has been effected against which reinsurers contract

 GUY CARPENTER
      Guy Carpenter & Company, Inc.
      4 Embarcadero Center, San Francisco, Ca. 94111
      Telephone:  (415) 981-8900, Telex:  34-295      

                                              Page 1 of  5

                                              No.  3341-00-0001-00-95-03-01-00

                                              San Francisco,  August 17, 1995

20th Century Insurance Company
6301 Owensmouth
Woodland Hills, California  91367

Gentlemen:

       We are  in receipt of confirmation  that the following Reinsurance  has
been effected for your account:

REASSURED         20th Century Insurance Company
                  21st Century Casualty Company
                  Woodland Hills, California

COVER             Property  Catastrophe   Cover  applying   to  all   business
                  underwritten and classified by the Reassured as  Homeowners'
                  (Section 1), Condominium Owners' (Section 1), Dwelling Fire,
                  Inland Marine, and Auto Physical Damage.
                  
                  

LIMIT             $2,500,000  ultimate   net  loss   each  occurrence   excess
                  $7,500,000 ultimate net loss each occurrence.
                  
                  Reassured to retain at minimum 10% of limit hereon, net  and
                  unreinsured.
                  
                  

DEFINITION OF
OCCURRENCE        Any one disaster, accident  or loss or series  of disasters,
                  accidents or  losses arising  out of  one event,  subject to
                  maximum 168 consecutive hours  in any one occurrence  within
                  the area of one province, territory or state and  provinces,
                  territories  and  states  contiguous  thereto  and  to   one
                  another, except for:
                  
                        
                        72 Hours Clauses - Tornado, cyclone, hurricane,  wind-
                                           storm and hail.
                                        -  Riot,  riot  attending  a   strike,
                                           civil   commotion,   vandalism  and
                                           malicious mischief.
                                        
                                        
                  No Reinstatement in the same event for Wind
                  

This document is intended for use as evidence that reinsurance described above
has  been  effected  against  which  reinsurers  contract will be duly issued.
Immediate advice must be given of any discrepancies, inaccuracies or necessary
changes.

                                                                   Page 2 of 5
                                                   3341-00-0001-00-95-03-01-00
      GUY CARPENTER

                  As  respects  the  168  Hour  Clauses  only  one  such   168
                  consecutive hours shall apply in respect of one event.
                  
                  
                  No  loss  caused  by  Perils  as  covered  under the 72 hour
                  clauses may be included in  any recovery made under the  168
                  hour provisions.
                  

DURATION          Losses occurring  during the  twelve-month period  effective
                  12:01 a.m., P.D.T. July 1, 1995.
                  

TERRITORY         As original.
RATE              Annual Minimum Premium $500,000.
                  
                  
                  Annual Deposit Premium $625,000 payable quarterly in advance
                  in four equal installments of $156,250.
                  
                  
                  Adjustable at 1.07% of  Gross Net Earned Premium  Income for
                  Homeowners' (Section  1), Condominium  Owners' (Section  1),
                  Dwelling Fire, and Inland Marine, for the period.
                  

PROFIT            
COMMISSION        If this contract remains in effect for a continuous two year
                  period from July  1, 1995 and  the premiums paid  exceed the
                  claims incurred under this  Contract, then the Company  will
                  be  entitled  to  a  "Return  Premium"  (RP).    The "Return
                  Premium" shall be equal to the greater of zero or 20% of the
                  "Profit Balance" under the contract for the two year period.
                  The "Profit  Balance" is  equal to  80% the  total premiums,
                  including reinstatement  premiums paid  during the  two year
                  period, less claims incurred during the period.
                  
                  
                  At that date  that such a  Return Premium is  agreed by both
                  parties and the return payment  is made by the Reinsurer  to
                  the Company  this shall  constitute the  commutation of this
                  Contract and such payment once effected shall be regarded as
                  a full and final release of the Reinsurer from all liability
                  hereunder.
                  
                  
                  Should the Reinsurer decline  to offer a renewal  at similar
                  terms as  expiring, in  relation to  the exposure presented,
                  then the Return Premium provision shall be calculated in the
                  years  actually  reinsured  subject  to  the above mentioned
                  conditions.
                  

REINSTATEMENT     One annual  reinstatement at  additional premium  100% as to
                  time and pro rata as to amount.

                                                                   Page 3 of 5
                                                   3341-00-0001-00-95-03-01-00

      GUY CARPENTER
                  
                  
                  
                  Simultaneous  settlement  of  reinstatement  premium on paid
                  losses.
                  

EXCLUSIONS        See attached Exclusion List.
                  
                  
NON ADMITTED
REINSURERS        Agree  to  provide  clean,  irrevocable  and   unconditional
                  letters  of  Credit  as  respects outstanding loss reserves,
                  IBNR and LAE.
                  
                  
                  
                  

GENERAL
CONDITIONS        Ultimate Net  Loss Clause   -  Reassured to  have benefit of
                                              underlying  catastrophe   excess
                                              of loss reinsurance,  recoveries
                                              under which  shall inure  to its
                                              sole benefit.
                  
                  
                  
                  Net Retained Lines Clause
                  Service of Suit Clause
                  Indemnification and Errors and Omissions Clause
                  Extended Expiration Clause
                  Guy Carpenter Intermediary Clause
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
      *                             *                                   *

                                                                   Page 4 of 5
                                                   3341-00-0001-00-95-03-01-00

      GUY CARPENTER
      Guy Carpenter & Company, Inc.
      4 Embarcadero Center, San Francisco, Ca. 94111
      Telephone:  (415) 981-8900, Telex:  34-295      

                  
                  
                  

FOREIGN REINSURER
- - -----------------

Renaissance Reinsurance Company (Bermuda)                               90.00%

                                                                              
                                                 GUY CARPENTER & COMPANY, INC.
                                                                              
                                                                              
                                                             Timothy J. Brophy
                                                                              
                                                                              
                                                         Senior Vice President
                                                                              

Each reinsurer subscribing the coverage evidenced by this cover note and named
in it has bound  itself only for its  own part and not  one for any other  and
only for is proportion of the total coverage evidenced by this cover note.

                                                                   Page 5 of 5
                                                   3341-00-0001-00-95-03-01-00

      GUY CARPENTER

                                       
                        20TH CENTURY INSURANCE COMPANY
                       FIRST PROPERTY CATASTROPHE COVER
                       --------------------------------
                                       
                                       
                                EXCLUSION LIST
                                --------------

1.  Nuclear Incident Exclusion Clauses - Physical Damage - Reinsurance.

2.  Flood and/or Earthquake when written alone.

3.  Mortgage Impairment Business.

4.    Pools,  Associations  and  Syndicates  in  accordance  with  the  Pools,
    Associations and Syndicates Exclusion Clause.

5.  All reinsurance assumed other than facultative.

6.    War  risk,  bombardment,  invasion, insurrection, rebellion, revolution,
    military or usurped power, or  confiscation by order of any  government or
    public  authority,  as  excluded  under  a  standard  policy  containing a
    standard War Exclusion Clause.

7.  Insolvency Funds Exclusion Clause.

8.  Third Party Bodily Injury or Death Liability, Third Party Personal  Injury
    Liability,  Third  Party  Property  Damage  Liability and Medical Payments
    insurance.    However,  nothing  herein  contained  shall  be construed as
    excluding liability for damage to  property in an insured's care,  custody
    or control for which the insured may be liable.

9.  Excluding 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
    covered hereunder but subject always to a limit of 25% of the  Reassured's
    property loss under the original policy.

