Jr., Chief Executive Officer of Philadelphia Consolidated
Holding Corp, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Philadelphia
      Consolidated Holding Corp.

2.    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
      and have:

      (a)   Designed such disclosure controls and procedures, or caused such
            disclosure controls and procedures to be designed under our
            supervision, to ensure that material information relating to the
            registrant, including its consolidated subsidiaries, is made known
            to us by others within those entities, particularly during the
            period in which this report is being prepared;

      (b)   Evaluated the effectiveness of the registrant's disclosure controls
            and procedures and presented in this report our conclusions about
            the effectiveness of the disclosure controls and procedures as of
            the end of the period covered by this report based on such
            evaluation; and

      (c)   Disclosed in this report any change in the registrant's internal
            control over financial reporting that occurred during the
            registrant's most recent fiscal quarter (the registrant's fourth
            fiscal quarter in the case of an annual report) that has materially
            affected, or is reasonably likely to materially affect, the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on
      our most recent evaluation of internal control over financial reporting,
      to the registrant's auditors and the audit committee of the registrant's
      board of directors (or persons performing the equivalent functions):

      (a)   All significant deficiencies and material weaknesses in the design
            or operation of internal control over financial reporting which are
            reasonably likely to adversely affect the registrant's ability to
            record, process, summarize and report financial information; and

      (b)   Any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal control over financial reporting.

                                        Signed: James J. Maguire, Jr.
                                                --------------------------------
                                                Name:  James J. Maguire, Jr.
November 8, 2004                                Title: Chief Executive Officer

EX-31.2

                                                                    EXHIBIT 31.2

                                  CERTIFICATION

I, Craig P. Keller, Chief Financial Officer of Philadelphia Consolidated Holding
Corp, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Philadelphia
      Consolidated Holding Corp.

2.    Based on my knowledge, this report does not contain any untrue statement
      of a material fact or omit to state a material fact necessary to make the
      statements made, in light of the circumstances under which such statements
      were made, not misleading with respect to the period covered by this
      report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
      and have:

      (a)   Designed such disclosure controls and procedures, or caused such
            disclosure controls and procedures to be designed under our
            supervision, to ensure that material information relating to the
            registrant, including its consolidated subsidiaries, is made known
            to us by others within those entities, particularly during the
            period in which this report is being prepared;

      (b)   Evaluated the effectiveness of the registrant's disclosure controls
            and procedures and presented in this report our conclusions about
            the effectiveness of the disclosure controls and procedures as of
            the end of the period covered by this report based on such
            evaluation; and

      (c)   Disclosed in this report any change in the registrant's internal
            control over financial reporting that occurred during the
            registrant's most recent fiscal quarter (the registrant's fourth
            fiscal quarter in the case of an annual report) that has materially
            affected, or is reasonably likely to materially affect, the
            registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on
      our most recent evaluation of internal control over financial reporting,
      to the registrant's auditors and the audit committee of the registrant's
      board of directors (or persons performing the equivalent functions):

      (a)   All significant deficiencies and material weaknesses in the design
            or operation of internal control over financial reporting which are
            reasonably likely to adversely affect the registrant's ability to
            record, process, summarize and report financial information; and

      (b)   Any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal control over financial reporting.

                                      Signed: Craig P. Keller
                                              ----------------------------------
                                              Name:  Craig P. Keller
                                              Title: Chief Financial Officer
November 8, 2004

EX-32.1

                                                                    Exhibit 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Philadelphia Consolidated Holding
Corp. (the "Company") on Form 10-Q for the period ended September 30, 2004 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, James J. Maguire, Jr., chief executive officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

James J. Maguire, Jr.
- ------------------------------------------
James J. Maguire, Jr.
President and Chief Executive Officer
November 8, 2004

EX-32.2

                                                                    Exhibit 32.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Philadelphia Consolidated Holding
Corp. (the "Company") on Form 10-Q for the period ended September 30, 2004 as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Craig P. Keller, chief financial officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

Craig P. Keller
- ------------------------------
Craig P. Keller
Chief Financial Officer
November 8, 2004