GUARANTY NATIONAL CORP
10-Q, 1997-08-04
FIRE, MARINE & CASUALTY INSURANCE
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                          UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549
                                
                            FORM 10-Q
                                
        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934
                                
               For the Quarter ended June 30, 1997
                                
                 Commission file number  1-10861
                                
                  GUARANTY NATIONAL CORPORATION
                  .............................
     (Exact name of registrant as specified in its charter)

         Colorado                                 84-0445021
         ........                                 ..........
     (State or other jurisdiction of              (I.R.S. Employer
     incorporation or organization)               Identification No.)
                                
                  9800 South Meridian Boulevard
                    Englewood, Colorado 80112
                  .............................
            (Address of principal executive offices)
                           (Zip Code)

       Registrant's telephone number, including area code  (303) 754-8400
                                                           ..............
                                
       - - - - - - - - - -  - - - - - - - - - - - - - - - - - - - - - - -


     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


     As of August 4, 1997, there were 15,038,433 shares of
Registrant's $1.00 par value common stock issued and outstanding
exclusive of shares held by Registrant.
<PAGE>
                  GUARANTY NATIONAL CORPORATION
                         Form 10-Q Index
               For the Quarter Ended June 30, 1997
                                
                                
                                
                                                         Page
                                                        Number
PART 1.   FINANCIAL INFORMATION

Item 1.   Consolidated Financial Statements:
          Consolidated Balance Sheets at
          June 30, 1997 and December 31, 1996                3

          Consolidated Statements of Earnings
          for the six months and three months
          ended June 30, 1997 and 1996                       4

          Consolidated Statements of Cash Flows
          for the six months ended June 30, 1997
          and 1996                                           5

          Notes to Consolidated Financial Statements         6

Item 2.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations     10

PART 2.   OTHER INFORMATION                                 15

SIGNATURES                                                  17
<PAGE>
PART I - FINANCIAL INFORMATION
GUARANTY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

ASSETS

                                                    June 30,   December 31,
                                                      1997         1996
                                                    --------   ------------
                                                  (Unaudited)
Investments:
 Fixed maturities held to maturity, at cost         $ 74,378     $ 80,271
 Fixed maturities available for sale, at market      402,481      390,290
                                                    --------     -------- 
                                                     476,859      470,561
 Common stocks, at market                             70,169       59,415
 Non-redeemable preferred stocks, at market           33,692       28,687
 Other long-term investments                          16,379       13,585
 Short-term investments                               98,430       94,993
                                                    --------     -------- 
  Total investments                                  695,529      667,241
Cash                                                   8,104        3,988
Accrued investment income                              7,824        7,971
Accounts receivable, (less allowance of
 $171 - 1997 and 1996)                                60,174       45,557
Reinsurance recoverables and prepaids,
 (less allowance of $200 - 1997 and 1996)             87,850       90,781
Property and equipment, (less accumulated
 depreciation of $15,188 - 1997; $13,508 - 1996)      28,988       29,833
Deferred policy acquisition costs                     46,751       44,456
Goodwill, (less accumulated amortization of
 $6,982 - 1997; $6,423 - 1996)                        34,080       34,639
Other assets                                           1,774        4,626
                                                    --------     --------
  Total assets                                      $971,074     $929,092
                                                    ========     ======== 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
 Unpaid losses                                      $299,219     $303,266
 Unpaid loss adjustment expenses                      72,143       65,142
 Unearned premiums                                   167,152      154,242
 Notes payable                                       101,313      101,688
 Reinsurance payables and deposits                    10,673        7,268
 Deferred income taxes                                 4,660          803
 Other liabilities                                    56,152       58,644
                                                    --------     --------
   Total liabilities                                 711,312      691,053
                                                    --------     --------  
Commitments and contingencies
Shareholders' equity:
 Preferred stock, $.10 par value;
  authorized, 6,000,000 shares;
  none issued and outstanding
 Common stock, $1 par value;
  authorized, 30,000,000 shares;
  issued 15,038,433 shares - 1997
  and 14,975,497 shares - 1996                        15,038       14,975
 Capital in excess of par                            122,354      121,272
 Retained earnings                                   100,395       84,685
 Net unrealized investment gains                      21,975       17,107
                                                    --------     --------
   Total shareholders' equity                        259,762      238,039
                                                    --------     --------
   Total liabilities and shareholders' equity       $971,074     $929,092
                                                    ========     ========
See notes to consolidated financial statements
<PAGE>
GUARANTY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)


                                       Six Months Ended   Three Months Ended
                                           June 30,            June 30,
                                        1997      1996      1997      1996
                                      --------  --------  --------  ---------
                                    (Unaudited)         (Unaudited)
Revenue:
 Premiums earned                      $263,272  $234,419  $134,597  $118,949
 Net investment income                  21,608    18,519    10,863     9,266
 Realized investment gains               4,955     3,589     3,543     1,608
                                      --------  --------  --------  --------
                                       289,835   256,527   149,003   129,823
                                      --------  --------  --------  --------  

Expenses:
 Losses and loss adjustment
  expenses incurred                    183,126   168,507    94,264    83,662
 Policy acquisition costs               69,336    60,560    33,366    31,478
 General and administrative              6,527     6,925     3,947     3,397
 Interest                                3,307     3,403     1,654     1,683
 Other                                     689       783       342       495
 Nonrecurring tender offer charge                  2,163               2,163
                                      --------  --------  --------  --------
                                       262,985   242,341   133,573   122,878
                                      --------  --------  --------  --------

Earnings before income taxes            26,850    14,186    15,430     6,945
Income taxes                             7,390     3,174     4,388     1,720
                                      --------  --------  --------  --------
Net earnings                          $ 19,460  $ 11,012  $ 11,042  $  5,225
                                      ========  ========  ========  ========
Earnings per common share             $   1.29  $   0.74  $   0.73  $   0.35
                                      ========  ========  ========  ========
Dividends per common share            $   0.25  $   0.25  $  0.125  $  0.125
                                      ========  ========  ========  ========


See notes to consolidated financial statements.
<PAGE>
GUARANTY NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

                                                 Six Months Ended 
                                                     June 30,
                                                 1997        1996
                                               --------    --------           
                                                   (Unaudited)
Operating Activities:
 Premiums collected                            $263,750    $243,895
 Net investment income collected                 19,060      17,381
 Losses and loss adjustment expenses paid      (178,933)   (166,909)
 Policy acquisition costs and general and
  administrative expenses paid                  (77,663)    (72,644)
 Interest paid                                   (3,281)     (3,372)
 Federal income taxes paid                       (5,047)         (6)
 Nonrecurring tender offer charge                              (102)
 Other receipts (payments)                          948         (57)
                                               --------    --------
  Net cash provided by operating activities      18,834      18,186
                                               --------    --------
 
Investing Activities:
 Maturities of fixed maturities
  held to maturity                                4,131       2,000
 Maturities of fixed maturities
  available for sale                             30,672      32,309
 Sales of fixed maturities
  available for sale                             35,955      31,389
 Sales of equity securities                      21,308      17,811
 Sales of property and equipment                    241         264
 Redemption of mortgage loans                                   681
 Net change in short-term investments            (3,407)    (11,925)
 Purchases of fixed maturities
  held to maturity                                          (12,858)
 Purchases of fixed maturities
  available for sale                            (74,094)    (43,944)
 Purchases of equity securities                 (24,109)    (17,397)
 Net change in other long-term investments         (924)       (356)
 Purchases of property and equipment             (1,361)     (2,238)
                                               --------    --------
  Net cash used in investing activities         (11,588)     (4,264)
                                               --------    --------

Financing Activities:
 Repayment of notes payable                        (375)       (938)
 Dividends paid                                  (3,750)     (3,741)
 Proceeds from exercise of stock options            995          54
                                               --------    --------
  Net cash used in financing activities          (3,130)     (4,625)
                                               --------    --------
Net Increase in Cash                              4,116       9,297
Cash, Beginning of Period                         3,988       6,794
                                               --------    --------
Cash, End of Period                            $  8,104    $ 16,091
                                               ========    ========


See notes to consolidated financial statements.
<PAGE>
GUARANTY NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Six and Three Months Ended June 30, 1997
                                
NOTE 1 - GENERAL

  The accompanying unaudited consolidated financial statements of
Guaranty National Corporation and subsidiaries (the "Company")
have been prepared in accordance with generally accepted
accounting principles applicable to interim reporting and do not
include all the information and footnotes required for complete
financial statements.  In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.  Operating
results for the six months ended June 30, 1997 are not
necessarily indicative of the results that may be expected for
the year ending December 31, 1997.

  These financial statements should be read in conjunction with
the financial statements and related notes included in the
Company's Annual Report to Shareholders and Form 10-K for the
year ended December 31, 1996, for the more complete explanations
therein.

  Certain reclassifications have been made to the 1996 financial
statements to conform with presentations used in 1997.

NOTE 2 - EARNINGS PER SHARE

  Earnings per common share has been computed using the weighted
average number of shares and equivalent shares outstanding of
15,053,857 and 14,967,244 for the six months ended June 30, 1997
and 1996, and 15,115,009 and 14,972,525 for the three months
ended June 30, 1997 and 1996, respectively.  The common stock
equivalents are stock options which result in a dilutive effect
from assumed exercise of the options.

  During the first quarter of 1997, Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings per Share" was
issued.  This SFAS is effective for financial statements issued
for periods ending after December 15, 1997, including interim
periods; earlier application is not permitted.  The SFAS replaces
primary earnings per share with basic earnings per share
(computed by dividing income available to common stockholders
(the numerator) by the weighted average number of common shares
outstanding (the denominator during the period).  Adoption of
SFAS No. 128 would have had no effect on earnings per share for
June 30, 1997 and 1996.

NOTE 3 - INVESTMENTS

  At June 30, 1997 and December 31, 1996, the estimated aggregate
fair value of fixed maturities held to maturity was $75,240,000
and $81,430,000, respectively, the cost of fixed maturities
available for sale was $393,793,000 and $382,415,000,
respectively, and the cost of equity securities was $78,741,000
and $69,658,000, respectively.  At June 30, 1997 and December 31,
1996, the Company had investments in non-investment grade
securities with a cost of $57,393,000 and $55,205,000 which are
carried at fair values of $58,665,000 and $56,477,000,
respectively.
<PAGE>
GUARANTY NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Six and Three Months Ended June 30, 1997

  Realized investment gains (losses), which include gains
(losses) on calls and maturities of fixed maturities, for the six
and three months ended June 30, 1997 and 1996, and write downs
for other-than-temporary investment impairments of approximately
$160,000 for the six months ended June 30, 1997, and
approximately $434,000 and $300,000 for the six and three months
ended June 30, 1996 are as follows (in thousands):

                             Six Months Ended     Three Months Ended
                               June 30, 1997         June 30, 1997
                             ----------------     ------------------ 
Fixed maturities
 available for sale:
 Gains                            $1,054                $  578
 Losses                             (612)                 (233)
                                  ------                ------
                                     442                   345
                                  ------                ------ 
Equity securities:
 Gains                             5,694                 3,369
 Losses                           (1,181)                 (171)
                                  ------                ------ 
                                   4,513                 3,198
                                  ------                ------ 
 Total                            $4,955                $3,543
                                  ======                ====== 

                             Six Months Ended     Three Months Ended
                               June 30, 1996         June 30, 1996
                             ----------------     ------------------
Fixed maturities
 available for sale:
 Gains                            $  948                $  288
 Losses                             (203)                 (183)
                                  ------                ------
                                     745                   105
                                  ------                ------
Equity securities:
 Gains                             4,048                 2,242
 Losses                           (1,204)                 (739)
                                  ------                 -----  
                                   2,844                 1,503
                                  ------                 -----
 Total                            $3,589                $1,608
                                  ======                ======

NOTE 4 - REINSURANCE

  In the ordinary course of business, the Company reinsures
certain risks, generally on an excess of loss basis with other
insurance companies.  Such reinsurance arrangements serve to
limit the Company's maximum loss per occurrence on individual
risks to $400,000, $300,000 on property losses and $600,000 for
catastrophe losses. Reinsurance does not discharge the primary
liability of the original insurer.  Amounts recoverable from
reinsurers are recognized and estimated in a manner consistent
with the claim liabilities arising from the reinsured policies
and incurred but not reported losses.
<PAGE>
GUARANTY NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Six and Three Months Ended June 30, 1997

  Premiums, losses, and loss adjustment expenses, including the
effect of reinsurance, are comprised of (in thousands):

            Six Months Ended June 30,           Three Months Ended June 30,
               1997             1996              1997               1996
        ----------------  ----------------  ----------------   ----------------
        Written   Earned  Written   Earned  Written   Earned   Written   Earned
        ------- --------  ------- --------  ------- -------- --------- --------
Premiums:
Direct $276,113 $265,445 $247,392 $240,242 $140,625 $135,675  $122,190 $121,686
Assumed  21,817   19,327   22,990   19,276    9,630    9,465    11,153    9,717
Ceded   (19,728) (21,500) (26,027) (25,099) (10,350) (10,543)  (12,601) (12,454)
       -------- -------- -------- -------- -------- -------- --------- --------
Net    $278,202 $263,272 $244,355 $234,419 $139,905 $134,597  $120,742 $118,949
       ======== ======== ======== ======== ======== ======== ========= ========
% Assumed
 to Net    7.84%             9.41%             6.88%              9.24%
           ====              ====              ====               ====

                Incurred          Incurred          Incurred           Incurred
                --------          --------          --------           --------
Losses and loss
 adjustment
 expenses:
 Direct         $178,214          $163,275          $ 93,163           $ 76,918
 Assumed          19,368            20,096            10,282             15,934
 Ceded           (14,456)          (14,864)          ( 9,181)            (9,190)
                --------          --------          --------           --------
 Net            $183,126          $168,507          $ 94,264           $ 83,662
                ========         =========          ========           ========

NOTE 5 - COMMITMENTS AND CONTINGENCIES

  During 1995, the Company acquired Viking Insurance Company of
Wisconsin ("Viking") in a business combination accounted for as a
purchase.  As part of the 1995 Viking acquisition, and based upon
Viking's favorable loss development since the acquisition date,
the Company estimates that is will pay Talegen Holdings, Inc.
("Seller") an additional purchase price in the maximum amount
agreed to in the purchase agreement.  This amount, which is
approximately $4,333,000 plus interest at 6.28%, will be payable
to the Seller as of December 31, 1998.  The Company has accrued
this amount and the related interest payable in the accompanying
consolidated balance sheet.

  As discussed in the Company's report on Schedule 14D-9, filed
with the Securities and Exchange Commission on May 22, 1996, as
amended on June 1, 1996, June 7, 1996 and June 19, 1996, three
separate complaints naming the Company and one or more of its
directors, and Orion Capital Corporation ("Orion"), as defendants
were filed on behalf of the Company's shareholders, alleging that
the Orion tender offer was unfair and inadequate.  On July 2,
1996, counsel for Orion and the Company signed a Memorandum of
Understanding resulting in the settlement and dismissal
of the three cases in June 1997, based on the revisions which the
Purchasers had made in the terms of the Offer to Purchase.  In
the judgment of the Company's management, the costs incurred to
defend and settle these complaints did not have a materially
adverse effect on the results of the Company's operations.  The
settlement costs have been accrued in the Company's
consolidated financial statements as of June 30, 1997.

  In addition to the three complaints described above, the
Company is subject to litigation in the normal course of
operating its insurance business.  The Company is not engaged in
any such litigation which it believes would have a material
adverse impact on its financial condition or results of
operations, taking into account the reserves established
therefore and giving effect to insurance.
<PAGE>
 
GUARANTY NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
For the Six and Three Months Ended June 30, 1997

NOTE 6 - ACCOUNTING STANDARDS NOT YET ADOPTED

  In June 1997 the Financial Accounting Standards Board ("FASB")
issued SFAS No. 130, "Reporting Comprehensive Income", which
requires that changes in comprehensive income be shown in a
financial statement that is displayed with the same prominence as
other financial statements.  This statement is effective for
periods beginning after December 15, 1997.  Management is
currently evaluating the effects of this change on the Company's
financial statements.