10. Special Programs as declared by the Reassured.

11.  Extra  Contractual  Obligations  and  Exess  of  Original Policy Limits -
    wording to be agreed.

      GUY CARPENTER
      Guy Carpenter & Company, Inc.
      4 Embarcadero Center, San Francisco, Ca. 94111
      Telephone:  (415) 981-8900, Telex:  34-295      

                                              Page 1 of 8

                                              No.  3341-00-0001-00-95-03-02-00

                                              San Francisco,  August 17, 1995

20th Century Insurance Company
6301 Owensmouth
Woodland Hills, California  91367

Gentlemen:

      We are  in receipt  of confirmation  that the  following reinsurance has
been effected for your account:

REASSURED         20th Century Insurance Company
                  21st Century Casualty Company
                  Woodland Hills, California
                  
                  
                  
COVER             Property  Catastrophe   Cover  applying   to  all   business
                  underwritten and classified by the Reassured as  Homeowners'
                  (Section 1), Condominium Owners' (Section 1), Dwelling Fire,
                  Inland Marine, and Auto Physical Damage.
                  
                  
                  
LIMIT             $90,000,000  ultimate  net   loss  each  occurrence   excess
                  $10,000,000 ultimate net loss each occurrence.
                  Reassured to retain at minimum  5% of limit hereon, net  and
                  unreinsured.
                  
                  
                  
DEFINITION OF
OCCURRENCE        Any one disaster, accident  or loss or series  of disasters,
                  accidents or  losses arising  out of  one event,  subject to
                  maximum 168 consecutive hours  in any one occurrence  within
                  the area of one province, territory or state and  provinces,
                  territories  and  states  contiguous  thereto  and  to   one
                  another, except for:
                  
                  
                        
                        72 Hours Clauses - Tornado, cyclone, hurricane,  wind-
                                           storm and hail.
                                        -  Riot,  riot  attending  a   strike,
                                           civil   commotion,   vandalism  and
                                           malicious mischief.

This document is intended for use as evidence that reinsurance described above
has  been  effected  against  which  reinsurers  contract will be duly issued.
Immediate advice must be given of any discrepancies, inaccuracies or necessary
changes.

      GUY CARPENTER
                                                                   Page 2 of 8
                                                   3341-00-0001-00-95-03-02-00

                  
                  No Reinstatement in the same event for Wind
                  
                  
                  
                  As  respects  the  168  Hour  Clauses  only  one  such   168
                  consecutive hours shall apply in respect of one event.
                  
                  
                  
                  No  loss  caused  by  Perils  as  covered  under the 72 hour
                  clauses may be included in  any recovery made under the  168
                  hour provisions.
                  

DURATION          Losses occurring  during the  twelve-month period  effective
                  12:01 a.m., P.D.T. July 1, 1995.
                  

TERRITORY         As original.
RATE              Annual Minimum Premium $10,440,000.
                  
                  
                  Annual  Deposit  Premium  $13,050,000  payable  quarterly in
                  advance in four equal installments of $3,262,500.
                  
                  
                  Adjustable at 22.32% of Gross Net Earned Premium Income  for
                  Homeowners' (Section  1), Condominium  Owners' (Section  1),
                  Dwelling Fire, and Inland Marine, for the period.
                  

REINSTATEMENT     One annual  reinstatement at  additional premium  100% as to
                  time and pro rata as to amount.
                  
                  
                  Simultaneous  settlement  of  reinstatement  premium on paid
                  losses.
                  

EXCLUSIONS        See attached Exclusion List.
                  

NON ADMITTED
REINSURERS        Agree  to  provide  clean,  irrevocable  and   unconditional
                  letters  of  Credit  as  respects outstanding loss reserves,
                  IBNR and LAE.
                  

GENERAL
CONDITIONS        Ultimate Net Loss Clause  -   Reassured to  have benefit  of
                                                underlying catastrophe  excess
                                                of     loss     re insuranc e,
                                                recoveries  under  which shall
                                                inure to its sole benefit.

      GUY CARPENTER
                                                                   Page 3 of 8
                                                   3341-00-0001-00-95-03-02-00

            
            
                  Net Retained Lines Clause
                  Service of Suit Clause
                  Several Liability Notice (LSW 1001)
                  Indemnification and Errors and Omissions Clause
                  Extended Expiration Clause
                  Guy Carpenter Intermediary Clause
            
            
            
            

INFORMATION:      No Earthquake Shock Endorsement in effect after August 30th,

      *                             *                                   *

      GUY CARPENTER
                                                                   Page 4 of 8
                                                   3341-00-0001-00-95-03-02-00

DOMESTIC REINSURERS:    
- - -------------------
Allmerica Re.                                                     0.1112%

Fester, Fothergill and Hartung on behalf of:                      0.2565%

   Folksamerica Reinsurance Company       

Folksamerica Reinsurance Company                                  0.5000%

Frankona America Reinsurance Company                              0.3611%

Hartford Reinsurance Management Company on behalf of:             0.1944%

   Hartford Fire Insurance Company  

The Mercantile and General Reinsurance Company of America         0.3231%

Nationwide Mutual Insurance Company                               0.7518%

Prudential Reinsurance Company                                    1.3889%

Shelter Reinsurance Company                                       0.1944%

Sydney Reinsurance Corporation                                    0.5258%

The Toa-Re Insurance Company of America                           0.2344%

  Thru The Mercantile and General Reinsurance Company of America
      

Transatlantic Reinsurance Company                                 3.2157%

United Fire and Casualty Company                                  0.0863%

USF Re. Insurance Company                                         0.1944%

Vesta Fire Insurance Corporation                                  4.4444%

Zenith Insurance Company                                          0.1000%
                                                                  -------
                                                                  12.8824%
                                                                  ========

Each reinsurer subscribing the coverage evidenced by this cover note and named
in it has bound itself only for its own part and not one for any other and
only for is proportion of the total coverage evidenced by this cover note.

      GUY CARPENTER
                                                                   Page 5 of 8
                                                   3341-00-0001-00-95-03-02-00

FOREIGN REINSURERS (Other than London Market Reinsurers):   
- - --------------------------------------------------------
Carpenter Bowring (Australia) Ltd. on behalf of:                  1.1850%

REAC  

Carpenter Bowring (Bermuda) Ltd. on behalf of:                    7.7778%

  Mid Ocean Re    

Central Reinsurance Corporation (Republic of China)               0.0556%

Centre Cat Limited (Bermuda)                                      9.4800%

Copenhagen Reinsurance Company Ltd. - (Denmark)                   0.5777%

Global Capital Reinsurance Ltd. (Bermuda)                         3.8889%

International Property Catastrophe Reinsurance Company Ltd.
(Bermuda)                                                         5.8047%

LaSalle Re. Limited (Bermuda)                                     2.4042%

Nissan Fire & Marine Insurance Company Limited (Japan)            0.2222%

Renaissance Reinsurance Company (Bermuda)                         11.1111%

Sirius International Insurance Corporation (Sweden)               0.1333%

Tempest Re. (Bermuda)                                             13.1559%

UFREAS:                                                           
- - ------
AXA Reassurance (France)                                          4.4445%

Compagnie Transcontinentale de Reassurances - (France)            0.2924%

Corifrance (France)                                               0.1667%

La Reunion Francaise                                              1.1112%
                                                                  -------
  Par Societe Parisienne de Souscription (France)                 

                                                                  61.8112%
                                                                  ========

Each reinsurer subscribing the coverage evidenced by this cover note and named
in it has bound itself only for its own part and not one for any other and
only for is proportion of the total coverage evidenced by this cover note.

GUY CARPENTER
                                                                   Page 6 of 8
                                                   3341-00-0001-00-95-03-02-00

LONDON  COMPANIES
- - -----------------

CNA International Reinsurance Company Limited                      0.8052%

London, England

The Copenhagen Reinsurance Company (U.K.) Limited

London, England                                                    0.2818%

Liberty Mutual Insurance Company (U.K.) Limited                    0.8053% 

London, England

QBE International Insurance Limited                                1.1918% 

London, England

Sphere Drake Insurance (UK)                                        0.2684% 

London, England

St. Paul Reinsurance Company Limited                               0.5369%

London, England

Zurich Reinsurance (UK) Limited                                    0.8053%
                                                                   -------
London, England

                                                                    4.6947
                                                                    ======

                                                      Part of 20.3064

                                                      Part of 100.0000%

Federal Excise Tax is not applicable.

Each reinsurer subscribing the coverage evidenced by this cover note and named
in it has bound itself only for its own part and not one for any other and
only for is proportion of the total coverage evidenced by this cover note.

GUY CARPENTER
                                                                   Page 7 of 8
                                                   3341-00-0001-00-95-03-02-00

LLOYD'S UNDERWRITERS
- - --------------------

                                                                  15.6117%

                                                      Part of 20.3064%

                                                      Part of 100.0000%

        Syndicate  Syndicate No.                   Syndicate      Syndicate
        ---------  -------------                   ---------      ---------
                                                                      No.
                                                                     ---
0.9395%       HGJ           205            0.5369%       DFB             183
                                           
0.8053%       JHV           376            0.1879%       PWH             382

0.4027%       RAE           219            0.4026%       AMU             529

1.3421%       WEH           362            0.5369%       SAM             727

1.6105%       KJC           40             0.1610%       MVH             1093

0.2014%       AER           33             0.4687%       RGB             490

0.2013%       SEB           1165           0.0682%       RGB             2490

0.4698%       HRD           1028           0.1073%       CFP             314

0.0536%       PJG           79             0.2416%       COX             590

0.2684%       NMT           1174           0.1342%       PTZ             1095

0.2684%       TMH           625            0.0537%       MEW             1069

0.0537%       GLR           55             0.0601%       JPB             322

2.6843%       SJC           1003           0.0204%       FRA             2322

0.2684%       BFC           780            0.1074%       JEM             1141

0.4778%       GSC           958            0.1074%       DJN             1096

0.0483%       GCG           179            1.2079%       IAM             672

0.5369%       SVH           1007           0.0859%       BER             539

0.1342%       MED           609            0.0215%       COT             538

0.0671%       BAR           990            0.2684%       GNR             570

                                 GUY CARPENTER & COMPANY, INC.

                                       Timothy J. Brophy

                                      Senior Vice President

Each reinsurer subscribing the coverage evidenced by this cover note and named
in it has bound itself only for its own part and not one for any other and
only for is proportion of the total coverage evidenced by this cover note.

GUY CARPENTER
                                                                   Page 8 of 8
                                                   3341-00-0001-00-95-03-02-00

                                                                              

                       20TH CENTURY INSURANCE COMPANY

                       FIRST PROPERTY CATASTROPHE COVER
                       --------------------------------
                                       
                                       
                                       
                                       
                                EXCLUSION LIST
                                --------------
                                       

1.  Nuclear Incident Exclusion Clauses - Physical Damage - Reinsurance.

2.  Flood and/or Earthquake when written alone.

3.  Mortgage Impairment Business.

4.  Pools,  Associations  and  Syndicates  in  accordance  with  the  Pools,
    Associations and Syndicates Exclusion Clause.

5.  All reinsurance assumed other than facultative.

6.  War  risk,  bombardment,  invasion, insurrection, rebellion, revolution,
    military or usurped power, or  confiscation by order of any  government or
    public  authority,  as  excluded  under  a  standard  policy  containing a
    standard War Exclusion Clause.

7.  Insolvency Funds Exclusion Clause.

8.  Third Party Bodily Injury or Death Liability, Third Party Personal  Injury
    Liability,  Third  Party  Property  Damage  Liability and Medical Payments
    insurance.    However,  nothing  herein  contained  shall  be construed as
    excluding liability for damage to  property in an insured's care,  custody
    or control for which the insured may be liable.

9.  Excluding 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  pay-ment of
    the cost of the removal of debris of property damaged by a loss  otherwise
    covered hereunder but subject always to a limit of 25% of the  Reassured's
    property loss under the original policy.

10. Special Programs as declared by the Reassured.

11. Extra  Contractual  Obligations  and  Exess  of  Original Policy Limits -
    wording to be agreed.

      GUY CARPENTER
      Guy Carpenter & Company, Inc.
      4 Embarcadero Center, San Francisco, Ca. 94111
      Telephone:  (415) 981-8900, Telex:  34-295      

                                              Endorsement No. 1

                                              No. 3341-00-0001-00-95-03-02-00

                                              San Francisco,  August 17, 1995

20th Century Insurance Company
6301 Owensmouth
Woodland Hills, California  91367

Gentlemen:

      
      It is hereby  understood and agreed  that, effective 12:01  a.m., P.D.T.
August 1, 1995, the undersigned Reinsurer's participation will be amended  for
the term August 1, 1995 to July 1, 1996 as follows:
      
      Centre Cat Limited (Bermuda)                                7.4800%
      
      
      
      Furthermore, for the period July 1,  1995 to August 1, 1995, Centre  Cat
Limited will receive pro-rata reinsurance premium in the amount of $103,095.00
in consideration for coverage during that period.
      
      Tempest Re. (Bermuda)                                       9.1559%
      
      
      
      Furthermore, for the period July 1, 1995 to August 1, 1995, Tempest  Re.
will receive  pro-rata reinsurance  premium in  the amount  of $143,070.41  in
consideration for coverage during that period.
      
      International Property Catastrophe Reinsurance Company Ltd. 11.8047%
      
      
      
      All other terms and conditions remain unchanged.
      
      
      
      
      
                                                GUY CARPENTER & COMPANY, INC.
      
      
                                                      Timothy J. Brophy
      
      
                                                      Senior Vice President
      
      

This document is intended for use as evidence that reinsurance described above
has  been  effected  against  which  reinsurers  contract will be duly issued.
Immediate advice must be given of any discrepancies, inaccuracies or necessary
changes.

      GUY CARPENTER
      Guy Carpenter & Company, Inc.
      4 Embarcadero Center, San Francisco, Ca. 94111
      Telephone:  (415) 981-8900, Telex:  34-295      

                                              Page 1 of 6

                                              No.  3341-00-0002-00-96-03-00-00

                                              San Francisco, January 19, 1996

20th Century Insurance Company
6301 Owensmouth
Woodland Hills, California  91367

Gentlemen:

      We are  in receipt  of confirmation  that the  following reinsurance has
been effected for your account:

REASSURED         20th Century Insurance Company
                  21st Century Casualty Company
                  Woodland Hills, California

TREATY            60% QUOTA SHARE TREATY  applying to all business  classified
                  by  the  Reassured  as  Personal  Excess  Liability   Policy
                  (P.E.L.P.).

LIMIT             60% Quota Share of a maximum of $1,000,000 CSL any one risk.
                  (Maximum cession $600,000 CSL any one risk).

                  The Reassured shall  be the sole  judge of what  constitutes
                  one risk.

TERRITORY         This  reinsurance  shall  apply  wherever  the   Reassured's
                  policies apply.

RETENTION         40%  Quota  Share  subject  only to Contingency Reinsurance.
                  Recoveries under which shall  inure to the Reassured's  sole
                  benefit.