  Additionally, in June 1997 the FASB issued SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related
Information", which changes the way public companies report
information about segments.  This statement is effective for
periods beginning after December 15, 1997.  Management is
currently evaluating the effects of this change on the Company's
financial statements.
<PAGE>

GUARANTY NATIONAL CORPORATION AND SUBSIDIARIES

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS

Results for the First Six Months of 1997 Compared to the First Six
Months of 1996

  Guaranty National Corporation and its subsidiaries (the
"Company") manage their property and casualty business in three
operating units:  personal lines, commercial lines and collateral
protection insurance.  Gross premiums written and GAAP combined
ratios by operating unit for the six months ended June 30, 1997
and 1996, are summarized below:

                                               Six Months Ended
                                                   June 30,
                                              1997         1996
                                            --------     --------
                                           (Dollars in thousands)

Personal Lines:
 Gross premiums written                     $165,684     $127,244
 GAAP combined ratio                            95.6%        99.8%
Commercial Lines:
 Gross premiums written                     $ 88,112     $105,143
 GAAP combined ratio                           104.7%       103.4%
Collateral Protection:
 Gross premiums written                     $ 44,134     $ 37,995
 GAAP combined ratio                            97.5%        96.9%
Total:
 Gross premiums written                     $297,930     $270,382
 GAAP combined ratio                            98.4%       100.7%

  Personal lines gross premiums written increased 30% for the
first six months of 1997, compared to the first six months of
1996.  The premium volume growth in the private passenger line of
business was due mainly to newly-enacted legislation in the state
of California which requires all drivers to maintain liability
insurance.  This change in California law resulted in a
significant increase in the personal lines one-month product
business.  The first six months gross premiums written in the
state of California were $75.7 million compared to $39.4 million
for the same period in 1996, representing 46% of total personal
lines premiums for the six months ended June 30, 1997.  In
addition, 16 of the 27 other states in which personal lines
markets had growth in premium production for the first six months
of June 30, 1997.  Although the extent and duration of the
increase in California premium can not be predicted, the Company
believes it will continue to record significant premium increases
through the remainder of 1997.  Usually with a legislative change
similar to California there is a rapid escalation followed by a
corresponding falloff in policies-in-force.  However, the Company
is not experiencing this trend in California.  Presently, the
Company is encountering above average retention rates on the new
business written in California.  In addition, any new business
generally has a higher loss ratio than seasoned business due to
higher frequency.  Personal lines reserve estimates currently
anticipate an increase in frequency from the new California
business, but so far the higher frequency has not manifested
itself.

  The personal lines loss ratio (incurred losses and loss
adjustment expense) for the first six months of 1997 was 71.3%,
compared to 74.4% for the first six months of 1996.  The decrease
in the loss ratio resulted from a 5.0 point decrease in the
incurred loss component, partially offset by an increase in the
loss adjustment expense component of 1.9 points.  The lower
incurred loss component is primarily due to lower claim
frequency.  The loss adjustment expense ratio increase was due
mainly to this unit's continued emphasis on improving claim
handling and on reducing insurance fraud, which resulted in
higher legal expenses.  During the second quarter of 1997, the
Company opened a second claims office in California as a result
of the growth in that state.

  The personal lines expense ratio was 24.3% for the first six
months of 1997, compared to 25.4% for the first six months of
1996.  The lower expense ratio is primarily due to the benefits
of integrating the Viking and Guaranty National personal lines
operations, spreading fixed costs over our increased premium
volume, and a greater
<PAGE>

GUARANTY NATIONAL CORPORATION AND SUBSIDIARIES

concentration of one-month product business in the state of
California, which has a lower overall agent commission rate.

  During the first six months of 1997, commercial lines gross
premiums written decreased 16% when compared to the same period
in the prior year.  The decrease was primarily the a result of
a 23% decrease in premiums in the commercial nonstandard
division, partially offset by a 12% increase in the commercial
standard division.  The majority of the decrease is due to
the Company's position in the commercial nonstandard division to
maintain important underwriting standards in an increasingly soft
market, which has resulted from increased competition from large
standard carriers entering the nonstandard marketplace.  The
remaining decrease is from agent and program cancellations
initiated in 1996.  The commercial nonstandard division
plans to replace a portion of this premium loss by appointing new
agents, identifying new business opportunities and more closely
monitoring the production of existing agents.  The increase in
gross premiums written for the commercial standard division is
primarily the result of an overall increase in premium production
for the first six months of 1997 in existing offices compared to
the same period in 1996.

  The commercial lines loss ratio for the first six months of 1997
was 69.9%, compared to 70.9% for the same period last year.  The
loss incurred component decreased by 2.6 points and the loss
adjustment expense component increased by 1.6 points.  The
improvement in the loss incurred component was principally caused
by lower claim frequency and the result of underwriting actions
mentioned above.  The increase in the loss adjustment expense
component is due to higher estimates of loss adjustment
expenses on general liability claims, which is needed to cover
high litigation costs on this line of business.

  The commercial lines expense ratio increased 2.3 points to 34.8%
for the first six months of 1997 from 32.5% for the same period
last year, due mainly to the decrease in net premiums written
occurring faster than direct underwriting expenses, such as
salaries and related benefits, were reduced.

  The collateral protection unit's gross premiums written
increased 16% for the first six months of 1997, compared to the
first six months of 1996.  The premium volume growth is primarily
due to continued increased writing in the mortgage fire program
as well as the addition of a new mechanical breakdown program.
Gross premiums written from the mortgage fire product for the
first six months of 1997 were $6,114,000 as compared to gross
premiums in the first six months of 1996 of $3,075,000.  The
mechanical breakdown program's gross premiums written for the
first six months of 1997 were $3,708,000.

  The collateral protection unit's loss ratio was 61.9% and 63.5%
for the first six months of 1997 and 1996, respectively.  The
loss incurred component decreased by 1.3 points and the loss
adjustment expense component decreased by 0.3 points.  This is
primarily due to the mortgage fire program having a lower loss
ratio compared to other business the unit writes.  In addition,
the loss incurred component for the first six months
of 1996 was abnormally high due to the Northeast blanket vendor
single interest and Puerto Rico business which experienced
unfavorable results in early 1996.  During 1996, the unit
implemented underwriting and pricing adjustments and canceled
problematic accounts.  The unit's expense ratio increased 2.2
points for the first six months of 1997 compared to the first six
months of 1996, primarily due to higher agency contingent
commissions, which increased proportionately as a result of the
improved loss ratio.

  The Company operates under a reinsurance contract that provides
both excess of loss and property catastrophe coverage up to
$6,000,000 per occurrence for all major lines of business.  This
primary reinsurance contract serves to limit the Company's
maximum loss per occurrence on casualty losses to $400,000,
$300,000 on property losses and $600,000 for catastrophe losses.
The Company also has an additional layer of catastrophe coverage
up to 95% of $14,000,000 per loss occurrence, for total
catastrophe protection of $20,000,000.  The Company continues to
utilize facultative reinsurance for certain risks, primarily
umbrella and property coverages.

  The Company's insurance operating units in total showed
$2,074,000 of adverse development on 1996 and prior loss
reserves, net of reinsurance, in the first six months of 1997,
compared to $251,000 of favorable development in the first six
months of 1996 on 1995 and prior loss reserves, net of
reinsurance.  This development equates to 0.7% and (0.2%) of net
loss reserves at the end of the previous years 1996 and 1995,
respectively.  The commercial lines unit had adverse development of
$1,206,000 due primarily to allocated loss adjustment expense costs emerging
<PAGE>

GUARANTY NATIONAL CORPORATION AND SUBSIDIARIES

higher than expected and more significantly an increase in
reserves intended to reduce the possibility of adverse
development in future years.  The collateral protection unit had
adverse development of $2,260,000 principally related to
unexpectedly high paid losses on the Northeast blanket vendor
single interest business written during 1996.  The personal lines
unit had favorable development of $1,392,000, which is mainly
attributable to lower estimates of future claim payments
on prior accident year losses.

  During the first six months of 1997, the Company's known
exposure to environmental losses remained consistent with the
activity reported as of December 31, 1996.  Considering the
minimal claim activity to date and the nature of the business
written, primarily automobile coverage, the Company continues
to believe that a material exposure to environmental losses
does not exist.  For the six month period ended June 30, 1997,
the Company's catastrophe losses amounted to approximately
$425,000, or three cents per share, net of tax and reinsurance
recoveries.  This compares to catastrophe losses of $1,040,000,
or seven cents per share, net of tax and reinsurance recoveries,
during the six month period ended June 30, 1996.  Company
management believes that its exposure to such catastrophic losses
is limited due to the spread of geographic coverage and the
prudent level of reinsurance retention in the event of a single loss.

  Overall, the Company reported net earnings for the first six
months of 1997 of $19,460,000, or $1.29 per share, compared to
net earnings for the first six months of 1996 of $11,012,000, or
$0.74 per share.  Net earnings increased 77% primarily as a
result of the lower loss ratio and the growth of the personal
lines unit, as discussed above.

  Pretax net investment income increased $3,089,000 in the first
six months of 1997, compared to 1996, while after-tax net
investment income increased to $16,254,000 from $14,405,000 for
the same period.  These increases are due mainly to continuing
positive cash flow and increased earnings from limited
partnership equity interests.

  The investment yield, on an after-tax basis, for the first six
months of 1997 remained constant at approximately five percent.
After-tax realized investment gains in the first six months of
1997 and 1996 were $3,221,000 and $2,333,000, respectively.  The
after-tax realized investment gain for the first six months of
1997 and 1996 include the effects of a $104,000 and $282,000,
respectively, after-tax, permanent investment impairment recorded
by the Company.  The increase in after-tax realized investment
gains was attributable primarily to sales from the Company's
equity portfolio.  During the first six months of 1997, the
strong equity market has enabled the Company to take the realized
gains without reducing its total investments in equities.  The
Company's overall investment portfolio continues to be invested
primarily in fixed maturities and short-term investments, which
represented 83% and 85% of the portfolio as of June 30, 1997 and
December 31, 1996, respectively.

  Securities are classified as available for sale and recorded at
fair value, unless they meet the Company's criteria for
classification as held to maturity.  Such criteria include
investment grade bonds with stated maturities of less than ten
years.  The unrealized investment gains on fixed maturities
available for sale and on equity securities as of June 30, 1997,
were $8,688,000 and $25,120,000, respectively.  This compares to
unrealized investment gains on fixed maturities available for
sale and on equity securities as of December 31, 1996 of
$7,875,000 and $18,444,000, respectively.  The increase in
unrealized gains on the fixed portfolio was due mostly to the
rise in our high yield securities which we have strategically,
but conservatively positioned in our fixed portfolio to take
advantage of higher yields.  The market value of the Company's
fixed maturity investments generally varies inversely with
changes in the general level of interest rates.  The market value
of federal agency and other mortgage pool securities of
$47,555,000 as of June 30, 1997, is subject to additional market
value volatility due to the impact of changes in prepayment rates
on the mortgages which underlie such securities.

  The Company's holdings in noninvestment grade bonds as of June
30, 1997 and December 31, 1996 were approximately eight percent
of total invested assets.  Total investments held by the Company
include highly rated fixed maturities (rated AAA or AA) of 46% at
June 30, 1997, and 50% at December 31, 1996.  The Company
continues to maintain a low level of real estate related
investments, consisting primarily of federal agency mortgage
pools.
<PAGE>

GUARANTY NATIONAL CORPORATION AND SUBSIDIARIES

Results for the Quarters Ended June 30, 1997 and June 30, 1996

  Gross premiums written and GAAP combined ratios by operating
unit, for the quarters ended June 30, 1997 and 1996, are
summarized below:

                                              Three Months Ended
                                                   June 30,
                                              1997         1996
                                            --------     -------- 
                                            (Dollars in thousands)
Personal Lines:
 Gross premiums written                     $ 82,963     $ 61,962
 GAAP combined ratio                            94.7%        98.8%
Commercial Lines:
 Gross premiums written                     $ 45,814     $ 53,179
 GAAP combined ratio                           104.6%       102.4%
Collateral Protection:
 Gross premiums written                     $ 21,478     $ 18,202
 GAAP combined ratio                            97.7%        96.3%
Total:
 Gross premiums written                     $150,255     $133,343
 GAAP combined ratio                            97.8%        99.6%

  Personal lines gross premiums written increased 34% for the
second quarter of 1997, compared to the second quarter of 1996.
The increase in gross premiums written was due principally to
premium generated from the state of California, an increase of
86%, as discussed above, as well as from the states of Colorado
and Oregon, an increase of 45% and 30%, respectively.  The 4.1
point decrease in the GAAP combined ratio was caused by the
improved loss and expense ratios, which were impacted by the
growth in premium production, and the operating efficiencies of
the recently combined personal lines operations, as discussed
above.

  The commercial lines gross premiums written decreased 14% for
the second quarter of 1997, compared to the second quarter of
1996.  The decrease was primarily as a result of a 20% decrease in
premiums in the commercial nonstandard division, partially offset
by a nine percent increase in the commercial standard division.
The commercial lines GAAP combined ratio increased 2.2 points for
the second quarter of 1997, compared to the second quarter of
1996, and was primarily caused by an increase in the expense
ratio resulting from the lower level of premium production.

  The collateral protection unit's gross premiums written
increased 18% for the second quarter of 1997, compared to the
second quarter of 1996, due to its mortgage fire and new
mechanical breakdown programs.  The mortgage fire program's gross
written premiums increased 185% for the second quarter of 1997,
compared to the same period in 1996, while the mechanical
breakdown program's gross premiums written for the second quarter
of 1997 were $2,514,000.  The unit's GAAP combined ratio
increased 1.4 points for the three month period ended June 30,
1997, compared to the same period in the prior year.  The
increase in the GAAP combined ratio resulted from a 8.3 points
increase in the loss ratio, which was offset proportionately by a
6.9 points decrease in the expense ratio.  The higher loss ratio
and lower expense ratio for the second quarter of 1997 is
primarily due to adverse development related to the Northeast
blanket vendor single interest program, which is partially offset
by lower agency contingent commissions.

Liquidity and Capital Resources

  Positive cash flow from operations of $18,834,000 was generated
for the first six months of 1997 compared to $18,186,000 for the
first six months of 1996.  The operating cash flow remained
relatively constant and was primarily the result of a combination
of higher premiums, mainly from the personal lines unit, and net
investment income collected.  This was offset mainly by the
commercial lines loss and loss adjustment expense payments not
declining in proportion to the decline in commercial premium
and higher acquisition expenses related to premium production.  
In addition, 1997 cash flow from operations was adversely
impacted by the higher level of
<PAGE>

GUARANTY NATIONAL CORPORATION AND SUBSIDIARIES

federal incomes taxes paid in the first six months of 1997 as
compared to the same period in 1996.  An overpayment in 1995
reduced taxes paid in 1996 to nearly zero.

  Net cash used in investing activities was $11,588,000 for the
first six months of 1997, compared to $4,264,000 for the first
six months of 1996.  The increase in funds used in investing
activities in 1997 was related primarily to increases in fixed
maturities, equity securities and long term investments.  These
increased investment acquisitions were partially offset by cash
proceeds received from maturities of short term investments, as
well as sales of equity and fixed maturity securities.

  Cash used in financing activities was $3,130,000 and $4,625,000
for the first six months of 1997 and 1996, respectively.  During
the first six months of 1997, the Company made $375,000 in
principal payments on its 6.5% term loan compared to $938,000 in
the same period last year.  As of June 30, 1997, the Company had
$10,000,000 of funds available under its reducing, revolving
credit facility.  For the first six months of 1997 the Company
received proceeds of $995,000 from the exercise of stock options
as compared to $54,000 for the same period in 1996.  The Company
declared and paid a regular quarterly dividend of $.125 a share
in the first two quarters of 1997 and 1996.

  The Company's level of short-term investments was 14.2% of
total invested assets at both June 30, 1997 and December 31,
1996.  Overall, the Company maintains sufficient liquidity in its
investment portfolio through its short-term investment holdings
to meet operating cash payment requirements.

  In the second quarter of 1997, Fred T. Roberts, Senior Vice
President and President of the Commercial Lines Unit since
November 1995, announced his pending retirement at the end of
1997.