PERIOD            Continuous and to apply  to new, renewal and  reunderwritten
                  policies incepting on and after 12:01 A.M., Pacific Standard
                  Time January 1, 1996.

             GUY CARPENTER
                                                                   Page 2 of 6

                                                   3341-00-0002-00-96-03-00-00

CANCELLATION      At  12:01  A.M,.  Pacific  Standard  Time  of  any January 1
                  following 90 days'  notice.  In  the event of  cancellation,
                  the  Reassured   shall  have   the  option   of  terminating
                  Reinsurers'  liability  in  force  at cancellation date with
                  return by Reinsurers of  the unearned premium portfolio,  or
                  of  continuing   Reinsurers'  liability   until  the   first
                  anniversary date following cancellation.

                  Irrespective  of  the  cancellation  option  chosen  by  the
                  Reassured,  Reinsurers   will  remain   liable  for   losses
                  occurring on risks  in force at  cancellation which for  any
                  reason the  Reassured is  unable to  cancel but  in no event
                  shall  Reinsurers  liability  continue  for  more than three
                  years from cancellation date.

PREMIUM AND
COMMISSION        Gross  original  rates  as  allocated  by the Reassured less
                  22.5% commission.

ACCOUNTS          Quarterly within 45 days of close of quarter with settlement
                  within 60 days of close of quarter.

CASH LOSSES       $100,000

WARRANTY          Reassured shall use only their Policy.

EXCLUSIONS        As per attached Exclusion List.

LOSS ADJUSTMENT &
LEGAL EXPENSES    Pro  rated and in proportion  to each party's share of  loss
                  and in addition to limit  hereof, except where the limit  of
                  the Reassured's policy includes defense costs as part of the
                  limit.

STATISTICAL
REPORTS           Quarterly  reports  of  unearned  premiums  and  outstanding
                  losses.

NON-ADMITTED
REINSURERS        Agree  to  provide  clean,  irrevocable  and   unconditional
                  Letters  of  Credit  as  respects outstanding loss reserves,
                  IBNR, LAE and unearned premiums.

             GUY CARPENTER
                                                                   Page 3 of 6

                                                   3341-00-0002-00-96-03-00-00

CLAUSES           Extended Expiration Clause

                  Original Conditions Clause

                  Extra Contractual  Obligations Clause  (Combined contractual
                  and extra contractual loss not  to exceed the limit of  this
                  Reinsurance).
                  
                  Excess of Policy Limits Clause

                  Access to Records Clause

                  Errors and Omissions Clause

                  Tax/Federal Excise Tax Statutory Amount

                  Service of Suit Clause

                  Arbitration Clause

                  Insolvency Clause

                  Guy Carpenter Intermediary Clause

             GUY CARPENTER
                                                                   Page 4 of 6

                                                   3341-00-0002-00-96-03-00-00

REINSURERS
- - ----------

The Mercantile and General Reinsurance Company of America         15.0%

SCOR Reinsurance Company                                          15.0%

Underwriters Reinsurance Company                                  30.0%
                                                                  -----

                                                                  60.0%
                                                                  =====

                                                 GUY CARPENTER & COMPANY, INC.

                                                      Timothy J. Brophy

                                                     Senior Vice President

      GUY CARPENTER
                                                                   Page 5 of 6

                                                   3341-00-0002-00-96-03-00-00

                                       
                        20TH CENTURY INSURANCE COMPANY
                                       
                 PERSONAL EXCESS LIABILITY QUOTA SHARE TREATY
                 --------------------------------------------
                                       
                                       
                                       
                                       
                                EXCLUSION LIST
                                --------------
                                       
                                       
                                       

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

    
    1.  Perils  and  clauses  which  are  excluded  in the Reassureds Personal
        Excess Liability Policy (P.E.L.P.).
    
    2.  Assumed Reinsurance except Agency Reinsurance.
    
    3.  Nuclear Incident Exclusion Clause.
    
    4.  War   risks,    bombardment,   invasion,    insurrection,   rebellion,
        revolution, military or  usurped power, and  confiscation by order  of
        any  government  or  civil  authority,  as  excluded  under a standard
        policy containing a standard war exclusion clause.
    
    5.  Accident and Health Insurance.
    
    6.  Losses  arising  out  of   seepage  and  pollution  as   per  original
        exclusions.  However,  this  exclusion   shall  not  apply  when   the
        Reassured includes  its seepage  and pollution  exclusion on  a policy
        and  the  judicial  entity  having  legal jurisdiction invalidates the
        Reassured's exclusion, thereby obligating the Reassured for  liability
        for  seepage  and  pollution  when  such  liability was intended to be
        excluded  from  coverage  by  the  Reassured's  seepage  and pollution
        exclusion.
    
    7.  All liability of the Company  arising, by contract, operation of  law,
        or otherwise, from its participation or membership, whether  voluntary
        or involuntary, in  any insolvency fund.   "Insolvency Fund"  includes
        any guaranty fund, insolvency  fund, plan, pool, association,  fund or
        other  arrangement,  howsoever  denominated,  established or governed;
        which provides for any assessment  of or payment or assumption  by the
        Company of  part or  all of  any claim,  debt, charge,  fee, or  other
        obligation of  an insurer,  or its  successors or  assigns, which  has
        been declared by any competent authority to be insolvent, or which  is
        otherwise  deemed  unable  to  meet  any  claim, debt, charge, fee, or
        other obligation in whole or in part.

        GUY CARPENTER
                                                                   Page 6 of 6

                                                   3341-00-0002-00-96-03-00-00

                                       
                                       
                     LOSSES AND LOSS ADJUSTMENT EXPENSES
                     -----------------------------------
                                       

        As  provided  in  the  Original  Conditions and Liability of Reinsurer
Article, the Company  shall settle all  losses, and such  settlements shall be
unconditionally binding upon the Reinsurer in proportion to its participation.

        In addition  to the  limit hereunder,  as shown  in the Limit Article,
the Reinsurer shall be  liable for its pro  rata share of all  loss adjustment
expenses, as defined  herein, incurred by  the Company in  connection with the
settlement of, resistance  to and negotiations  concerning claims and  losses.
Notwithstanding the foregoing, if the Company's policy includes defense  costs
as part of  the policy limit,  such defense costs  shall be included  with the
loss (if any) in making up the recovery from the Reinsurer, up to the limit of
this Agreement.

        The term "loss adjustment  expenses" shall mean court  costs, interest
upon  awards   and  judgments,   allocated  expenses   for  investigation  and
adjustment, and all allocated legal  expenses paid by the Company  which shall
include all legal expense and  costs associated with any declaratory  judgment
actions  brought  to  determine  the  Company's defense and/or indemnification
obligations arising  under policies  ceded to  this Agreement.   The Reinsurer
shall not, however,  be required to  contribute to the  salary charges of  any
officials or permanent employees  of the Company except  in the case of  field
claim adjusters or staff attorneys, and  then only when the time spent  by any
adjuster or  staff attorney  is definitely  allocated to  a specific  claim or
loss.

        The  Reinsurer  shall  be  credited  with  its  proportionate share of
salvage or recovery made  by the Company on  account of claims and  settlement
involving reinsurance  hereunder.   The Company  hereby agrees  to enforce its
rights to salvage or  subrogation relating to any  loss, a part of  which loss
was sustained by the Reinsurer and to prosecute all claims arising out of such
rights.  All salvages, recoveries or payments recovered or received subsequent
to a loss settlement under this Agreement shall be applied as if recovered  or
received prior to the aforesaid settlement, and all necessary adjustment shall
be made by the parties hereto.

        The amounts due from the  Reinsurer shall be charged in  the quarterly
accounts.  If  the amount due  from the Reinsurer  in respect of  any one loss
exceeds its percentage of $100,000  the Reinsurer shall upon demand  forthwith
remit the amount due.  The Reinsurer reserves the right to reduce such  amount
by the amount  of any balances  under this Agreement  which may be  due to the
Reinsurer in current account.

                                                 [EXECUTION COPY]

- - ------------------------------------------------------------------------------

                           $225,000,000

              AMENDED AND RESTATED CREDIT AGREEMENT

                              AMONG

                     20TH CENTURY INDUSTRIES,
                           as Borrower

                           UNION BANK,
                      as Agent and as Lender

               THE FIRST NATIONAL BANK OF CHICAGO,
                as Documentary Agent and as Lender

   THE BANK OF NEW YORK, FLEET NATIONAL BANK OF CONNECTICUT and
                  THE CHASE MANHATTAN BANK, N.A.
                   as Co-Agents and as Lenders

               FIRST UNION BANK OF NORTH CAROLINA,
                  as Lead Manager and as Lender

                               and

          THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO

                           DATED AS OF

                         December 7, 1995

- - ------------------------------------------------------------------------------

                        TABLE OF CONTENTS
                        -----------------                                       

ARTICLE I

    DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II

    THE CREDITS. . . . . . . . . . . . . . . . . . . . . . . . 15
    2.1. Advances. . . . . . . . . . . . . . . . . . . . . . . 15
    2.2. Ratable Loans . . . . . . . . . . . . . . . . . . . . 15
    2.3. Types of Advances . . . . . . . . . . . . . . . . . . 15
    2.4. Commitment Fee; Reductions in Aggregate Revolving
         Credit Commitment; Amendment Fee. . . . . . . . . . . 16
    2.5. Minimum Amount of Each Advance. . . . . . . . . . . . 16
    2.6. Optional Principal Payments . . . . . . . . . . . . . 16
    2.7.  Mandatory Commitment Reductions and Prepayments. . . 16
    2.8.  Method of Selecting Types and Interest Periods
          for New Advances . . . . . . . . . . . . . . . . . . 18
    2.9.  Conversion and Continuation of Outstanding Advances. 18
    2.10.     Changes in Interest Rate, etc. . . . . . . . . . 19
    2.11.     Rates Applicable After Default . . . . . . . . . 19
    2.12.     Method of Payment. . . . . . . . . . . . . . . . 19
    2.13.     Notes; Telephonic Notices. . . . . . . . . . . . 20
    2.14.     Interest Payment Dates; Interest and Fee Basis . 20
    2.15.     Notification of Advances, Interest Rates,
              Prepayments and Commitment Reductions . . . .  . 20
    2.16.     Lending Installations. . . . . . . . . . . . . . 20
    2.17.     Non-Receipt of Funds by the Agent. . . . . . . . 21
    2.18.     Taxes. . . . . . . . . . . . . . . . . . . . . . 21
    2.19.     Agents' Fees . . . . . . . . . . . . . . . . . . 22

ARTICLE III

    CHANGE IN CIRCUMSTANCES. . . . . . . . . . . . . . . . . . 22
    3.1. Yield Protection. . . . . . . . . . . . . . . . . . . 22
    3.2. Changes in Capital Adequacy Regulations . . . . . . . 23
    3.3. Availability of Types of Advances . . . . . . . . . . 23
    3.4. Funding Indemnification . . . . . . . . . . . . . . . 24
    3.5. Lender Statements; Survival of Indemnity. . . . . . . 24

ARTICLE IV

    CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . 24
    4.1. Effectiveness of this Agreement and the Initial
         Loans Hereunder . . . . . . . . . . . . . . . . . . . 24
    4.2. Each Future Advance . . . . . . . . . . . . . . . . . 26

ARTICLE V

    REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . 26
    5.1. Corporate Existence and Standing. . . . . . . . . . . 26
    5.2. Authorization and Validity. . . . . . . . . . . . . . 26
    5.3. Compliance with Laws and Contracts. . . . . . . . . . 27
    5.4. Governmental Consents . . . . . . . . . . . . . . . . 27
    5.5. Financial Statements. . . . . . . . . . . . . . . . . 27
    5.6. Material Adverse Change . . . . . . . . . . . . . . . 28
    5.7. Taxes . . . . . . . . . . . . . . . . . . . . . . . . 28
    5.8. Litigation and Contingent Obligations . . . . . . . . 28
    5.9. Capitalization. . . . . . . . . . . . . . . . . . . . 28
    5.10.     ERISA. . . . . . . . . . . . . . . . . . . . . . 29
    5.11.     Defaults . . . . . . . . . . . . . . . . . . . . 29
    5.12.     Federal Reserve Regulations. . . . . . . . . . . 29
    5.13.     Investment Company . . . . . . . . . . . . . . . 29
    5.14.     Certain Fees . . . . . . . . . . . . . . . . . . 29
    5.15.     Solvency . . . . . . . . . . . . . . . . . . . . 30
    5.16.     Ownership of Properties. . . . . . . . . . . . . 30
    5.17.     Employee Controversies . . . . . . . . . . . . . 30
    5.18.     Material Agreements. . . . . . . . . . . . . . . 30
    5.19.     Environmental Laws . . . . . . . . . . . . . . . 30
    5.20.     Insurance. . . . . . . . . . . . . . . . . . . . 31
    5.21.     Security . . . . . . . . . . . . . . . . . . . . 31
    5.22.     Insurance Licenses . . . . . . . . . . . . . . . 31
    5.23.     Disclosure . . . . . . . . . . . . . . . . . . . 31

ARTICLE VI

    COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . 31
    6.1. Financial Reporting . . . . . . . . . . . . . . . . . 32
    6.2. Use of Proceeds . . . . . . . . . . . . . . . . . . . 34
    6.3. Notice of Default and Other Matters . . . . . . . . . 34
    6.4. Conduct of Business . . . . . . . . . . . . . . . . . 34
    6.5. Taxes . . . . . . . . . . . . . . . . . . . . . . . . 34
    6.6. Compliance with Laws. . . . . . . . . . . . . . . . . 35
    6.7. Maintenance of Properties . . . . . . . . . . . . . . 35

    6.8. Inspection. . . . . . . . . . . . . . . . . . . . . . 35
    6.9.  Capital Stock and Dividends. . . . . . . . . . . . . 35
    6.10.     Indebtedness . . . . . . . . . . . . . . . . . . 36
    6.11.     Merger . . . . . . . . . . . . . . . . . . . . . 36
    6.12.     Sale of Assets . . . . . . . . . . . . . . . . . 36
    6.13.     Sale and Leaseback . . . . . . . . . . . . . . . 37
    6.14.     Investments and Purchases. . . . . . . . . . . . 37
    6.15.     Contingent Obligations . . . . . . . . . . . . . 38
    6.16.     Liens. . . . . . . . . . . . . . . . . . . . . . 38
    6.17.     Affiliates . . . . . . . . . . . . . . . . . . . 39
    6.18.     Environmental Matters. . . . . . . . . . . . . . 39
    6.19.     Change in Corporate Structure; Fiscal Year . . . 39
    6.20.     Inconsistent Agreements. . . . . . . . . . . . . 39
    6.21.     Financial Covenants. . . . . . . . . . . . . . . 40
    6.22.     Insurance Company Financial Covenants. . . . . . 40
    6.22.1.  Surplus as Regards Policyholders. . . . . . . . . 40
    6.22.2.  Operating Leverage. . . . . . . . . . . . . . . . 40
    6.22.3.  Coverage Ratio. . . . . . . . . . . . . . . . . . 40
    6.23.     Tax Consolidation. . . . . . . . . . . . . . . . 40
    6.24.     ERISA Compliance . . . . . . . . . . . . . . . . 41
    6.25.     No Earthquake Insurance Coverage . . . . . . . . 41