Forward Looking Statements

  Some of the statements made in the Form 10-Q Report, as well as
statements made by the Company in periodic press releases, total
statements made by the Company's officials to analysts and
shareholders in the course of presentations about the Company and
conference calls following earnings releases, constitute "forward-
looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act").  Such forward-
looking statements involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance
or achievements of the Company to be materially different from
any future results, performance of achievements expressed or
implied by the forward-looking statements.  Such factors include,
among the other things (i) general economic and business
conditions (ii) interest rate changes; (iii) competition and
regulatory environment in which the Company operates; (iv) claims
frequency; (v) claims severity; (vi) severe adverse weather
conditions; (vii) the cost of automobile repair; (viii) the
number of new and renewal policy application submitted by the
Company's agents; (ix) changes in the renewal rate on policies
written in the state of California; and (x) other factors over
which the Company has little or no control.
<PAGE>

GUARANTY NATIONAL CORPORATION AND SUBSIDIARIES     

PART II - OTHER INFORMATION
                                
                                
                                
ITEM 1.   LEGAL PROCEEDINGS

  The Company is routinely engaged in litigation incidental to
its business.  In June 1997, the three outstanding lawsuits
related to the Orion Tender Offer were settled and dismissed.  
In the judgment of the Company's management, the costs incurred
to defend and settle these complaints did not have a materially
adverse effect on the results of the Company's operations.  The
settlement costs have been accrued in the Company's consolidated
financial statements.  See Note 17 to the Consolidated Financial
Statements in the Company's Annual Report to Shareholders and Form
10-K for the year ended December 31, 1996, for further discussion
of these costs.  In the judgment of the Company's management, at
June 30, 1997, the Company is not engaged in any such litigation
which it believes would have a material adverse impact on its
financial condition or results of operation, taking into account
the reserves established therefore and giving effect to insurance.

ITEM 2.   CHANGES IN SECURITIES

  None

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

  None

ITEM 4.   SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS

  At the Annual Meeting of Shareholders held on May 13, 1997,
14,975,497 shares of Guaranty National Corporation's ("Guaranty")
Common Stock were outstanding and entitled to vote (the
"Outstanding Common Stock"), and a quorum of 13,345,703 shares of
the Outstanding Common Stock or 89.1% were represented at the
meeting in person or by proxy.  At that meeting, the following
nominees were elected as the Board of Directors of Guaranty:

                               Number of Shares    Number of Shares
                                  Voted For            Withheld
                               ----------------    ----------------          

  W. Marston Becker               13,334,902            10,801
  Alan R. Gruber (see below)      13,334,052            11,651
  Vincent T. Papa                 13,334,231            11,472
  Robert B. Sanborn               13,334,902            10,801
  William J. Shepherd             13,334,802            10,901
  Roger B. Ware                   13,334,902            10,801
  Richard R. Thomas               13,334,902            10,801
  Dennis J. Lacey                 13,335,975             9,728
  M. Ann Padilla                  13,334,581            11,122
  Tucker Hart Adams               13,333,731            11,972
  James R. Pouliot                13,334,902            10,801

  Consequently, all directors received the affirmative vote of at
least 13,333,731 shares, or 89.0%, of the Outstanding Common
Stock (99.9% of the shares voted at the meeting).  The
appointment of Deloitte & Touche LLP as the auditors of Guaranty
for 1997 was ratified by the affirmative vote of 12,460,621
shares, or 83.2%, of the Outstanding Common Stock (93.4% of the
shares voted at the meeting), with 830,315 shares voting against
the proposal and 2,440 shares abstaining.  The Guaranty National
Corporation Equity Incentive Plan was ratified by the affirmative
vote of 13,337,603 shares or 89.1%, of the Outstanding Common
Stock (99.9% of the shares voted at the meeting), with 8,100
shares voting against the proposal and no shares abstaining.
There were no "broker non-votes" on either of the three
proposals.
<PAGE>

GUARANTY NATIONAL CORPORATION AND SUBSIDIARIES



  Alan R. Gruber passed away in April 1997, shortly before the
Annual Meeting of Stockholders.  The Company has no present plans
to fill the resulting vacancy on the Board.

ITEM 5.     OTHER INFORMATION

  None

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K
          (a)     Exhibits
          10.2 Property First Catastrophe Excess of Loss
          Contract, effective January 1, 1997, issued to
          Guaranty National Insurance Company, Colorado Casualty
          Insurance Company, Peak Property and Casualty
          Insurance Corporation, Guaranty National Insurance
          Company of California, Landmark American Insurance
          Company, Viking Insurance Company of Wisconsin,
          Viking County Mutual Insurance Company by
          Towers Perrin Reinsurance.

          10.3 Property Second Catastrophe Excess of Loss
          Contract, effective January 1, 1997, issued to
          Guaranty National Insurance Company, Colorado Casualty
          Insurance Company, Peak Property and Casualty Insurance
          Corporation, Guaranty National Insurance Company of
          California, Landmark American Insurance Company, Viking
          Insurance Company of Wisconsin, Viking County Mutual
          Insurance Company by Towers Perrin Reinsurance.

          (b)     Reports on Form 8-K
          No reports on Form 8-K have been filed by the Registrant
          during the quarter.
<PAGE>

GUARANTY NATIONAL CORPORATION AND SUBSIDIARIES

SIGNATURES
                                
                                
                                
     Pursuant to the requirements of Section 13 or 15(d) 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.


                                      Guaranty NationalCorporation



                                   By: s/James R.Pouliot
                                       James R. Pouliot,President and
                                       Chief Executive Officer
                                       (Principal Executive Officer)



                                   By: s/Michael L.Pautler
                                       Michael L. Pautler, Senior Vice
                                       President-Finance and Treasurer
                                       (Principal Financial Officer)



                                   By:  s/Shelly J. Hengsteler
                                        Shelly J. Hengsteler
                                        Controller and Assistant Treasurer
                                        (Principal Accounting Officer)

DATE:  August 4, 1997
<PAGE>


<TABLE> <S> <C>

<ARTICLE> 7
<LEGEND>
THIS FINANCIAL SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
GUARANTY NATIONAL CORPORATIONS'S FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED
JUNE 30, 1997, AND IS QUALIFIED IN ITS ENTIRELY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-1997
<PERIOD-START>                             JAN-01-1997
<PERIOD-END>                               JUN-30-1997
<DEBT-HELD-FOR-SALE>                           402,481
<DEBT-CARRYING-VALUE>                           74,378
<DEBT-MARKET-VALUE>                             75,240
<EQUITIES>                                     103,861
<MORTGAGE>                                           0
<REAL-ESTATE>                                        0
<TOTAL-INVEST>                                 695,529
<CASH>                                           8,104
<RECOVER-REINSURE>                              85,811
<DEFERRED-ACQUISITION>                          46,751
<TOTAL-ASSETS>                                 971,074
<POLICY-LOSSES>                                371,362
<UNEARNED-PREMIUMS>                            167,152
<POLICY-OTHER>                                       0
<POLICY-HOLDER-FUNDS>                                0
<NOTES-PAYABLE>                                101,313
                                0
                                          0
<COMMON>                                       137,392
<OTHER-SE>                                     122,370
<TOTAL-LIABILITY-AND-EQUITY>                   971,074
                                     263,272
<INVESTMENT-INCOME>                             21,608
<INVESTMENT-GAINS>                               4,955
<OTHER-INCOME>                                       0
<BENEFITS>                                     183,126
<UNDERWRITING-AMORTIZATION>                     69,336
<UNDERWRITING-OTHER>                             6,527
<INCOME-PRETAX>                                 26,850
<INCOME-TAX>                                     7,390
<INCOME-CONTINUING>                             19,460
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                    19,460
<EPS-PRIMARY>                                     1.29
<EPS-DILUTED>                                     1.29
<RESERVE-OPEN>                                 284,681
<PROVISION-CURRENT>                            181,052
<PROVISION-PRIOR>                                2,074
<PAYMENTS-CURRENT>                              75,323
<PAYMENTS-PRIOR>                               103,610
<RESERVE-CLOSE>                                288,874
<CUMULATIVE-DEFICIENCY>                          2,074
        

</TABLE>

                                                  Reference No.

        PROPERTY FIRST CATASTROPHE EXCESS OF LOSS CONTACT
                                
   EFFECTIVE JANUARY 1, 1997, 12:01 A.M., LOCAL STANDARD TIME
                                
                             for the
                                
               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO
                                
               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS
                                
              (hereinafter called the "Reassured")
                                
                               by
                                
                  THE HANOVER INSURANCE COMPANY
                                
                          NEW HAMPSHIRE
                                
            (hereinafter called, with other participants, the
            "Reinsurers")

            Under the terms of this Contract the above Reinsurer
            agrees to assume severally and not jointly with other
            participants

                          a 4.00% share
                                
            of the liability described in the attached Contract
            and, as
            consideration, the Reinsurer shall receive a 4.00%
            share
            of the premium named therein.

            Signed in Florham Park, New Jersey, this 14th day of April, 1997,

                              ALLMERICA RE for and on behalf of
                              THE HANOVER INSURANCE COMPANY

                              BY   s/Phillip A. Ward

                              TITLE     Vice President

Towers Perrin
Reinsurance

<PAGE>
                                        Reference No. 9612/166324

        PROPERTY FIRST CATASTROPHE EXCESS OF LOSS CONTACT
                                
   EFFECTIVE JANUARY 1, 1997, 12:01 A.M., LOCAL STANDARD TIME
                                
                             for the
                                
               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO
                                
               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS
                                
               (herinafter called the "Reassured")
                                
                               by
                                
                   EVEREST REINSURANCE COMPANY
                                
                            DELAWARE
                                
            (hereinafter called, with other participants, the
            "Reinsurers")

            Under the terms of this Contract the above Reinsurer
            agrees to assume severally and not jointly with other
            participants

                         a 17.25% share
                                
            of the liability described in the attached Contract
            and, as
            consideration, the Reinsurer shall receive a 17.25%
            share
            of the premium named therein.

            Signed in Newark, New Jersey, this 28 day of March, 1997,

                              EVEREST REINSURANCE COMPANY

                              BY   s/Halina Herc

                              TITLE     Vice President

Towers Perrin
Reinsurance


<PAGE>
                                                  Reference No.

        PROPERTY FIRST CATASTROPHE EXCESS OF LOSS CONTACT
                                
   EFFECTIVE JANUARY 1, 1997, 12:01 A.M., LOCAL STANDARD TIME
                                
                             for the
                                
               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO
                                
               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS
                                
               (herinafter called the "Reassured")
                                
                               by
                                
             FIRST EXCESS & REINSURANCE CORPORATION
                                
                            MISSOURI
                                
            (hereinafter called, with other participants, the
            "Reinsurers")

            Under the terms of this Contract the above Reinsurer
            agrees to assume severally and not jointly with other
            participants

                          a 5.75% share
                                
            of the liability described in the attached Contract
            and, as
            consideration, the Reinsurer shall receive a 5.75%
            share
            of the premium named therein.

            Signed in Overland Park, Kansas this 3 day of April, 1997,

                              FIRST EXCESS & REINSURANCE
                              CORPORATION

                              BY   s/Michael C. S. Burn

                              TITLE     Vice President

Towers Perrin
Reinsurance

<PAGE>
                                                  Reference No.

        PROPERTY FIRST CATASTROPHE EXCESS OF LOSS CONTACT
                                
   EFFECTIVE JANUARY 1, 1997, 12:01 A.M., LOCAL STANDARD TIME
                                
                             for the
                                
               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO
                                
               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS
                                
               (herinafter called the "Reassured")
                                
                               by
                                
                  HANNOVER RUCKVERSICHERUNG AG
                                
                        HANNOVER, GERMANY
                                
            (hereinafter called, with other participants, the
            "Reinsurers")

            Under the terms of this Contract the above Reinsurer
            agrees to assume severally and not jointly with other
            participants

                          a 5.00% share
                                
            of the liability described in the attached Contract
            and, as
            consideration, the Reinsurer shall receive a 5.00%
            share
            of the premium named therein.

            Signed in Hannover, Germany, this 3rd day of April, 1997,

                              HANNOVER RUCKVERSICHERUNG AG

                                        hannover re
                                   Hannover
BY          Ruckversicherungs-Aktiengesellschaft

                                        s/Konrad Rentrup
                              TITLE     North American Treaty
Dpt.-VR 10                                   Ref.-No. MO 2648
Towers Perrin
Reinsurance    <PAGE>


                                                  Reference No.

        PROPERTY FIRST CATASTROPHE EXCESS OF LOSS CONTACT
                                
   EFFECTIVE JANUARY 1, 1997, 12:01 A.M., LOCAL STANDARD TIME
                                
                             for the
                                
               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO
                                
               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS
                                
               (herinafter called the "Reassured")
                                
                               by
                                
                  INSURANCE COMPANY OF THE WEST
                                
                           CALIFORNIA
                                
            (hereinafter called, with other participants, the
            "Reinsurers")

            Under the terms of this Contract the above Reinsurer
            agrees to assume severally and not jointly with other
            participants

                         a 19.50% share
                                
            of the liability described in the attached Contract
            and, as
            consideration, the Reinsurer shall receive a 19.50%
            share
            of the premium named therein.

Signed in San Diego, California this 17th day of March, 1997,

                              INSURANCE COMPANY OF THE WEST

                              BY   s/Elaine Lamb

                              TITLE      Product Management Specialist

Towers Perrin
Reinsurance
<PAGE>

                                                  Reference No.

        PROPERTY FIRST CATASTROPHE EXCESS OF LOSS CONTACT
                                
   EFFECTIVE JANUARY 1, 1997, 12:01 A.M., LOCAL STANDARD TIME
                                
                             for the
                                
               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO
                                
               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS
                                
               (herinafter called the "Reassured")
                                
                               by
                                
               NATIONWIDE MUTUAL INSURANCE COMPANY
                                
                              OHIO
                                
            (hereinafter called, with other participants, the
            "Reinsurers")

            Under the terms of this Contract the above Reinsurer
            agrees to assume severally and not jointly with other
            participants

                         a 20.00% share
                                
            of the liability described in the attached Contract
            and, as
            consideration, the Reinsurer shall receive a 20.00%
            share
            of the premium named therein.

Signed in Columbus, Ohio, this 21st day of March, 1997,

                              NATIONWIDE MUTUAL INSURANCE
                              COMPANY

                              BY   s/Robert J. Wilson

                              TITLE     Reinsurance Manager

Towers Perrin
Reinsurance
<PAGE>
                                                  Reference No.

        PROPERTY FIRST CATASTROPHE EXCESS OF LOSS CONTACT
                                
   EFFECTIVE JANUARY 1, 1997, 12:01 A.M., LOCAL STANDARD TIME
                                
                             for the
                                
               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO
                                
               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS
                                
               (herinafter called the "Reassured")
                                
                               by
                                
                 NEW JERSEY RE-INSURANCE COMPANY
                                
                           NEW JERSEY
                                
            (hereinafter called, with other participants, the
            "Reinsurers")

            Under the terms of this Contract the above Reinsurer
            agrees to assume severally and not jointly with other
            participants

                          a 2.00% share
                                
            of the liability described in the attached Contract
            and, as
            consideration, the Reinsurer shall receive a 5.75%
            share
            of the premium named therein.

Signed in West Trenton, New Jersey,  this 29th day of April,
1997,

                              NEW JERSEY RE-INSURANCE COMPANY

                              BY   s/Thomas A Lynch

                              TITLE     Vice President

Towers Perrin
Reinsurance


<PAGE>
                                                  Reference No.

        PROPERTY FIRST CATASTROPHE EXCESS OF LOSS CONTACT
                                
   EFFECTIVE JANUARY 1, 1997, 12:01 A.M., LOCAL STANDARD TIME
                                
                             for the
                                
               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO
                                
               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS
                                
               (herinafter called the "Reassured")
                                
                               by
                                
           ST. PAUL FIRE AND MARINE INSURANCE COMPANY
                                
                            MINNESOTA
                                
            (hereinafter called, with other participants, the
            "Reinsurers")

            Under the terms of this Contract the above Reinsurer
            agrees to assume severally and not jointly with other
            participants

                         a 12.00% share
                                
            of the liability described in the attached Contract
            and, as
            consideration, the Reinsurer shall receive a 12.00%
            share
            of the premium named therein.

Signed in New York, New York,  this 4th day of April, 1997,

                              ST PAUL FIRE AND MARINE INSURANCE
                              through  ST. PAUL REINSURANCE
                              MANAGEMENT CORPORATION

                              BY   s/Cathryn Carea

                              TITLE     Vice President

Towers Perrin
Reinsurance
<PAGE>
                                                  Reference No.

        PROPERTY FIRST CATASTROPHE EXCESS OF LOSS CONTACT
                                
   EFFECTIVE JANUARY 1, 1997, 12:01 A.M., LOCAL STANDARD TIME
                                
                             for the
                                
               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO
                                
               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS
                                
               (herinafter called the "Reassured")
                                
                               by
                                
                 UNITED FIRE & CASUALTY COMPANY
                                
                              IOWA
                                
            (hereinafter called, with other participants, the
            "Reinsurers")

            Under the terms of this Contract the above Reinsurer
            agrees to assume severally and not jointly with other
            participants

                          a 2.00% share
                                
            of the liability described in the attached Contract
            and, as
            consideration, the Reinsurer shall receive a 2.00%
            share
            of the premium named therein.

Signed in Cedar Rapids, Iowa,  this 27th day of March, 1997,

                              UNITED FIRE & CASUALTY COMPANY

                              BY   s/John A. Cruice

                              TITLE     Vice President

Towers Perrin
Reinsurance

<PAGE>

                                                  Reference No.

        PROPERTY FIRST CATASTROPHE EXCESS OF LOSS CONTACT
                                
   EFFECTIVE JANUARY 1, 1997, 12:01 A.M., LOCAL STANDARD TIME
                                
                             for the
                                
               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO
                                
               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS
                                
               (herinafter called the "Reassured")
                                
                               by
                                
          WINTERTHUR REINSURANCE CORPORATION OF AMERICA
                                
                            NEW YORK
                                
            (hereinafter called, with other participants, the
            "Reinsurers")

            Under the terms of this Contract the above Reinsurer
            agrees to assume severally and not jointly with other
            participants

                         a 12.50% share
                                
            of the liability described in the attached Contract
            and, as
            consideration, the Reinsurer shall receive a 12.50%
            share
            of the premium named therein.

Signed in New York, New York,  this 14th day of April, 1997,

                              WINTERTHUR REINSURANCE
                              CORPORATION OF AMERICA

                              BY   s/Scott M. Emanuele

                              TITLE     Vice President

Towers Perrin
Reinsurance

<PAGE>
and signed in Englewood, Colorado, this 18th day of June, 1997.

                              BY   s/Fred T. Roberts

                              TITLE  President, Commercial Division


















                           PART OF THE
                                
       PROPERTY FIRST CATASTROPHE EXCESS OF LOSS CONTRACT
                                
   EFFECTIVE JANUARY 1, 1997, 12:01 A.M., LOCAL STANDARD TIME
                                
                             for the
                                
               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
            GUARANTY NATIONAL INSURANCE OF CALIFORNIA
                       ENGLEWOOD, COLORADO
                                
               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS
                                
                                
                                
                                
                                
Towers Perrin
Reinsurance


<PAGE>
                                
               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
              LANDMARK ARMERICAN INSURANCE COMPANY
              VIKING INSURANCE COMPANY OF WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                                
       PROPERTY FIRST CATASTROPHE EXCESS OF LOSS CONTRACT
                                
   EFFECTIVE JANUARY 1, 1997, 12:01 A.M., LOCAL STANDARD TIME
                                
                              INDEX
                                
ARTICLE                  SUBJECT                       PAGE

                    PREAMBLE ___________________.1.
  1                 BUSINESS COVERED _______________1.
  2                 TERM _____________________ . 1.
  3                 DEFINITION OF POLICIES _____________1.
  4                 TERRITORY ___________________.1.
  5                 EXCLUSIONS _.. _________________2.
  6                 RETENTION AND LIMIT ______________3.
  7                 REINSTATEMENT_________________3.
  8                 DEFINITION OF LOSS OCCURRENCE________..4.
  9                 NET LOSS____________________..5.
  10                NET RETAINED LINES_______________6.
  11                LIABILITY OF THE REINSURER___________6.
  12                NOTICE OF LOSS AND LOSS SETTLEMENT_____..6.
  13                SALVAGE AND SUBROGATION___________7.
  14                PREMIUM ____________________..7.
  15                CURRENCY____________________8.
  16                ERRORS AND OMMISSIONS____________..8.
  17                TAXES______________________.8.
  18                ACCESS TO RECORDS _______________8
  19                INTERMEDIARY__________________9
  20                INSOLVENCY___________________.9
  21                ARBITRATION___________________9
  22                RESERVES____________________.10
  23                SERVICE OF SUIT_________________12
  24                OFFSET_____________________..12
  25                ENTIRE AGREEMENT_______________.13

ATTACHMENTS

NUCLEAR     INCIDENT  EXCLUSION CLAUSE    -     PHYSICAL   DAMAGE
- -
REINSURANCE
POOLS EXCLUSION CLAUSE

Towers Perrin
Reinsurance

<PAGE>
                                
               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
               LANDMARK AMERICAN INSURANCE COMPANY
              VIKING INSURANCE COMPANY OF WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY

       PROPERTY SECOND CATASTROPHE EXCESS OF LOSS CONTRACT



PREAMBLE

         The  Reinsurers hereby reinsure the net excess liability
of  the  Reassured  resulting from any loss  occurrence  or  loss
occurrences which may take place during the term of this Contract
under   the   Reassured's  policies  subject  to  the   following
conditions:

ARTICLE 1., BUSINESS COVERED

          This  Contract  shall cover policies in  force  at  the
inception  of  this Contract or written or renewed subsequent  to
its  inception,  issued  by or on behalf  of  the  Reassured  and
classified  by the Reassured as property including  Fire,  Allied
Lines,  Inland  Marine,  Section I  of  Farmers  Multiple  Peril,
Homeowners Multiple Peril and Commercial Multiple Peril and  Auto
Physical Damage but excluding Collision.

ARTICLE 2., TERM

     A.   The term of this Contract shall be from 12:01 a.m.,
Local Standard
Time, January 1, 1997 through 12:01 a.m., Local Standard Time,
January 1, 1998.



     B.     If  this  Contract  should  terminate  while  a  loss
occurrence covered hereunder is in progress, the Reinsurers shall
be  liable subject to all other conditions of this Contract,  for
their  share  of all individual losses resulting from  such  loss
occurrence  whether any such individual losses take place  before
or after such termination.

ARTICLE 3., DEFINITION OF POLICIES

          The term "policies", whenever used herein, shall mean
all binders, policies, contracts, certificates and other
obligations, whether oral or written, of insurance.

ARTICLE 4., TERRITORY

          Subject to all other terms and conditions of this
Contract, this Contract shall apply to losses occurring anywhere
within the territorial limits of the Reassured's policy by which
it was insured.


Towers Perrin
Reinsurance


<PAGE>
ARTICLE 5., EXCLUSIONS

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

          1.   Business classified by the Reassured as Accident and Health,
               Workers' Compensation, Employers' Liability. all
               forms of third
               party Bodily Injury Liability, and Fidelity and
               Surety;

          2.   Hail damage to growing or standing crops;

          3    Nuclear  incidents in accordance with the  Nuclear
               Incident
               Exclusion  Clause - Physical Damage -  Reinsurance
               attached
               to and forming part of this Contract,

          4.   Reinsurance treaty business, including pro rata and excess
               of
               loss, assumed by the Reassured, but not to exclude
               business
               from  State  and  County  Mutual  Fire,  Security
               Insurance of
               Hartford and affiliated companies;

          5.   Pools, Associations and Syndicate business as
               excluded by
               the  provisions of the "Pools Exclusions  Clause"
               attached to
               and forming part of this Contract;

           6   Loss  or  damage  occasioned by  war,  invasion,
               hostilities, acts
               of   foreign  enemies,  civil  war,   rebellion,
               insurrection, military or
               usurped power, or martial law or confiscation  by
               order of any
               government or public authority but not  excluding
               loss or
               damage which would be covered under a standard of
               policy containing a standard War Exclusion Clause;

          7.   Financial Guaranty and Insolvency;

          8.   All liability of the Reassured arising by contract,
               operation of law, or     otherwise, from its participation or
               membership, whether voluntary or   involuntary, in any
               insolvency fund shall be excluded hereunder.  "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 Reassured 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;

          9.   Loss/or Damage/or Costs/or Expenses arising from
               Seepage and/or Pollution and/or Contamination, other than
               Contamination from Smoke Damage.  Nevertheless, this
               exclusion does not preclude any payment of the
               cost of the removal of debris of property damaged
               by a loss otherwise

Towers Perrin
Reinsurance
                                
<PAGE>
                covered hereunder, but subject always to a  limit
                of 25.0% of the
                Reassured's  Property  loss  under  the  original
                policy.  It is agreed
                that  all  business the subject of  the  Contract
                contains the full I.S.O.
                Seepage  and  Pollution Exclusion  Clause  or  so
                deemed.

     B.    Policies or coverages excluded under the provisions of
this ARTICLE 5., EXCLUSIONS, (other than items (3), (6), (7)  and
(9)  which are inadvertently issued or issued in error or  issued
without  the Reassured's knowledge and consent shall  be  covered
hereunder  provided  such  policies  are  canceled  or  reinsured
elsewhere  as soon as possible upon the Reassured's  Home  Office
Underwriting Management becoming aware that they are excluded.


ARTICLE 6., RETENTION AND LIMIT


          The  Reinsurers shall be liable for each and every loss
occurrence,  irrespective of the number and kinds  of  risks  and
perils involved, for 95% of the net loss in excess of $10,000,000
each and every loss occurrence; but the Reinsurers' shall not  be
liable  for  more than $9,500,000 (being 95% of $10,000,000)  for
each  and  every  loss  occurrence.  In the event  the  aggregate
losses  recoverable  under this Contract are expected  to  exceed
$18,000,000, the Reassured shall immediately notify the State  of
Colorado Division of Insurance of the impending exhaustion of the
reinsurance coverage.


ARTICLE 7., REINSTATEMENT
    
    
       A.   Each claim hereunder shall reduce the amount  of  the
Reinsurers' liability from the time of the occurrence of the loss
by  the  sum paid, but the sum so exhausted immediately shall  be
reinstated from the time of the occurrence of the loss.


     B.    For each amount so reinstated, the Reassured agrees to
pay  an additional premium calculated by multiplying 100% of  the
annual  premium hereon by the product of the percentage that  the
amount  reinstated bears to the limit (i.e. $9,500,000)  of  this
Contract.   Nevertheless, the liability of the  Reinsurers  shall
never  be  more  than  $9,500,000 in  respect  of  any  one  loss
occurrence,  nor more than $19,000,000 in all in respect  of  all
losses occurring during the term of this Contract.


     C.    A provisional reinstatement premium shall be. paid  by
the Reassured at the time the Reinsurers pay the loss giving rise
to the reinstatement premium through an offset of the provisional
reinstatement premium due the Reinsurers against the loss payment
due the Reassured, with only the net amount due to be remitted by
the  Reinsurers to the Reassured.  The amount of this provisional
reinstatement  premium shall be based on 100%  of  the  estimated
annual  reinsurance  premium as calculated  in  Paragraph  A.  of
ARTICLE 14., PREMIUM (or the annual deposit premium as stated  in
Paragraph  C. of ARTICLE 14., PREMIUM, if prior to the conclusion
of a full calendar year).



Towers Perrin
Reinsurance
     
     
     
     <PAGE>
     D.   As promptly as possible after the loss has been paid by
the Reinsurers and the annual reinsurance premium hereunder has
been finally  determined,  the Reassured shall prepare and submit
to the Reinsurers a final  statement of reinstatement premium
due.  Any reinstatement premium shown to be due the Reinsurers
(less prior payments, if any) shall be remitted by the Reassured
with its statement.  Any return reinstatement premium shown to be
due the Reassured shall be remitted by the Reinsurers as promptly
as possible after receipt of the Reassured's final statement.


ARTICLE 8., DEFINITION OF 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 Reassured  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
                Reassured   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 Reassured
                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 assured'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
                opening paragraph of this
                ARTICLE 8.,  DEFINITION OF LOSS OCCURRENCE) 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 Reassured's "Loss Occurrence".



TowersPerrin
Reinsurance

                                
                                
                                
                                
<PAGE>
                                
          4.    As regards "Freeze", only individual losses directly
                occasioned by
                collapse,  breakage  of glass  and  water  damage
                (caused by bursting of
                frozen  pipes and tanks) may be included  in  the
                Reassured's "Loss
                Occurrence".


     B.    For  all "Loss Occurrences", other than those referred
to  in subparagraph A. 2. of this ARTICLE 8.. DEFINITION OF  LOSS
OCCURRENCE, the Reassured 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 Reassured 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 Occurrences" referred to in  sub-
paragraph A. 1. of this ARTICLE B., DEFINITION OF LOSS OCCURRENCE
where  only  one such period of 72 consecutive hours shall  apply
with respect to one event.



     C.   As respects those "Loss Occurrences" referred to in sub-
paragraph A.
2.    of  this ARTICLE B., DEFINITION OF LOSS OCCURRENCE, if the
disaster, accident or loss occasioned by the event is of  greater
duration than 72 consecutive hours, then the Reassured 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
Reassured 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 9., NET LOSS

    A.    The term "net loss" shall mean the actual loss incurred
by  the  Reassured under policies covered hereunder.   Such  loss
shall include sums paid in settlement of claims and suits and  in
satisfaction  of judgments, including prejudgment  interest  when
added  to a judgment.  Such loss also shall include all allocated
loss adjustment expenses paid by the Reassured including but  not
limited  to expenses sustained in connection with settlement  and
litigation  of  claims  and  suits,  satisfaction  of  judgments,
resistance  to  or  negotiations concerning a loss  (which  shall
include  the pro rata share of the Reassured's outside  employees
according  to  the time occupied in adjusting such loss  and  the
expenses of. the Reassured's employees while diverted from  their
normal  duties to the service of field adjustment but  shall  not
include any salaries of officers nor normal overhead expenses  of
the   Reassured)  and  any  interest  on  judgments  other   than
prejudgment interest when added to a judgment.

     B.    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 loss settlement  under  this  Contract,
including

Towers Perrin
Reinsurance


<PAGE>

amounts recoverable under other reinsurance whether collected  or
not, 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 9., NET LOSS, shall be construed to  mean
losses  are  not recoverable until the net loss to the  Reassured
finally has been ascertained.



ARTICLE 10., NET RETAINED LINES


     A.    This  Contract  applies only to that  portion  of  any
insurance or reinsurance which the Reassured 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  insurance or reinsurance  which  the  Reassured
retains net for its own account shall be included.


     B.     It  is  agreed,  however,  that  the  amount  of  the
Reinsurers' liability hereunder in respect of any loss or  losses
shall  not  be  increased  by reason  of  the  inability  of  the
Reassured 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.


          C.    It  is  understood  that  the  Reassured  carries
underlying per risk excess
reinsurance,   recoveries    under   which    shall    inure   to
the  benefit    of   the   Reinsurers
hereunder    and     shall   be  deducted   in   determining  the
net  loss   subject  to  this  Contract.

ARTICLE 1., LIABILITY OF THE REINSURER

      A.    The liability of the Reinsurers shall follow that  of
the  Reassured in every case, and be subject in all  respects  to
all  the  general and special stipulations, clauses, waivers  and
modifications  of  the Reassured's policies and any  endorsements
thereon.

     B.   All terms of this Contract shall be subject to the laws
of the state of Colorado.

     C.   Nothing herein shall in any manner create any
obligations or establish any rights against the Reinsurers in
favor of any third party or any persons not parties to this
Contract.