ARTICLE VII

    DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . 41

ARTICLE VIII

    ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES . . . . . . 44
    8.1. Acceleration. . . . . . . . . . . . . . . . . . . . . 44
    8.2. Amendments. . . . . . . . . . . . . . . . . . . . . . 44
    8.3. Preservation of Rights. . . . . . . . . . . . . . . . 45
    8.4. Limitation of Rights. . . . . . . . . . . . . . . . . 45

ARTICLE IX

    GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . 45
    9.1. Survival of Representations . . . . . . . . . . . . . 45
    9.2. Governmental Regulation . . . . . . . . . . . . . . . 45
    9.3. Taxes . . . . . . . . . . . . . . . . . . . . . . . . 46
    9.4. Headings. . . . . . . . . . . . . . . . . . . . . . . 46
    9.5. Entire Agreement. . . . . . . . . . . . . . . . . . . 46
    9.6. Several Obligations; Benefits of this Agreement . . . 46
    9.7. Expenses; Indemnification . . . . . . . . . . . . . . 46

    9.8. Numbers of Documents. . . . . . . . . . . . . . . . . 46
    9.9. Accounting. . . . . . . . . . . . . . . . . . . . . . 46
    9.10.     Severability of Provisions . . . . . . . . . . . 47
    9.11.     Non-liability of Lenders . . . . . . . . . . . . 47
    9.12.     CHOICE OF LAW. . . . . . . . . . . . . . . . . . 47
    9.13.     NON-EXCLUSIVE CONSENT TO JURISDICTION. . . . . . 47
    9.14.     WAIVER OF JURY TRIAL . . . . . . . . . . . . . . 47
    9.15.     Disclosure . . . . . . . . . . . . . . . . . . . 47
    9.16.     Counterparts . . . . . . . . . . . . . . . . . . 48
    9.17.     Consent. . . . . . . . . . . . . . . . . . . . . 48
    9.18.     Effect of Restatement. . . . . . . . . . . . . . 48
    9.19.     Exiting Lender . . . . . . . . . . . . . . . . . 48

ARTICLE X

    THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . 48
    10.1.     Appointment. . . . . . . . . . . . . . . . . . . 48
    10.2.     Powers . . . . . . . . . . . . . . . . . . . . . 49
    10.3.     General Immunity . . . . . . . . . . . . . . . . 49
    10.4.     No Responsibility for Loans, Recitals, etc.. . . 49
    10.5.     Action on Instructions of Lenders. . . . . . . . 49
    10.6.     Employment of Agents and Counsel . . . . . . . . 49
    10.7.     Reliance on Documents; Counsel . . . . . . . . . 50
    10.8.     Agent's Reimbursement and Indemnification. . . . 50
    10.9.     Notice of Default. . . . . . . . . . . . . . . . 50
    10.10.    Rights as a Lender . . . . . . . . . . . . . . . 50
    10.11.    Lender Credit Decision . . . . . . . . . . . . . 50
    10.12.    Successor Agent. . . . . . . . . . . . . . . . . 51
    10.13.    Documentary Agent. . . . . . . . . . . . . . . . 51

ARTICLE XI

    SETOFF; RATABLE PAYMENTS . . . . . . . . . . . . . . . . . 51
    11.1.     Setoff . . . . . . . . . . . . . . . . . . . . . 51
    11.2.     Ratable Payments . . . . . . . . . . . . . . . . 52

ARTICLE XII

    BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS. . . . . 52
    12.1.     Successors and Assigns . . . . . . . . . . . . . 52
    12.2.     Participations.. . . . . . . . . . . . . . . . . 52
              12.2.1.  Permitted Participants; Effect. . . . . 52
              12.2.2.  Voting Rights . . . . . . . . . . . . . 53
              12.2.3.  Benefit of Setoff . . . . . . . . . . . 53

    12.3.     Assignments. . . . . . . . . . . . . . . . . . . 53
              12.3.1.  Permitted Assignments . . . . . . . . . 53
              12.3.2.  Effect; Effective Date. . . . . . . . . 53
    12.4.     Dissemination of Information . . . . . . . . . . 54
    12.5.     Tax Treatment. . . . . . . . . . . . . . . . . . 54

ARTICLE XIII

    NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . 54
    13.1.     Giving Notice. . . . . . . . . . . . . . . . . . 54
    13.2.     Change of Address. . . . . . . . . . . . . . . . 54

                             EXHIBITS
                             --------                                           

Exhibit A (Section 1)        Note
Exhibit B (Section 1)        Pledge Amendment
Exhibit C (Section 6.1(g))   Quarterly Compliance Certificate
Exhibit D (Section 6.1(h))   Monthly Compliance Certificate
Exhibit E (Section 12.3.1)   Assignment Agreement

                            SCHEDULES
                            ---------                                           

Schedule 2.1  -    Loans and Repayments
Schedule 5.7  -    Taxes
Schedule 5.8  -    Litigation and Material Contingent Obligations
Schedule 5.9  -    Capitalization
Schedule 5.10 -    ERISA
Schedule 5.16 -    Owned and Leased Properties
Schedule 5.22 -    License Jurisdictions
Schedule 6.10 -    Indebtedness
Schedule 6.14 -    Investments
Schedule 6.16 -    Liens

              AMENDED AND RESTATED CREDIT AGREEMENT

    This Amended and Restated Credit Agreement, dated as of December 7,  1995,
is  by  and  among  20TH  CENTURY  INDUSTRIES,  a  California corporation, the
Lenders, UNION BANK, individually and as Agent, and THE FIRST NATIONAL BANK OF
CHICAGO, individually and as Documentary Agent.

                         R E C I T A L S:
                         ----------------                                       

    A.   The  Borrower,  the  Agents  and  certain financial institutions (the
"Existing Lenders") have entered into  that certain Credit Agreement dated  as
 ----------------                                                               
of June  30, 1994,  as amended  by amendments  dated as  of October  17, 1994,
December  31,  1994  and  April  10,  1995  (as  so amended, the "Prior Credit
                                                                  ------------  
Agreement") pursuant to  which the Existing  Lenders agreed to  make revolving
- - ---------                                                                       
loans to the  Borrower under a  revolving credit facility,  subject to certain
restrictions set forth therein, in an aggregate principal amount not to exceed
$175,000,000 at any one time outstanding.

    B.   The  Borrower  has  requested  that  the  Prior  Credit  Agreement be
amended and restated in  order to increase the  size of such revolving  credit
facility to $225,000,000 and to make certain other changes to the Prior Credit
Agreement.

    C.   The Borrower,  the Agents  and the  Existing Lenders  desire to amend
and restate the Prior Credit Agreement to, among other things, accomplish such
amendments.

    D.   The Lenders  which are  not Existing  Lenders wish  to become parties
hereto.

    NOW, THEREFORE, in consideration of the mutual covenants and  undertakings
herein contained, and for other  good and valuable consideration, the  receipt
and sufficiency of  which are hereby  acknowledged, the Borrower,  the Lenders
and the Agents hereby agree as follows:

                            ARTICLE I

                           DEFINITIONS
                           -----------                                          

    As used in this Agreement:

    "Advance" means  a borrowing  pursuant to  Section 2.1  consisting of  the
     -------                                                                    
aggregate amount of the several Loans  made on the same Borrowing Date  by the
Lenders  to  the  Borrower  of  the  same  Type and, in the case of Eurodollar
Advances, for the same Interest Period.