ARTICLE 12., NOTICE OF LOSS AND LOSS SETTLEMENT

    A.     The Reassured shall advise the Reinsurers promptly  of
all  loss occurrences which, in the opinion of the Reassured, may
result  in  a  claim hereunder and of all subsequent developments
thereto  which,  in the opinion of the Reassured, may  materially
affect  the position of the Reinsurers.  Inadvertent omission  or
oversight  in  giving  such notice shall in  no  way  affect  the
liability  of the Reinsurers.  However, the Reinsurers  shall  be
informed  of  such  omission  or  oversight  promptly  upon   its
discovery.

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Reinsurance
     
     
     <PAGE>
     B.    All  loss settlements made by the Reassured,  provided
they   are   within  the  terms  of  this  Contract,   shall   be
unconditionally binding upon the Reinsurers, who agree to pay all
amounts  for  which  they  may be liable immediately  upon  being
furnished by the Reassured with reasonable evidence of the amount
due.

ARTICLE 13., SALVAGE AND SUBROGATION

          The  Reinsurers  shall be credited with salvage  (i.e.,
reimbursement  obtained or recovery made by the  Reassured,  less
the actual cost, excluding salaries of officials and employees of
the  Reassured  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
Reassured  for its primary loss.  The Reassured 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 14, PREMIUM

     A.   The premium due the Reinsurers shall be calculated by
applying a rate of .346% to the Reassured's gross net written
premium income during the term of this Contract.


          The term "gross net written premium income" shall mean
gross premiums written on business covered hereunder less
premiums paid for reinsurance, recoveries under which would
reduce the loss under this Contract.


     B.    For purposes of this Contract, 100% of the Reassured's
written premium for property including Fire, Allied Lines, Inland
Marine,  Section  I  of  Farm owners Multiple  Peril,  Homeowners
Multiple  Peril and Commercial Multiple Peril and  Auto  Physical
Damage excluding Collision shall be reported hereunder.


     C.    A deposit premium of $308,500, shall be payable to the
Reinsurers in four equal installments of $77,125, each, the first
payment  being due at inception of this Contract and  the  second
and  subsequent payments being payable as of April 1, July 1  and
October  1,  1997.  This Contract shall be subject to  a  minimum
premium   of  $246,800.   As  promptly  as  possible  after   the
termination  of  this  Contract, the  Reassured  shall  render  a
statement  to  the  Reinsurers  showing  the  actual  reinsurance
premiums due hereunder, calculated as provided in Paragraph A. of
this  ARTICLE 14., PREMIUM, and, if the premium so calculated  is
greater  than  the deposit premium, the additional premium  shall
hereupon be paid to the Reinsurers.  If the premium so calculated
in  Paragraph A. of this ARTICLE 14., PREMIUM, is less  than  the
minimum   premium,   Reinsurers  will  immediately   return   the
difference  between the minimum premium and the  deposit  premium
previously  paid by the Reassured.  If the premium calculated  in
Paragraph  A. of this ARTICLE 14., PREMIUM, is greater  than  the
minimum  premium  but less than the deposit premium.   Reinsurers
will  immediately return the difference between  the  reinsurance
premium  due  and  the  deposit premium previously  paid  by  the
Reassured.


Towers Perrin
Reinsurance


<PAGE>
ARTICLE 15.,CURRENCY

          Whenever the word "Dollars" or the I" 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 Reassured 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 Reassured.

ARTICLE 16., ERRORS AND OMISSIONS

          Inadvertent  delays,  errors  or  omissions   made   in
connection with this Contract shall not relieve either party 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 the Reassured's Home Office.


ARTICLE 17., TAXES

          In consideration of the terms under which this Contract
is issued, the Reassured 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 18., ACCESS TO RECORDS


         The  Reassured  shall  place  at  the  disposal  of  the
Reinsurers at all reasonable times, and the Reinsurers shall have
the  right  to  inspect through their designated representatives,
during  the  term  of  this Contract and thereafter,  all  books,
records  and  papers  of  the Reassured in  connection  with  any
reinsurance hereunder, or the subject matter hereof.


ARTICLE 19., INTERMEDIARY

          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 the Reassured  or  the
Reinsurers through Towers Perrin Reinsurance, Mellon Bank Center,
1735   Market  Street,  Philadelphia,  Pennsylvania,  19103-7501.
Payments by the Reassured to the Intermediary shall be deemed  to
constitute payment to the Reinsurers.  Payments by the Reinsurers
to  the Intermediary shall be deemed to constitute payment to the
Reassured  only  to  the extent that such payments  are  actually
received by the Reassured.



Towers Perrin
Reinsurance



<PAGE>
ARTICLE 20., INSOLVENCY


     A.    In  the  event  of  insolvency of the  Reassured,  the
reinsurance  under  this  Contract  shall  be  payable   by   the
Reinsurers  to the Reassured or to its liquidator,  receiver,  or
statutory  successor  on  the  basis  of  the  liability  of  the
Reassured   under  the  policy  or  policies  reinsured   without
diminution because of the insolvency of the Reassured.


     B.    It is further agreed that the liquidator, or receiver,
or statutory successor of the Reassured shall give written notice
to  the  Reinsurers  of  the pendency of any  claim  against  the
Reassured  on  the  policies reinsured within a  reasonable  time
after such claim is filed in the insolvency proceeding, and  that
during  the pendency of such claim the Reinsurers may investigate
such claim and interpose, at their own expense, in the proceeding
where  such  claim is to be adjudicated, any defense or  defenses
which  they  may  deem  available to  the  Reassured  or  to  its
liquidator,  or  receiver, or statutory successor.   The  expense
thus  incurred by the Reinsurers shall be chargeable, subject  to
court  approval, against the Reassured as part of the expense  of
liquidation to the extent of a proportionate share of the benefit
which  may  accrue to the Reassured solely as  a  result  of  the
defense undertaken by the Reinsurers.


ARTICLE 21., ARBITRATION

     A.    Any  dispute or other matter in question  between  the
Reassured  and the Reinsurers arising out of or relating  to  the
formation,  interpretation,  performance,  or  breach   of   this
Contract, whether such dispute arises before or after termination
of  this  Contract, shall be settled by arbitration.  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.


     B.    If  more  than one Reinsurer is involved in  the  same
dispute,  all  such Reinsurers shall constitute and  act  as  one
party   for  the  purposes  of  this  ARTICLE  21.,  ARBITRATION,
provided, however, that nothing herein shall impair the rights of
such Reinsurers to assert several, rather than joint, defenses or
claims,  nor  be  construed  as changing  the  liability  of  the
Reinsurers  under  the  terms of this Contract  from  several  to
joint.


     C.    Each  party shall appoint an individual as  arbitrator
and  the  two so appointed shall then appoint a third arbitrator.
If  either  party  refuses or neglects to appoint  an  arbitrator
within  sixty  days,  the  other party  may  appoint  the  second
arbitrator.   If  the two arbitrators do not  agree  on  a  third
arbitrator  within sixty days of their appointment, each  of  the
arbitrators  shall nominate three individuals.   Each  arbitrator
shall  then decline two of the nominations presented by the other
arbitrator.  The third arbitrator shall then be chosen  from  the
remaining two nominations by drawing lots.  The arbitrators shall
be  active  or  retired  officers  of  insurance  or  reinsurance
companies  or Lloyd's London Underwriters; the arbitrators  shall
not  have a personal or financial interest in the result  of  the
arbitration.




Towers Perrin
Reinsurance

<PAGE>


     D.    The  arbitration hearings shall be held in  Englewood,
Colorado,  or  such other place as may be mutually agreed.   Each
party shall submit its case to the arbitrators within sixty  days
of  the  selection of the third arbitrator or within such  longer
period  as  may  be agreed by the arbitrators.   The  arbitrators
shall  not be obliged to follow judicial formalities or the rules
of  evidence except to the extent required by governing law, that
is,  the  state  law  of the situs of the arbitration  as  herein
agreed; they shall make their decisions according to the practice
of the reinsurance business.  The decision rendered by a majority
of  the  arbitrators shall be final and binding on both  parties.
Such  decision  shall be a condition precedent to  any  right  of
legal  action arising out of the arbitrated dispute which  either
party  may  have  against  the other.  Judgment  upon  the  award
rendered may be entered in any court having jurisdiction thereof.

     E.   Each party shall pay the fee and expenses of its own
arbitrator and one-half of the fee and expenses of the third
arbitrator.  All other expenses of the arbitration shall be
equally divided between the parties.


     F.          Except as provided above, arbitration shall be
based, insofar as applicable, upon the procedures of the American
Arbitration Association.


     G.        In the event of the insolvency of the Reassured,
all arbitration proceedings must also be subject to the laws of
the state of Colorado.

ARTICLE 22., RESERVES

     A.    If a jurisdiction of the United States will not permit
the  Reassured, in the statements required to be filed  with  its
regulatory  authority(ies), to receive full  credit  as  admitted
reinsurance   for  any  Reinsurers  share  of  obligations,   the
Reassured  shall  forward to such Reinsurer a  statement  of  the
Reinsurer's  share  of such obligations.  Upon  receipt  of  such
statement the Reinsurer shall promptly apply for, and provide the
Reassured  with, a "clean," unconditional and irrevocable  Letter
of  Credit,  in the amount specified in the statement  submitted,
with  terms  and bank acceptable to the regulatory authority(ies)
having jurisdiction over the Reassured.  An acceptable bank is  a
"qualified  United States Financial institution"  as  defined  by
Regulation  No.  10-1-102  (9.5)  promulgated  by  the   Colorado
Insurance Department.

     B.    "Obligations," as used in this ARTICLE 22.,  RESERVES,
shall  mean  the sum of losses paid and allocated loss adjustment
expenses  paid  by the Reassured but not yet recovered  from  the
Reinsurer,  plus reserves for reported losses and allocated  loss
adjustment  expenses.  It shall not include reserves  for  losses
incurred but not reported.

     C.    The  Reinsurer hereby agrees that the Letter of Credit
will  provide  for  automatic extension of the Letter  of  Credit
without  amendment for one year from the date  of  expiration  of
said Letter or any future expiration date unless thirty (30) days
prior  to  any  expiration  the issuing  bank  shall  notify  the
Reassured by registered mail that the issuing bank elects not  to
consider the Letter of Credit renewed for any additional period.

Towers Perrin
Reinsurance

<PAGE>
     
     D.    Notwithstanding any other provision of this  Contract,
the  Reassured  or  any  successor by operation  of  law  of  the
Reassured   including,   without  limitation,   any   liquidator,
rehabilitator, receiver or conservator of the Reassured may  draw
upon such credit, without diminution because of the insolvency of
any  party  hereto, at any time and undertakes to use  and  apply
such credit for one or more of the following purposes only:

           1     To pay the Reinsurers share or to reimburse  the
                 Reassured for the
                 Reinsurers   share  of  any    obligations,   as
                 stipulated in the statement
                 submitted by the Reassured to the Reinsurer, which
                 is due to the
                 Reassured   and  not  otherwise  paid   by   the
                 Reinsurer. In the event the
                 Reassured has received effective notice  of  non-
                 renewal of the
                 Letter  of  Credit and the Reinsurer's  liability
                 remains unliquidated and
                 undischarged thirty (30) days prior to the expiry
                 date of the Letter of
                 Credit, to withdraw the balance of the Letter  of
                 Credit and place such
                 sums  in  an  interest bearing trust  account  to
                 secure the continuing
                 liabilities  of  the  Reinsurer  under       this
                 Contract until a renewal Letter of
                 Credit acceptable to the regulatory authority(ies)
                 having jurisdiction over
                 the  Reassured, or a substitute in  lieu  thereof
                 acceptable to the regulatory
                 authority(ies)  having  jurisdiction  over   the
                 Reassured, has been received by
                 the Reassured.  The Reassured shall provide to the
                 Reinsurer payment of
                 any interest thereon accruing from such account.

          3.     To make refund of any sum which is in excess of the
                 actual amount  required for Sub-paragraphs 1. and 2. of
                 this Paragraph D., of ARTICLE 22., RESERVES.

E.   At annual intervals or more frequently as determined by  the
Reassured,   but  never  more  frequently  than  quarterly,   the
Reassured  shall  prepare  a specific  statement,  for  the  sole
purpose  of  amending the Letter of Credit,  of  the  Reinsurer's
share  of  any  obligations.  If the  statement  shows  that  the
Reinsurer's share of obligations exceeds the balance of credit as
of  the  statement date, the Reinsurer shall, within thirty  (30)
days  after receipt of notice of such excess, secure delivery  to
the  Reassured of an amendment of the Letter of Credit increasing
the  amount of credit by the amount of such difference.   If  the
statement   shows,  however,  that  the  Reinsurer's   share   of
obligations  is  less  than  the balance  of  credit  as  of  the
statement  date,  the Reassured shall, within  thirty  (30)  days
after receipt of written request from the Reinsurer, release such
excess credit by agreeing to secure an amendment to the Letter of
Credit  reducing the amount of credit available by the amount  of
such excess credit.


     F.    The  bank  shall have no responsibility whatsoever  in
connection  with  the  propriety  of  withdrawals  made  by   the
Reassured or the disposition of funds withdrawn, except to assure
that  withdrawals  are  made  only upon  the  order  of  properly
authorized representatives of the Reassured.  The Reassured shall
incur  no obligation to the bank in acting upon the credit, other
than as appears in the express terms thereof.



Towers Perrin
Reinsurance


<PAGE>


ARTICLE 23.,SERVICE OF SUIT   (Paragraphs A. and S. of this
ARTICLE 23.,
                         SERVICE OF SUIT, only apply to
               Reinsurers domiciled
                         outside   of the United States and/or
               unauthorized in the
                         State of New York)

    A.     It  is agreed that in the event of the failure of  the
Reinsurers  hereon to pay any amount claimed to be due hereunder,
the  Reinsurers  hereon, at the request of  the  Reassured,  will
submit  to  the jurisdiction of a Court of competent jurisdiction
within  the United States.  Nothing in this ARTICLE 23.,  SERVICE
OF  SUIT,  constitutes or should be understood  to  constitute  a
waiver  of Reinsurers' 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.   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-
6829,  and  that in any suit instituted against any one  of  them
upon  this  Contract, such Reinsurer(s) will abide by  the  final
decision of such Court or of any Appellate Court in the event  of
an appeal.


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


    C.      Further,  pursuant  to  any  statute  of  any  state,
territory  or district of the United States which makes provision
therefore, Reinsurers hereon 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 the Reassured or any  beneficiary
hereunder arising out of this Contract of reinsurance, and hereby
designate the above-named as the person to whom the said  officer
is authorized to mail such process or a true copy thereof.


ARTICLE 24., OFFSET


          The  Reassured or the Reinsurer may offset any  balance
allowed  by  Colorado  law,  statute or  regulation,  whether  on
account of premium, commission, claims or losses, loss adjustment
expenses, recoveries, salvage, or any other amount due  from  one
party  to  the  other under this Contract or any  other  contract
heretofore  or  hereafter entered into between the Reassured  and
the  Reinsurer,  whether acting as assuming reinsurer  or  ceding
company.   This  right of offset shall not  be  affected  by  the
insolvency of either the Reassured or the Reinsurer.



Towers Perrin
Reinsurance



<PAGE>


ARTICLE 25., ENTIRE AGREEMENT

          This agreement embodies the whole agreement of the
parties and there are no promises, terms, conditions, obligations
other than those contained herein.










                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                                      MRM:cam
                                         Doc#:  46665 January 16,
1997

Towers Perrin
Reinsurance





<PAGE>
U. S. A.

Nuclear Incident Exclusion Clause_Physical Damage_Reinsurance

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 lose or
  liability by radio-active 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
         termination. however caused.  However on and after 1st January
         1960 this subparagraph (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 lose
  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 risk, 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 in understood and agreed that

    (a)    all policies issued by the Reassured on or before Slat
       December  1957 shall be free from the application  of  the
       other provisions of this Clause until expiry date or  Slat
       December  1960  whichever first occurs whereupon  all  the
       provisions of this Clause shall apply.

    (b)  with respect to any rink located in Canada policies issued
      by the Reassured on or before Slat December 1958 shall be free
      from the application of the other   provisions of this Clause
      until expiry date or 3lat December 1960 whichever first occurs,
      whereupon all the provisions of this Clause shall Apply





Towers Perrin
Reinsurance
<PAGE>
                                
       POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE
SECTION A

It is agreed that the following is excluded hereunder:

(1)   All  business derived directly or indirectly from any Pool,
   Association  or Syndicate which maintains its own  reinsurance
   facilities.

(2)   Any Pool or Scheme, (whether voluntary or mandatory) formed
   after  1  St March, 1 968 for the purpose of insuring property
   whether  on  a country-wide basis or in respect of  designated
   areas.  This exclusion 1h,11 not apply to so-coiled Automobile
   Insurance Plans or other Pools formed to provide coverage  for
   Automobile Physical Damage.

SECTION 8

It is agreed that business written by the Reassured for the some
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:

(1)   Where the Total Insured Value over all interests of the
risk in question is less then $250,000,000.

(2)  to interests traditionally underwritten as Inland Marine or
Stock and/or Contents written on a Blanket Basis.

(3)    to  Contingent  Business  interruption,  except  when  the
Reassured is aware that the key location is known at the  time
to  be  insured  in any Pool, Association or  Syndicate  named
above.

(4)  to risks as follows:

offices, hotels, apartments. hospitals. educational
establishments, publications (other than railroad schedules) and
builder's risks on  he classes of risks specified in this
subsection i4i only.

Where this Clause attaches to Catastrophe Excess of Loss
Reinsurance Agreements, the following SECTION C is
added;

SECTION C

Nevertheless the Reinsurers specifically agree that liability
accruing to the Reassured from its participation in:

(1)  The following so-called 'Coastal Pools'

   Alabama Insurance Underwriting Association
   Florida Windstorm Underwriting Association
   Louisiana Insurance Underwriting Association
   Mississippi Windstorm Underwriting Association
   North Carolina insurance Underwriting Association
   South Carolina Windstorm and Hail Underwriting Association
   Taxes Catastrophe Property Insurance Association

(2)   All 'Fair Plan' Business. including but not limited to  the
   Florida  Residential Property and Casualty Joint  Underwriting
   Association  and  the  Florida  Property  and  Casualty  Joint
   Underwriting Association; and oil 'Rural Risk Plan' Business.

for all perils otherwise protected hereunder shall not be
excluded, except 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'  to
     meet its liability.

   (iii)      Any claim against such 'Coastal Pool' and/or  'Fair
     Plan'  and/or 'Rural Risk Plan' or any participant  therein,
     including  the Reassured   whether by way of subrogation  or
     otherwise, brought by or on behalf of any insolvency fund as
     defined in the Insolvency Funds Exclusion   Clause incorporated
     in this Agreement).
Towers Perrin
Reinsurance
<PAGE>


                                                    Reference No.
                                
       PROPERTY SECOND CATASTROPHE EXCESS OF LOSS CONTRACT
                                
    EFFECTIVE JANUARY 1, 1997,12:01 A.M., LOCAL STANDARD TIME
                                
                             for the
                                
               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO
                                
               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS
                                
              (hereinafter called the "Reassured")
                                
                               by
                                
             FIRST EXCESS & REINSURANCE CORPORATION
                                
                            MISSOURI
                                
 (hereinafter called, with other participants, the "Reinsurers")
                                
                    Under the terms of this Contract the above
                    Reinsurer
                    agrees to assume severally and not jointly
                    with other
                    participants
                          a 4.50% share
                                
                   of the liability described in the attached
                   Contract and, as
                   consideration, the Reinsurer shall receive a
                   4.50% share
                   of the premium named therein.

     Signed in Overland Park, Kansas, this  3rd day of April, 1997
                                
                             FIRST EXCESS & REINSURANCE
                                 CORPORATION
                                
                              BY       s/Michael C. S. Burn,
                              TITLE    Vice President
                                
Towers Perrin
Reinsurance


<PAGE>
                                                       Reference No.

       PROPERTY SECOND CATASTROPHE EXCESS OF LOSS CONTRACT
                                
   EFFECTIVE JANUARY 1,1997,  12:01 A.M., LOCAL STANDARD TIME

                             for the
                                
               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO
                                
               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS
                                
              (hereinafter called the "Reassured")

                               by

                  THE HANOVER INSURANCE COMPANY

                          NEW HAMPSHIRE

 (hereinafter called, with other participants, the "Reinsurers")
                                
                    Under the terms of this Contract the above
                    Reinsurer
                    agrees to assume severally and not jointly
                    with other
                    participants
                    a 5.00% share
                                
                   of the liability described in the attached
                   Contract and, as
                   consideration, the Reinsurer shall receive a
                   5.00% share
                   of the premium named therein.
                                
Signed in Florham Park, New Jersey, this 14th day of,1997,
                                
                           ALLMERICA RE for and on behalf of THE
                           HANOVER INSURANCE COMPANY

                           BY    s/Phillip A. Ward

                           TITLE    Vice President

Towers Perrin
Reinsurance
<PAGE>
                                                       Reference No.
                                
       PROPERTY SECOND CATASTROPHE EXCESS OF LOSS CONTACT
                                
                    EFFECTIVE JANUARY 1, 1997, 12:01 A.M., LOCAL
                          STANDARD TIME
                                
                             for the

              GUARANTY NATIONAL I NSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                         ENGLEWOOD, COLORADO

               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS
                                
              (hereinafter called the "Reassured")
                                
                               by

                  HANNOVER RUCKVERSICEHERUNG AG

                        HANNOVER, GERMANY

               (hereinafter called, with other participants, the
               "Reinsurers")

               Under the terms of this Contract the above
               Reinsurer
               agrees to assume severally and not jointly with
               other
               participants
               a 10.00% share

               of the liability described in the attached
               Contract and, as
               consideration, the Reinsurer shall receive a
               10.00% share
               of the premium named therein.

Signed in Hannover, Germany, this   3rd   day of April, 1997,

                              HANNOVER RUCKVERSICHERUNG AG
                                    hannover re

                              BY  Hannover Ruckversicherungs-
Aktiengesellschaft
                                        s/Konrad Rentrup
                              TITLE   North American Treaty Dpt.-VR 10
                                        Ref - No.-MO2649

Towers Perrin
Reinsurance
<PAGE>
                                                  Reference No.

       PROPERTY SECOND CATASTROPHE EXCESS OF LOSS CONTRACT
                                
    EFFECTIVE JANUARY 1, 1997,12:01 A.M., LOCAL STANDARD TIME

                             for the

               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO

               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS

              (hereinafter called the "Reassured")
                                
                               by
                                
                  INSURANCE COMPANY OF THE WEST

                           CALIFORNIA

          (hereinafter called, with other participants, the
          "Reinsurers")

          Under the terms of this Contract the above Reinsurer
          agrees to assume severally and not jointly with other
          participants
          a 7.50% share
          of the liability described in the attached Contract
          and, as
          consideration, the Reinsurer shall receive a 7.50%
          share
          of the premium named therein.

Signed in San Diego, California, this 17th day of March, 1997,

                              INSURANCE COMPANY OF THE WEST

                              BY  s/Elaine Lamb

                              TITLE  Product Management
Specialist


Towers Perrin
Reinsurance

<PAGE>
                                                  Reference No.

       PROPERTY SECOND CATASTROPHE EXCESS OF LOSS CONTRACT

     EFFECTIVE JANUARY 1997,12:01 A.M., LOCAL STANDARD TIME

                             for the

               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO

               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS

              (hereinafter called the "Reassured")

                               by

                  MOTORS INSURANCE CORPORATION

                            NEW YORK

          (hereinafter called, with other participants, the
          "Reinsurers")

          Under the terms of this Contract the above Reinsurer
           agrees to assume severally and not jointly with other
          participants

                                 a 3.00% share

          of the liability described in the attached Contract
          and, as
          consideration, the Reinsurer shall receive a 3.00%
          share
          of the premium named therein.

Signed in Mt.  Laurel, New Jersey, this 27th day of March, 1997,

                              MOTORS INSURANCE CORPORATION
                              through MIC RE CORPORATION

                              BY  s/Gail R. Seblafer

                              TITLE  Vice President

Towers Perrin
Reinsurance
<PAGE>
                                                       Reference No.

       PROPERTY SECOND CATASTROPHE EXCESS OF LOSS CONTRACT
    EFFECTIVE JANUARY  1997, 12:01 A.M., LOCAL STANDARD TIME

                             for the

               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO

               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS

              (hereinafter called the "Reassured")

                               by

               NATIONWIDE MUTUAL INSURANCE COMPANY

                              OHIO

               (hereinafter called, with other participants, the
               "Reinsurers")

               Under the terms of this Contract the above
               Reinsurer
               agrees to assume severally and not jointly with
               other
               participants
               a 15.00% share
               of the liability described in the attached
               Contract and, as
               consideration, the Reinsurer shall receive a
               15.00% share
               of the premium named therein.

Signed in Columbus, Ohio, this a 21st  day of March, 1997,

                                   NATIONWIDE MUTUAL INSURANCE
                                   COMPANY

                                   BY  s/Robert J. Wilson

                                   TITLE               Robert J.
Wilson

Reinsurance Manager

Towers Perrin
Reinsurance
<PAGE>

                                                       Reference No.

       PROPERTY SECOND CATASTROPHE EXCESS OF LOSS CONTRACT

              EFFECTIVE JANUARY LOCAL STANDARD TIME

                             for the

               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO

               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS

              (hereinafter called the "Reassured")

                               by

                 NEW JERSEY RE-INSURANCE COMPANY

                           NEW JERSEY

               (hereinafter called, with other participants, the
               "Reinsurers")

               Under the terms of this Contract the above
               Reinsurer
               agrees to assume severally and not jointly with
               other
               participants
               a 6.00%share
               of the liability described in the attached
               Contract and, as
               consideration, the Reinsurer shall receive a
               6.00%share
               of the premium named therein.

Signed in West Trenton, New Jersey, this 29th  day of April, 1997,

                                   NEW JERSEY RE-INSURANCE COMPANY

                                   BY   s/Thomas A. Lynch

                                   TITLE Vice President

Towers Perrin
Reinsurance
<PAGE>
                                                       Reference No.

       PROPERTY SECOND CATASTROPHE EXCESS OF LOSS CONTRACT

     EFFECTIVE JANUARY 1997, 12:01 A.M., LOCAL STANDARD TIME

                             for the

               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO

               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS

              (hereinafter called the "Reassured")

                               by

            ST.  PAUL FIRE & MARINE INSURANCE COMPANY

                            MINNESOTA
                                
               (hereinafter called, with other participants, the
               "Reinsurers")

               Under the terms of this Contract the above
               Reinsurer
               agrees to assume severally and not jointly with
               other
               participants
               a 10.00% share
               of the liability described in the attached
               Contract and, as
               consideration, the Reinsurer shall receive a
               10.00% share
               of the premium named therein.

Signed in New York, New York, this 4th day of April, 1997,
                                   ST. PAUL FIRE & MARINE INSURANCE
                                   COMPANY through ST. PAUL
                                   REINSURANCE MANAGEMENT
                                   CORPORATION

                                   BY  s/Cathryn J. Carea

                                   TITLE  Vice President

Towers Perrin
Reinsurance
<PAGE>
                                        Reference No.

       PROPERTY SECOND CATASTROPHE EXCESS OF LOSS CONTRACT

    EFFECTIVE JANUARY 1, 1997,12:01 A.M., LOCAL STANDARD TIME

                             for the

               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO

               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS
              (hereinafter called the "Reassured")

                               by

      SUMITOMO MARINE & FIRE INSURANCE COMPANY, LTD. - U.S


                            NEW YORK

               (hereinafter called, with other participants, the
               "Reinsurers")

               Under the terms of this Contract the above
               Reinsurer
               agrees to assume severally and not jointly with
               other
               participants
               a 1.75% share
               of the liability described in the attached
               Contract and, as
               consideration, the Reinsurer shall receive a 1.75%
               share
               of the premium named therein.

Signed in New York, New York, this 4th day of June, 1997,

                           SUMITOMO MARINE & FIRE INSURANCE
                           COMPANY, LTD. - U.S. through SUMITOMO
                           MARINE RE MANAGEMENT, INC.

                           BY  s/John Schnech

                             TITLE  Assistant Vice President

Towers Perrin
Reinsurance
<PAGE>
                                                       Reference No.

       PROPERTY SECOND CATASTROPHE EXCESS OF LOSS CONTRACT

    EFFECTIVE JANUARY 1, 1997,12:01 A.M., LOCAL STANDARD TIME

                             for the

               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO

               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS

              (hereinafter called the "Reassured")

                               by
                                
                 UNITED FIRE & CASUALTY COMPANY

                              IOWA

          (hereinafter called, with other participants, the
          "Reinsurers")

          Under the terms of this Contract the above Reinsurer
          agrees to assume severally and not jointly with other
          participants
          a 2.00% share
          of the liability described in the attached Contract
          and, as
          consideration, the Reinsurer shall receive a 2.00%
          share
          of the premium named therein.

Signed in Cedar Rapids, Iowa, this 27th day of March, 1997

                                   UNITED FIRE & CASUALTY COMPANY


                                   BY  s/John A. Cruice

                                   TITLE  Vice President

Towers Perrin
Reinsurance

<PAGE>
                                                  Reference No.

       PROPERTY SECOND CATASTROPHE EXCESS OF LOSS CONTRACT

    EFFECTIVE JANUARY 1, 1997,12:01 A.M., LOCAL STANDARD TIME

                             for the

               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO

               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS

              (hereinafter called the "Reassured")

                               by

                    USF RE INSURANCE COMPANY

                          MASSACHUSETTS

          (hereinafter called, with other participants, the
          "Reinsurers")

          Under the terms of this Contract the above Reinsurer
          agrees to assume severally and not jointly with other
          participants

                              a 6.00% share

          of the liability described in the attached Contract
          and, as
          consideration, the Reinsurer shall receive a 6.00%
          share
          of the premium named therein.

Signed in Costa Mesa, California, this 24th day of March, 1997,

                                   USF RE INSURANCE COMPANY


                                   BY   s/James A. Dik

                                   TITLE Senior Vice President
Towers Perrin
Reinsurance

<PAGE>
                                                       Reference No.

       PROPERTY SECOND CATASTROPHE EXCESS OF LOSS CONTRACT

     EFFECTIVE JANUARY 1997, 12:01 A.M., LOCAL STANDARD TIME

                             for the

               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
            GUARANTY NATIONAL INSURANCE OF CALIFORNIA
                           ENGLEWOOD, COLORADO

               LANDMARK AMERICAN INSURAN E COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS

              (hereinafter called the "Reassured")

                               by

          WINTERTHUR REINSURANCE CORPORATION OF AMERICA

                            NEW YORK
                                
          (hereinafter called, with other participants, the
                          "Reinsurers')

               Under the terms of this Contract the above
               Reinsurer
               agrees to assume severally and not jointly with
               other
               participants
               a 12.50% share
               of the liability described in the attached
               Contract and, as
               consideration, the Reinsurer shall receive a
               12.50% share
               of the premium named therein.

Signed in New York, New York, this 14th day of April, 1997,

                             WINTERTHUR REINSURANCE
                             CORPORATION OF AMERICA

                              BY  s/Scott M. Emanuele

                              TITLE  Vice President

Towers Perrin
Reinsurance

<PAGE>
and signed in Englewood, Colorado this 18th day of June, 1997.