    "Affiliate" of any  Person means any  other Person directly  or indirectly
     ---------                                                                  
controlling, controlled by or under common control with such Person.  A Person
shall be deemed to control another  Person if the controlling Person owns  10%
or more of any  class of voting securities  (or other ownership interests)  of
the  controlled  Person  or  possesses,  directly  or indirectly, the power to
direct or cause the direction of the management or policies of the  controlled
Person, whether through ownership of stock, by contract or otherwise.

    "Agent"  means  Union  Bank  in  its  capacity  as  agent  for the Lenders
     -----                                                                      
pursuant to Article X, and not in its individual capacity as a Lender, and any
successor Agent appointed pursuant to Article X.

    "Agents" means, collectively, the Agent and the Documentary Agent.
     ------                                                                     

    "Aggregate  Revolving  Credit  Commitment"  means  the  aggregate  of  the
     ----------------------------------------                                   
Revolving Credit Commitments of all the Lenders hereunder.

    "Agreement" means this  Amended and Restated  Credit Agreement, as  it may
     ---------                                                                  
be amended, supplemented,  restated or otherwise  modified and in  effect from
time to time.

    "Agreement  Accounting  Principles"  means  generally  accepted accounting
     ---------------------------------                                          
principles as in effect from time to time, applied in a manner consistent with
that used  in preparing  the financial  statements referred  to in Section 5.5
                                                                   -----------  
(but  only  to  the  extent  that  such  financial statements were prepared in
accordance  with  said  generally  accepted  accounting principles); provided,
however,  that  for  purposes  of  all  computations  required to be made with
respect to  compliance by  the Borrower  with Section  6.9 or  6.21, such term
                                              ------------     ----             
shall mean generally accepted accounting  principles as in effect on  the date
hereof,  applied  in  a  manner  consistent  with  that  used in preparing the
financial statements referred to in Section  5.5 (but only to the extent  that
                                    ------------                                
such  financial  statements  were  prepared  in accordance with said generally
accepted accounting principles).

    "AIG" means American International Group, Inc., a Delaware corporation.
     ---                                                                        

    "AIG  Agreement"  means  that  certain  Investment  and Strategic Alliance
     --------------                                                             
Agreement dated as of October 17, 1994 between AIG and the Borrower.

    "Alternate Base Rate" or "ABR" means, for any day, a rate of interest  per
     -------------------      ---                                               
annum equal to the higher of (a) the Prime Rate for such day, and (b) the  sum
of the Federal Funds Effective Rate for such day plus 1/2% per annum.

    "Annual Statement" means the  annual statutory financial statement  of any
     ----------------                                                           
Insurance Subsidiary required to be filed with the insurance commissioner  (or
similar authority) of its jurisdiction of incorporation, which statement shall
be  in  the  form  required  by  such  Insurance  Subsidiary's jurisdiction of
incorporation or, if no specific form is so required, in the form of financial
statements recommended  by the  NAIC to  be used  for filing  annual statutory
financial statements and shall contain the type of information recommended  by
the NAIC  to be  disclosed therein,  together with  all exhibits  or schedules
filed therewith.

    "Applicable ABR Margin" means, subject  to the following two sentences  of
     ---------------------                                                      
this definition, for any period, the applicable of the following percentages:

         (a)  0% unless a different rate specified below is applicable;

         (b)  .25% at any time the aggregate principal balance of  outstanding
              Loans exceeds  $175 million  unless a  different rate  specified
              below is applicable;  and

         (c)  0% at any time the Unassigned  Funds are positive as of the  end
              of the most recently ended calendar month.

The Applicable ABR Margin shall be adjusted, to the extent required by (a)  or
(b) above,  upon the  date on  which the  triggering change  in the  aggregate
principal Loan balance occurs.   The Applicable ABR Margin shall  be adjusted,
to the extent  required by (c)  above, monthly as  of the tenth  day after the
required delivery  date for  the certificate  executed by  the chief financial
officer  of  the  Borrower  and  delivered  in accordance with Section 6.1(h);
                                                               ---------------  
provided, that if such certificate, together with the financial statements  to
- - ---------                                                                       
which such certificate  relates, are not  delivered by such  tenth day of  any
month,  then  the  Applicable  ABR  Margin  for such month shall be determined
pursuant to (a) or (b) above, as applicable.

    "Applicable  Eurodollar  Margin"  means,  subject  to  the  following  two
     ------------------------------                                             
sentences of this definition, for any period, the applicable of the  following
percentages:

         (a)  1.00% unless a different rate specified below is applicable;

         (b)  1.25%  at   any  time   the  aggregate   principal  balance   of
              outstanding Loans exceeds $175  million unless a different  rate
              specified below is applicable;

         (c)  1.00% at any  time the Unassigned Funds are positive as  of the
              end  of  the  most  recently  ended  calendar  month  unless   a
              different rate specified below is applicable; and

         (d)  .75% at any time (i) the Unassigned Funds are positive and  (ii)
              the ratio of  the Aggregate Revolving  Credit Commitment to  the
              Consolidated Surplus as  Regards Policyholders of  the Insurance
              Subsidiaries is .50:1.00 or less, in each case as of the end  of
              the most recently ended calendar month.

The Applicable Eurodollar Margin shall be adjusted, to the extent required  by
(a) or (b) above,  upon the date on  which the triggering change  in aggregate
principal Loan  balance occurs.   The  Applicable Eurodollar  Margin shall  be
adjusted, to the extent required by (c) or (d) above, monthly as of the  tenth
day after the required delivery date for the certificate executed by the chief
financial officer  of the  Borrower and  delivered in  accordance with Section
                                                                       -------  
6.1(h);  provided,  that  if  such  certificate,  together  with the financial
- - -------  ---------                                                              
statements to which such certificate relates, are not delivered by such  tenth
day of any month, then the  Applicable Eurodollar Margin for such month  shall
be determined pursuant to (a) or (b) above, as applicable.

    "Article" means an  article of this  Agreement unless another  document is
     -------                                                                    
specifically referenced.

    "Authorized Officer" means any  of the chief executive  officer, president
     ------------------                                                         
or chief financial officer of the Borrower, acting singly.

    "Bankruptcy Code" means Title 11, United States Code, sections 1  et.seq.,
     ---------------                                                            
as the same  may be amended  from time to  time, and any  successor thereto or
replacement therefor which may be hereafter enacted.

    "Borrower" means  20th Century  Industries, a  California corporation, and
     --------                                                                   
its successors and assigns.

    "Borrowing Date" means a date on which an Advance is made hereunder.
     --------------                                                             

    "Borrowing Notice" is defined in Section 2.8.
     ----------------                                                           

    "Business Day" means  (a) with respect  to any borrowing,  payment or rate
     ------------                                                               
selection of Eurodollar Advances, a day  (other than a Saturday or Sunday)  on
which banks generally are  open in Chicago, Los  Angeles and New York  for the
conduct of  substantially all  of their  commercial lending  activities and on
which dealings in United States dollars are carried on in the London interbank
market,  and  (b)  for  all  other  purposes,  a day (other than a Saturday or
Sunday) on which banks generally are open in Chicago, Los Angeles and New York
for the conduct of substantially all of their commercial lending activities.