                              BY   s/Fred T. Roberts

                              TITLE     President, Commercial Division



















                           PART OF THE

       PROPERTY SECOND CATASTROPHE EXCESS OF LOSS CONTRACT

    EFFECTIVE JANUARY 1, 1997,12:01 A.M., LOCAL STANDARD TIME

                             for the

               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO

               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS


Towers Perrin
Reinsurance



<PAGE>
               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
               LANDMARK AMERICAN INSURANCE COMPANY
              VIKING INSURANCE COMPANY OF WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY

       PROPERTY SECOND CATASTROPHE EXCESS OF LOSS CONTRACT

     EFFECTIVE JANUARY 1997, 12:01 A.M., LOCAL STANDARD TIME

                              INDEX

ARTICLE                  SUBJECT                       PAGE
                    PREAMBLE                _________1.
   1                BUSINESS COVERED ____________....1.
   2                TERM                  ___________1.
   3                DEFINITION OF POLICIES________ ..1.
   4                TERRITORY     ___________________1.
   5                EXCLUSIONS   __________________..2.
   6                RETENTION AND LIMIT _________.___3.
   7                REINSTATEMENT       _____________3.
   8                DEFINITION OF LOSS OCCURRENCE___.4.
   9                NET LOSS    ____________________.5.
 10                 NET RETAINED LINES______________.6.
 11                 LIABILITY OF THE REINSURER_____..6.
 12                 NOTICE OF LOSS AND LOSS SETTLEMENT_____6.
 13                 SAVAGE AND SUBROGATION_________..7.
 14                 PREMIUM      ____________________7.
 15                 CURRENCY    ___________________..8.
 16                 ERRORS AND OMMISSION__________.. 8.
 17                 TAXES      ____________________..8.
 18                 ACCESS TO RECORDS______________..8.
 19                 INTERMEDIARY   _________________.8.
 20                 INSOLVENCY   __________________..9.
 21                 ARBITRATION    __________________9.
 22                 RESERVES    ___________________.10.
 23                 SERVICE OF SUIT________________ 12.
 24                 OFFSET    ____________________..12.
 25                 ENTIRE AGREEMENT ______________.13.
ATTACHMENTS

NUCLEAR   INCEDENT  EXCLUSION CLAUSE  -   PHYSICAL     DAMAGE
- -
REINSURANCE
POOLS EXCLUSION CLAUSE

Towers Perrin
Reinsurance

<PAGE>
                                
               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
               LANDMARK AMERICAN INSURANCE COMPANY
              VIKING INSURANCE COMPANY OF WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY

       PROPERTY SECOND CATASTROPHE EXCESS OF LOSS CONTRACT



PREAMBLE

         The  Reinsurers hereby reinsure the net excess liability
of  the  Reassured  resulting from any loss  occurrence  or  loss
occurrences which may take place during the term of this Contract
under   the   Reassured's  policies  subject  to  the   following
conditions:

ARTICLE 1., BUSINESS COVERED

          This  Contract  shall cover policies in  force  at  the
inception  of  this Contract or written or renewed subsequent  to
its  inception,  issued  by or on behalf  of  the  Reassured  and
classified  by the Reassured as property including  Fire,  Allied
Lines,  Inland  Marine,  Section I  of  Farmers  Multiple  Peril,
Homeowners Multiple Peril and Commercial Multiple Peril and  Auto
Physical Damage but excluding Collision.

ARTICLE 2., TERM

     A.   The term of this Contract shall be from 12:01 a.m.,
Local Standard
Time, January 1, 1997 through 12:01 a.m., Local Standard Time,
January 1, 1998.



     B.     If  this  Contract  should  terminate  while  a  loss
occurrence covered hereunder is in progress, the Reinsurers shall
be  liable subject to all other conditions of this Contract,  for
their  share  of all individual losses resulting from  such  loss
occurrence  whether any such individual losses take place  before
or after such termination.

ARTICLE 3., DEFINITION OF POLICIES

          The term "policies", whenever used herein, shall mean
all binders, policies, contracts, certificates and other
obligations, whether oral or written, of insurance.

ARTICLE 4., TERRITORY

          Subject to all other terms and conditions of this
Contract, this Contract shall apply to losses occurring anywhere
within the territorial limits of the Reassured's policy by which
it was insured.


Towers Perrin
Reinsurance

<PAGE>

ARTICLE 5., EXCLUSIONS

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

          1.   Business classified by the Reassured as Accident and Health,
               Workers' Compensation, Employers' Liability. all
               forms of third
               party Bodily Injury Liability, and Fidelity and
               Surety;

          2.   Hail damage to growing or standing crops;

          3    Nuclear  incidents in accordance with the  Nuclear
               Incident
               Exclusion  Clause - Physical Damage -  Reinsurance
               attached
               to and forming part of this Contract,

          4.   Reinsurance treaty business, including pro rata and excess
               of
               loss, assumed by the Reassured, but not to exclude
               business
               from  State  and  County  Mutual  Fire,  Security
               Insurance of
               Hartford and affiliated companies;

          5.          Pools, Associations and Syndicate business as
               excluded by
               the  provisions of the "Pools Exclusions  Clause"
               attached to
               and forming part of this Contract;

           6     Loss  or  damage  occasioned by  war,  invasion,
               hostilities, acts
               of   foreign  enemies,  civil  war,   rebellion,
               insurrection, military or
               usurped power, or martial law or confiscation  by
               order of any
               government or public authority but not  excluding
               loss or
               damage which would be covered under a standard of
               policy containing a standard War Exclusion Clause;

          7.   Financial Guaranty and Insolvency;

          8.          All liability of the Reassured arising by contract,
               operation of law, or otherwise,
               from its participation or membership, whether
               voluntary or involuntary, in any
               insolvency fund shall be excluded hereunder.
               "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 Reassured 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;

          9.          Loss/or Damage/or Costs/or Expenses arising from
               Seepage and/or Pollution
               and/or  Contamination, other  than  Contamination
               from Smoke Damage.
               Nevertheless, this exclusion does not preclude any
               payment of the cost of the
               removal of debris of property damaged by  a  loss
               otherwise

Towers Perrin
Reinsurance


<PAGE>
                covered hereunder, but subject always to a  limit
                of 25.0% of the
                Reassured's  Property  loss  under  the  original
                policy.  It is agreed
                that  all  business the subject of  the  Contract
                contains the full I.S.O.
                Seepage  and  Pollution Exclusion  Clause  or  so
                deemed.

     B.    Policies or coverages excluded under the provisions of
this ARTICLE 5., EXCLUSIONS, (other than items (3), (6), (7)  and
(9)  which are inadvertently issued or issued in error or  issued
without  the Reassured's knowledge and consent shall  be  covered
hereunder  provided  such  policies  are  canceled  or  reinsured
elsewhere  as soon as possible upon the Reassured's  Home  Office
Underwriting Management becoming aware that they are excluded.


ARTICLE 6., RETENTION AND LIMIT


          The  Reinsurers shall be liable for each and every loss
occurrence,  irrespective of the number and kinds  of  risks  and
perils involved, for 95% of the net loss in excess of $10,000,000
each and every loss occurrence; but the Reinsurers' shall not  be
liable  for  more than $9,500,000 (being 95% of $10,000,000)  for
each  and  every  loss  occurrence.  In the event  the  aggregate
losses  recoverable  under this Contract are expected  to  exceed
$18,000,000, the Reassured shall immediately notify the State  of
Colorado Division of Insurance of the impending exhaustion of the
reinsurance coverage.


ARTICLE 7., REINSTATEMENT
    
    
       A.   Each claim hereunder shall reduce the amount  of  the
Reinsurers' liability from the time of the occurrence of the loss
by  the  sum paid, but the sum so exhausted immediately shall  be
reinstated from the time of the occurrence of the loss.


     B.    For each amount so reinstated, the Reassured agrees to
pay  an additional premium calculated by multiplying 100% of  the
annual  premium hereon by the product of the percentage that  the
amount  reinstated bears to the limit (i.e. $9,500,000)  of  this
Contract.   Nevertheless, the liability of the  Reinsurers  shall
never  be  more  than  $9,500,000 in  respect  of  any  one  loss
occurrence,  nor more than $19,000,000 in all in respect  of  all
losses occurring during the term of this Contract.


     C.    A provisional reinstatement premium shall be. paid  by
the Reassured at the time the Reinsurers pay the loss giving rise
to the reinstatement premium through an offset of the provisional
reinstatement premium due the Reinsurers against the loss payment
due the Reassured, with only the net amount due to be remitted by
the  Reinsurers to the Reassured.  The amount of this provisional
reinstatement  premium shall be based on 100%  of  the  estimated
annual  reinsurance  premium as calculated  in  Paragraph  A.  of
ARTICLE 14., PREMIUM (or the annual deposit premium as stated  in
Paragraph  C. of ARTICLE 14., PREMIUM, if prior to the conclusion
of a full calendar year).



Towers Perrin
Reinsurance



<PAGE>
     D.   As promptly as possible after the loss has been paid by
the Reinsurers and the annual reinsurance premium hereunder has
been finally  determined,  the Reassured shall prepare and submit
to the Reinsurers a final  statement of reinstatement premium
due.  Any reinstatement premium shown to be due the Reinsurers
(less prior payments, if any) shall be remitted by the Reassured
with its statement.  Any return reinstatement premium shown to be
due the Reassured shall be remitted by the Reinsurers as promptly
as possible after receipt of the Reassured's final statement.


ARTICLE 8., DEFINITION OF 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 Reassured  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 Reassured
            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
            Reassured 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 assured'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 opening
            paragraph of this ARTICLE 8.,
            DEFINITION OF LOSS OCCURRENCE) 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 Reassured's "Loss
            Occurrence".



TowersPerrin
Reinsurance
<PAGE>

          4.          As regards "Freeze", only individual losses directly
            occasioned by collapse,
            breakage  of  glass and water damage  (caused  by
            bursting of frozen pipes and
            tanks)  may be included in the Reassured's  "Loss
            Occurrence".



     B.    For  all "Loss Occurrences", other than those referred
to  in subparagraph A. 2. of this ARTICLE 8.. DEFINITION OF  LOSS
OCCURRENCE, the Reassured 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 Reassured 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 Occurrences" referred to in  sub-
paragraph A. 1. of this ARTICLE B., DEFINITION OF LOSS OCCURRENCE
where  only  one such period of 72 consecutive hours shall  apply
with respect to one event.



     C.   As respects those "Loss Occurrences" referred to in sub-
          paragraph A.
2. of  this ARTICLE B., DEFINITION OF LOSS OCCURRENCE, if  the
disaster, accident or loss occasioned by the event is of  greater
duration than 72 consecutive hours, then the Reassured 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
Reassured 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 9., NET LOSS

    A.    The term "net loss" shall mean the actual loss incurred
by  the  Reassured under policies covered hereunder.   Such  loss
shall include sums paid in settlement of claims and suits and  in
satisfaction  of judgments, including prejudgment  interest  when
added  to a judgment.  Such loss also shall include all allocated
loss adjustment expenses paid by the Reassured including but  not
limited  to expenses sustained in connection with settlement  and
litigation  of  claims  and  suits,  satisfaction  of  judgments,
resistance  to  or  negotiations concerning a loss  (which  shall
include  the pro rata share of the Reassured's outside  employees
according  to  the time occupied in adjusting such loss  and  the
expenses of. the Reassured's employees while diverted from  their
normal  duties to the service of field adjustment but  shall  not
include any salaries of officers nor normal overhead expenses  of
the   Reassured)  and  any  interest  on  judgments  other   than
prejudgment interest when added to a judgment.


     B.    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 loss settlement  under  this  Contract,
including

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Reinsurance
<PAGE>
amounts recoverable under other reinsurance whether collected  or
not, 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 9., NET LOSS, shall be construed to  mean
losses  are  not recoverable until the net loss to the  Reassured
finally has been ascertained.



ARTICLE 10., NET RETAINED LINES


     A.    This  Contract  applies only to that  portion  of  any
insurance or reinsurance which the Reassured 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  insurance or reinsurance  which  the  Reassured
retains net for its own account shall be included.


     B.     It  is  agreed,  however,  that  the  amount  of  the
Reinsurers' liability hereunder in respect of any loss or  losses
shall  not  be  increased  by reason  of  the  inability  of  the
Reassured 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.


          C.    It  is  understood  that  the  Reassured  carries
           underlying per risk excess
           reinsurance, recoveries under which shall inure to
           the  benefit    of   the   Reinsurers
           hereunder and shall be deducted in determining  the
           net  loss   subject  to  this  Contract.

ARTICLE 1., LIABILITY OF THE REINSURER

      A.    The liability of the Reinsurers shall follow that  of
the  Reassured in every case, and be subject in all  respects  to
all  the  general and special stipulations, clauses, waivers  and
modifications  of  the Reassured's policies and any  endorsements
thereon.

     B.   All terms of this Contract shall be subject to the laws
of the state of Colorado.

     C.   Nothing herein shall in any manner create any
obligations or establish any rights against the Reinsurers in
favor of any third party or any persons not parties to this
Contract.


ARTICLE 12., NOTICE OF LOSS AND LOSS SETTLEMENT

    A.     The Reassured shall advise the Reinsurers promptly  of
all  loss occurrences which, in the opinion of the Reassured, may
result  in  a  claim hereunder and of all subsequent developments
thereto  which,  in the opinion of the Reassured, may  materially
affect  the position of the Reinsurers.  Inadvertent omission  or
oversight  in  giving  such notice shall in  no  way  affect  the
liability  of the Reinsurers.  However, the Reinsurers  shall  be
informed  of  such  omission  or  oversight  promptly  upon   its
discovery.


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Reinsurance

<PAGE>
     B.    All  loss settlements made by the Reassured,  provided
they   are   within  the  terms  of  this  Contract,   shall   be
unconditionally binding upon the Reinsurers, who agree to pay all
amounts  for  which  they  may be liable immediately  upon  being
furnished by the Reassured with reasonable evidence of the amount
due.

ARTICLE 13., SALVAGE AND SUBROGATION

          The  Reinsurers  shall be credited with salvage  (i.e.,
reimbursement  obtained or recovery made by the  Reassured,  less
the actual cost, excluding salaries of officials and employees of
the  Reassured  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
Reassured  for its primary loss.  The Reassured 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 14, PREMIUM

     A.   The premium due the Reinsurers shall be calculated by
applying a rate of .346% to the Reassured's gross net written
premium income during the term of this Contract.


          The term "gross net written premium income" shall mean
gross premiums written on business covered hereunder less
premiums paid for reinsurance, recoveries under which would
reduce the loss under this Contract.


     B.    For purposes of this Contract, 100% of the Reassured's
written premium for property including Fire, Allied Lines, Inland
Marine,  Section  I  of  Farm owners Multiple  Peril,  Homeowners
Multiple  Peril and Commercial Multiple Peril and  Auto  Physical
Damage excluding Collision shall be reported hereunder.


     C.    A deposit premium of $308,500, shall be payable to the
Reinsurers in four equal installments of $77,125, each, the first
payment  being due at inception of this Contract and  the  second
and  subsequent payments being payable as of April 1, July 1  and
October  1,  1997.  This Contract shall be subject to  a  minimum
premium   of  $246,800.   As  promptly  as  possible  after   the
termination  of  this  Contract, the  Reassured  shall  render  a
statement  to  the  Reinsurers  showing  the  actual  reinsurance
premiums due hereunder, calculated as provided in Paragraph A. of
this  ARTICLE 14., PREMIUM, and, if the premium so calculated  is
greater  than  the deposit premium, the additional premium  shall
hereupon be paid to the Reinsurers.  If the premium so calculated
in  Paragraph A. of this ARTICLE 14., PREMIUM, is less  than  the
minimum   premium,   Reinsurers  will  immediately   return   the
difference  between the minimum premium and the  deposit  premium
previously  paid by the Reassured.  If the premium calculated  in
Paragraph  A. of this ARTICLE 14., PREMIUM, is greater  than  the
minimum  premium  but less than the deposit premium.   Reinsurers
will  immediately return the difference between  the  reinsurance
premium  due  and  the  deposit premium previously  paid  by  the
Reassured.


Towers Perrin
Reinsurance


<PAGE>
ARTICLE 15.,CURRENCY

          Whenever the word "Dollars" or the I" 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 Reassured 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 Reassured.

ARTICLE 16., ERRORS AND OMISSIONS

          Inadvertent  delays,  errors  or  omissions   made   in
connection with this Contract shall not relieve either party 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 the Reassured's Home Office.


ARTICLE 17., TAXES

          In consideration of the terms under which this Contract
is issued, the Reassured 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 18., ACCESS TO RECORDS


         The  Reassured  shall  place  at  the  disposal  of  the
Reinsurers at all reasonable times, and the Reinsurers shall have
the  right  to  inspect through their designated representatives,
during  the  term  of  this Contract and thereafter,  all  books,
records  and  papers  of  the Reassured in  connection  with  any
reinsurance hereunder, or the subject matter hereof.


ARTICLE 19., INTERMEDIARY

          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 the Reassured  or  the
Reinsurers through Towers Perrin Reinsurance, Mellon Bank Center,
1735   Market  Street,  Philadelphia,  Pennsylvania,  19103-7501.
Payments by the Reassured to the Intermediary shall be deemed  to
constitute payment to the Reinsurers.  Payments by the Reinsurers
to  the Intermediary shall be deemed to constitute payment to the
Reassured  only  to  the extent that such payments  are  actually
received by the Reassured.



Towers Perrin
Reinsurance


<PAGE>
ARTICLE 20., INSOLVENCY


     A.    In  the  event  of  insolvency of the  Reassured,  the
reinsurance  under  this  Contract  shall  be  payable   by   the
Reinsurers  to the Reassured or to its liquidator,  receiver,  or
statutory  successor  on  the  basis  of  the  liability  of  the
Reassured   under  the  policy  or  policies  reinsured   without
diminution because of the insolvency of the Reassured.


     B.    It is further agreed that the liquidator, or receiver,
or statutory successor of the Reassured shall give written notice
to  the  Reinsurers  of  the pendency of any  claim  against  the
Reassured  on  the  policies reinsured within a  reasonable  time
after such claim is filed in the insolvency proceeding, and  that
during  the pendency of such claim the Reinsurers may investigate
such claim and interpose, at their own expense, in the proceeding
where  such  claim is to be adjudicated, any defense or  defenses
which  they  may  deem  available to  the  Reassured  or  to  its
liquidator,  or  receiver, or statutory successor.   The  expense
thus  incurred by the Reinsurers shall be chargeable, subject  to
court  approval, against the Reassured as part of the expense  of
liquidation to the extent of a proportionate share of the benefit
which  may  accrue to the Reassured solely as  a  result  of  the
defense undertaken by the Reinsurers.


ARTICLE 21., ARBITRATION

     A.    Any  dispute or other matter in question  between  the
Reassured  and the Reinsurers arising out of or relating  to  the
formation,  interpretation,  performance,  or  breach   of   this
Contract, whether such dispute arises before or after termination
of  this  Contract, shall be settled by arbitration.  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.


     B.    If  more  than one Reinsurer is involved in  the  same
dispute,  all  such Reinsurers shall constitute and  act  as  one
party   for  the  purposes  of  this  ARTICLE  21.,  ARBITRATION,
provided, however, that nothing herein shall impair the rights of
such Reinsurers to assert several, rather than joint, defenses or
claims,  nor  be  construed  as changing  the  liability  of  the
Reinsurers  under  the  terms of this Contract  from  several  to
joint.


     C.    Each  party shall appoint an individual as  arbitrator
and  the  two so appointed shall then appoint a third arbitrator.
If  either  party  refuses or neglects to appoint  an  arbitrator
within  sixty  days,  the  other party  may  appoint  the  second
arbitrator.   If  the two arbitrators do not  agree  on  a  third
arbitrator  within sixty days of their appointment, each  of  the
arbitrators  shall nominate three individuals.   Each  arbitrator
shall  then decline two of the nominations presented by the other
arbitrator.  The third arbitrator shall then be chosen  from  the
remaining two nominations by drawing lots.  The arbitrators shall
be  active  or  retired  officers  of  insurance  or  reinsurance
companies  or Lloyd's London Underwriters; the arbitrators  shall
not  have a personal or financial interest in the result  of  the
arbitration.




Towers Perrin
Reinsurance

<PAGE>


     D.    The  arbitration hearings shall be held in  Englewood,
Colorado,  or  such other place as may be mutually agreed.   Each
party shall submit its case to the arbitrators within sixty  days
of  the  selection of the third arbitrator or within such  longer
period  as  may  be agreed by the arbitrators.   The  arbitrators
shall  not be obliged to follow judicial formalities or the rules
of  evidence except to the extent required by governing law, that
is,  the  state  law  of the situs of the arbitration  as  herein
agreed; they shall make their decisions according to the practice
of the reinsurance business.  The decision rendered by a majority
of  the  arbitrators shall be final and binding on both  parties.
Such  decision  shall be a condition precedent to  any  right  of
legal  action arising out of the arbitrated dispute which  either
party  may  have  against  the other.  Judgment  upon  the  award
rendered may be entered in any court having jurisdiction thereof.


     E.   Each party shall pay the fee and expenses of its own
arbitrator and one-half of the fee and expenses of the third
arbitrator.  All other expenses of the arbitration shall be
equally divided between the parties.


     F.          Except as provided above, arbitration shall be
based, insofar as applicable, upon the procedures of the American
Arbitration Association.


     G.        In the event of the insolvency of the Reassured,
all arbitration proceedings must also be subject to the laws of
the state of Colorado.

ARTICLE 22., RESERVES


     A.    If a jurisdiction of the United States will not permit
the  Reassured, in the statements required to be filed  with  its
regulatory  authority(ies), to receive full  credit  as  admitted
reinsurance   for  any  Reinsurers  share  of  obligations,   the
Reassured  shall  forward to such Reinsurer a  statement  of  the
Reinsurer's  share  of such obligations.  Upon  receipt  of  such
statement the Reinsurer shall promptly apply for, and provide the
Reassured  with, a "clean," unconditional and irrevocable  Letter
of  Credit,  in the amount specified in the statement  submitted,
with  terms  and bank acceptable to the regulatory authority(ies)
having jurisdiction over the Reassured.  An acceptable bank is  a
"qualified  United States Financial institution"  as  defined  by
Regulation  No.  10-1-102  (9.5)  promulgated  by  the   Colorado
Insurance Department.

     B.    "Obligations," as used in this ARTICLE 22.,  RESERVES,
shall  mean  the sum of losses paid and allocated loss adjustment
expenses  paid  by the Reassured but not yet recovered  from  the
Reinsurer,  plus reserves for reported losses and allocated  loss
adjustment  expenses.  It shall not include reserves  for  losses
incurred but not reported.

     C.    The  Reinsurer hereby agrees that the Letter of Credit
will  provide  for  automatic extension of the Letter  of  Credit
without  amendment for one year from the date  of  expiration  of
said Letter or any future expiration date unless thirty (30) days
prior  to  any  expiration  the issuing  bank  shall  notify  the
Reassured by registered mail that the issuing bank elects not  to
consider the Letter of Credit renewed for any additional period.

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Reinsurance
<PAGE>

     
     D.    Notwithstanding any other provision of this  Contract,
the  Reassured  or  any  successor by operation  of  law  of  the
Reassured   including,   without  limitation,   any   liquidator,
rehabilitator, receiver or conservator of the Reassured may  draw
upon such credit, without diminution because of the insolvency of
any  party  hereto, at any time and undertakes to use  and  apply
such credit for one or more of the following purposes only:

           1     To pay the Reinsurers share or to reimburse  the
                Reassured for the Reinsurers
                share  of any  obligations, as stipulated in  the
                statement submitted by the Reassured
                to  the  Reinsurer, which is due to the Reassured
                and not otherwise paid by the
                Reinsurer.
          2.          In the event the Reassured has received effective
                notice of non-renewal of the
                Letter  of  Credit and the Reinsurer's  liability
                remains unliquidated and
                undischarged thirty (30) days prior to the expiry
                date of the Letter of Credit, to
                withdraw the balance of the Letter of  Credit and
                place such sums in an interest
                bearing  trust  account to secure the  continuing
                liabilities of the Reinsurer under
                this  Contract until a renewal Letter  of  Credit
                acceptable To the regulatory
                authority(ies)  having  jurisdiction  over   the
                Reassured, or a substitute in
                lieu   thereof  acceptable  to  the   regulatory
                authority(ies) having jurisdiction over the
                Reassured,  has been received by  the  Reassured.
                The Reassured shall provide to
                the   Reinsurer  payment of any interest  thereon
                accruing from such account.

          3.          To make refund of any sum which is in excess of the
                actual amount required for
                Sub-paragraphs 1. and 2. of this Paragraph D., of
                ARTICLE 22., RESERVES.

     E.   At annual intervals or more frequently as determined by
the  Reassured,  but  never more frequently than  quarterly,  the
Reassured  shall  prepare  a specific  statement,  for  the  sole
purpose  of  amending the Letter of Credit,  of  the  Reinsurer's
share  of  any  obligations.  If the  statement  shows  that  the
Reinsurer's share of obligations exceeds the balance of credit as
of  the  statement date, the Reinsurer shall, within thirty  (30)
days  after receipt of notice of such excess, secure delivery  to
the  Reassured of an amendment of the Letter of Credit increasing
the  amount of credit by the amount of such difference.   If  the
statement   shows,  however,  that  the  Reinsurer's   share   of
obligations  is  less  than  the balance  of  credit  as  of  the
statement  date,  the Reassured shall, within  thirty  (30)  days
after receipt of written request from the Reinsurer, release such
excess credit by agreeing to secure an amendment to the Letter of
Credit  reducing the amount of credit available by the amount  of
such excess credit.


     F.    The  bank  shall have no responsibility whatsoever  in
connection  with  the  propriety  of  withdrawals  made  by   the
Reassured or the disposition of funds withdrawn, except to assure
that  withdrawals  are  made  only upon  the  order  of  properly
authorized representatives of the Reassured.  The Reassured shall
incur  no obligation to the bank in acting upon the credit, other
than as appears in the express terms thereof.



Towers Perrin
Reinsurance


<PAGE>



ARTICLE 23.,SERVICE OF SUIT   (Paragraphs A. and S. of this
ARTICLE 23.,
                         SERVICE OF SUIT, only apply to
               Reinsurers domiciled outside
               of the United States and/or unauthorized
               in the State of New York)

    A.     It  is agreed that in the event of the failure of  the
Reinsurers  hereon to pay any amount claimed to be due hereunder,
the  Reinsurers  hereon, at the request of  the  Reassured,  will
submit  to  the jurisdiction of a Court of competent jurisdiction
within  the United States.  Nothing in this ARTICLE 23.,  SERVICE
OF  SUIT,  constitutes or should be understood  to  constitute  a
waiver  of Reinsurers' 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.   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-
6829,  and  that in any suit instituted against any one  of  them
upon  this  Contract, such Reinsurer(s) will abide by  the  final
decision of such Court or of any Appellate Court in the event  of
an appeal.


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


    C.      Further,  pursuant  to  any  statute  of  any  state,
territory  or district of the United States which makes provision
therefore, Reinsurers hereon 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 the Reassured or any  beneficiary
hereunder arising out of this Contract of reinsurance, and hereby
designate the above-named as the person to whom the said  officer
is authorized to mail such process or a true copy thereof.



ARTICLE 24., OFFSET


          The  Reassured or the Reinsurer may offset any  balance
allowed  by  Colorado  law,  statute or  regulation,  whether  on
account of premium, commission, claims or losses, loss adjustment
expenses, recoveries, salvage, or any other amount due  from  one
party  to  the  other under this Contract or any  other  contract
heretofore  or  hereafter entered into between the Reassured  and
the  Reinsurer,  whether acting as assuming reinsurer  or  ceding
company.   This  right of offset shall not  be  affected  by  the
insolvency of either the Reassured or the Reinsurer.



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Reinsurance
<PAGE>




ARTICLE 25., ENTIRE AGREEMENT

          This agreement embodies the whole agreement of the
parties and there are no promises, terms, conditions, obligations
other than those contained herein.











                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                             MRM:cam
                                                     Dock   46665
January 16, 1997

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Reinsurance

<PAGE>
U. S. A.

Nuclear Incident Exclusion Clause_Physical Damage_Reinsurance

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 lose or
  liability by radio-active 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
    termination. however caused.  However on and 
    after 1st January 1960 this subparagraph (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 lose
   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 risk, 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 la.
   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 in understood and agreed that

    (a)    all policies issued by the Reassured on or before Slat
       December  1957 shall be free from the application  of  the
       other provisions of this Clause until expiry date or  Slat
       December  1960  whichever first occurs whereupon  all  the
       provisions of this Clause shall apply.

    (b)     with  respect to any rink located in Canada  policies
issued by the Reassured on or before Slat December 1958 shall  be
free  from the application of the other provisions of this Clause
until  expiry date or 3lat December 1960 whichever first  occurs,
whereupon all the provisions of this Clause shall Apply <PAGE>
Towers Perrin
Reinsurance

       POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE

SECTION A

It is agreed that the following is excluded hereunder:

(1)   All  business derived directly or indirectly from any Pool,
   Association  or Syndicate which maintains its own  reinsurance
   facilities.

(2)   Any Pool or Scheme, (whether voluntary or mandatory) formed
   after  1  St March, 1 968 for the purpose of insuring property
   whether  on  a country-wide basis or in respect of  designated
   areas.  This exclusion 1h,11 not apply to so-coiled Automobile
   Insurance Plans or other Pools formed to provide coverage  for
   Automobile Physical Damage.

SECTION 8

It is agreed that business written by the Reassured for the some
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:

(1)   Where the Total Insured Value over all interests of the
risk in question is less then $250,000,000.

(2)  to interests traditionally underwritten as Inland Marine or
Stock and/or Contents written on a Blanket Basis.

(3)    to  Contingent  Business  interruption,  except  when  the
Reassured is aware that the key location is known at the  time
to  be  insured  in any Pool, Association or  Syndicate  named
above.

(4)  to risks as follows:

   offices, hotels, apartments. hospitals. educational
establishments, publications (other than railroad schedules) and
builder's risks on the classes
of risks specified in this subsection i4i only.

Where this Clause attaches to Catastrophe Excess of Loss
Reinsurance Agreements, the following SECTION C is
added;

SECTION C

Nevertheless the Reinsurers specifically agree that liability
accruing to the Reassured from its participation in:

(1)  The following so-called 'Coastal Pools'

   Alabama Insurance Underwriting Association
   Florida Windstorm Underwriting Association
   Louisiana Insurance Underwriting Association
   Mississippi Windstorm Underwriting Association
   North Carolina insurance Underwriting Association
   South Carolina Windstorm and Hail Underwriting Association
   Taxes Catastrophe Property Insurance Association

(2)   All 'Fair Plan' Business. including but not limited to  the
   Florida  Residential Property and Casualty Joint  Underwriting
   Association  and  the  Florida  Property  and  Casualty  Joint
   Underwriting Association; and oil 'Rural Risk Plan' Business.

for all perils otherwise protected hereunder shall not be
excluded, except 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'  to
meet its liability. <PAGE>

(ii)                Any claim against such 'Coastal Pool'  and/or
'Fair  Plan' and/or 'Rural Risk Plan' or any participant therein,
including the Reassured
                     whether  by way of subrogation or otherwise,
brought by or on behalf of any insolvency fund as defined in  the
Insolvency Funds Exclusion
                   Clause incorporated in this Agreement).
Towers Perrin
Reinsurance



                                             Reference No.

9613/166325

       PROPERTY SECOND CATASTROPHE EXCESS OF LOSS CONTRACT


    EFFECTIVE JANUARY 1, 1997,12:01 A.M., LOCAL STANDARD TIME

                             for the

               GUARANTY NATIONAL INSURANCE COMPANY
               COLORADO CASUALTY INSURANCE COMPANY
        PEAK PROPERTY AND CASUALTY INSURANCE CORPORATION
        GUARANTY NATIONAL INSURANCE COMPANY OF CALIFORNIA
                       ENGLEWOOD, COLORADO

               LANDMARK AMERICAN INSURANCE COMPANY
                     OKLAHOMA CITY, OKLAHOMA
              VIKING INSURANCE COMPANY OF WISCONSIN
                       MADISON, WISCONSIN
             VIKING COUNTY MUTUAL INSURANCE COMPANY
                          AUSTIN, TEXAS

              (hereinafter called the "Reassured")

                               by

                   EVEREST REINSURANCE COMPANY

                            DELAWARE

               (hereinafter called, with other participants, the
               "Reinsurers")

               Under the terms of this Contract the above
               Reinsurer
               agrees to assume severally and not jointly with
               other
               participants
               a 16.75% share
               of the liability described in the attached
               Contract and, as
               consideration, the Reinsurer shall receive a
               16.75% share
               of the premium named therein.

Signed in Newark, New Jersey, this 28 day of March,   1997,

                           
                           <PAGE>
                           EVEREST REINSURANCE COMPANY

                           BY      s/Halina Herc

                             TITLE      Vice President
Towers Perrin
Reinsurance
<PAGE>



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