    "Capitalized  Lease"  of  a  Person  means  any  lease of Property by such
     ------------------                                                         
Person as lessee which would be capitalized on a balance sheet of such  Person
prepared in accordance with Agreement Accounting Principles.

    "Capitalized  Lease  Obligations"  of  a  Person  means  the amount of the
     -------------------------------                                            
obligations of such Person under Capitalized Leases which would be shown as  a
liability  on  a  balance  sheet  of  such  Person prepared in accordance with
Agreement Accounting Principles.

    "Change" is defined in Section 3.2.
     ------                ------------                                         

    "Change in Control"  means (a) the  acquisition by any  Person, or two  or
     -----------------                                                          
more Persons acting in  concert, including without limitation  any acquisition
effected  by  means  of  any  transaction  contemplated  by  Section  6.11, of
                                                             -------------      
beneficial ownership (within the meaning  of Rule 13d-3 of the  Securities and
Exchange Commission under the Securities Exchange Act of 1934) of 20% or  more
of the  outstanding shares  of voting  stock of  the Borrower,  (b) during any
period  of  25  consecutive  calendar  months,  commencing on the date of this
Agreement, the ceasing of  those individuals (the "Continuing  Directors") who
(i) were directors  of the Borrower  on the first  day of such  period or (ii)
subsequently became directors  of the Borrower  and whose initial  election or
initial nomination  for election  subsequent to  that date  was approved  by a
majority of the  Continuing Directors then  on the board  of directors of  the
Borrower, to constitute a majority of  the board of directors of the  Borrower
or (c) the Borrower  shall cease to own  beneficially and of record,  free and
clear of all Liens  (other than the Lien  of the Pledge Agreement),  or voting
agreements, restrictions or trusts of any kind 100% of the outstanding  shares
of capital stock of each Insurance Subsidiary.

    "Code" means the  Internal Revenue Code  of 1986, as  amended, reformed or
     ----                                                                       
otherwise modified from time to time.

    "Combined Statutory Basis" means, with respect  to any two or more of  the
     ------------------------                                                   
Insurance  Subsidiaries  at  any  time,  the  financial  results  achieved  by
combining the then  most recent Annual  Statements or Quarterly  Statements of
such  Insurance  Subsidiaries  (or  any  one  or  more  parts  thereof), after
eliminating  therefrom   the  amount   and  the   effect  (including,  without
limitation,  any  effect   on  Surplus  as   Regards  Policyholders)  of   any
investments, liabilities, expenses,  income or other  items appearing in  such
Annual Statements or Quarterly Statements which may have arisen out of any one
or more transactions by and among any of such Insurance Subsidiaries.

    "Commitment" means,  for each  Lender, the  obligation of  such Lender  to
     ----------                                                                 
make Loans not exceeding the amount set forth opposite its signature below, as
such amount may be modified from time to time pursuant to the terms hereof.

    "Condemnation" is defined in Section 7.8.
     ------------                ------------                                   

    "Consolidated"  or  "consolidated",  when  used  in  connection  with  any
     ------------        ------------                                           
calculation, means a calculation to be determined on a consolidated basis  for
the  Borrower  and  its  Subsidiaries  in accordance with Agreement Accounting
Principles.

    "Contingent Obligation" of  a Person means  any agreement, undertaking  or
     ---------------------                                                      
arrangement by which such  Person assumes, guarantees, endorses,  contingently
agrees to purchase or provide funds  for the payment of, or otherwise  becomes
or  is  contingently  liable  upon,  the  obligation or liability of any other
Person,  or  agrees  to  maintain  the  net  worth or working capital or other
financial condition of any other Person, or otherwise assures any creditor  of
such other  Person against  loss, including,  without limitation,  any comfort
letter,  operating  agreement  or  take-or-pay  contract  or application for a
Letter of Credit.

    "Controlled  Group"   means  all   members  of   a  controlled   group  of
     -----------------                                                          
corporations and all trades or businesses (whether or not incorporated)  under
common control which, together with  the Borrower or any of  its Subsidiaries,
are treated as a single employer under Section 414 of the Code.

    "Conversion/Continuation Notice" is defined in Section 2.9.
     ------------------------------                -----------                  

    "Coverage Ratio" is defined in Section 6.22.3.
     --------------                --------------                               

    "Debt  Securities"  means  obligations  for  money  borrowed  evidenced by
     ----------------                                                           
notes, bonds, debentures or other similar instruments.

    "Default" means an event described in Article VII.
     -------                              -----------                           

    "Department" is defined in Section 8.4.
     ----------                -----------                                      

    "Documentary Agent"  means First  Chicago in  its capacity  as documentary
     -----------------                                                          
agent for the Lenders hereunder.

    "Environmental Laws" is defined in Section 5.19.
     ------------------                ------------                             

    "ERISA" means  the Employee  Retirement Income  Security Act  of 1974,  as
     -----                                                                      
amended from time to time.

    "Eurodollar  Advance"  means  an   Advance  which  bears  interest   at  a
     -------------------                                                        
Eurodollar Rate.

    "Eurodollar Base  Rate" means,  with respect  to a  Eurodollar Advance for
     ---------------------                                                      
the relevant  Interest Period,  the rate  determined by  the Agent  to be  the
arithmetic average of the rates reported  to the Agent by each Reference  Bank
as the rate at  which deposits in U.S.  dollars are offered by  such Reference
Bank to  first-class banks  in the  London interbank  market at  approximately
11:00 a.m.  (London time)  two Business  Days prior  to the  first day of such
Interest Period, in the approximate  amount of such Reference Bank's  relevant
Eurodollar Advance and having a maturity approximately equal to such  Interest
Period.  If any Reference Bank  fails to provide such quotation to  the Agent,
then the Agent shall  determine the Eurodollar Base  Rate on the basis  of the
quotations of the remaining Reference Bank(s).

    "Eurodollar Loan" means, with respect  to a Lender, such Lender's  portion
     ---------------                                                            
of any Eurodollar Advance.

    "Eurodollar Rate"  means, with  respect to  a Eurodollar  Advance for  the
     ---------------                                                            
relevant Interest Period, the  sum of (a) the  quotient of (i) the  Eurodollar
Base Rate applicable to  such Interest Period, divided  by (ii) one minus  the
Reserve  Requirement  (expressed  as  a  decimal)  applicable to such Interest
Period, plus (b) the Applicable Eurodollar Margin.  The Eurodollar Rate  shall
be rounded to the next higher multiple of 1/16 of 1% if the rate is not such a
multiple.

    "Existing Lenders" is defined in the recitals to this Agreement.
     ----------------                                                           

    "Facility Termination Date" means April 1, 2001.
     -------------------------                                                  

    "Federal Funds Effective  Rate" means, for  any day, an  interest rate per
     -----------------------------                                              
annum equal to the  weighted average of the  rates on overnight Federal  funds
transactions with members  of the Federal  Reserve System arranged  by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business  Day,  for  the  immediately  preceding  Business Day) by the Federal
Reserve Bank of  New York, or,  if such rate  is not so  published for any day
which is a  Business Day, the  average of the  quotations at approximately  10
a.m. (Los Angeles time) on such day on such transactions received by the Agent
from three Federal funds brokers of recognized standing selected by the  Agent
in its sole discretion.

    "Financial Statements" is defined in Section 5.5.
     --------------------                -----------                            

    "First  Chicago"  means  The  First  National  Bank  of  Chicago  in   its
     --------------                                                             
individual capacity, and its successors.

    "Floating Rate"  means, for  any day,  a rate  per annum  equal to (a) the
     -------------                                                              
Alternate Base Rate for such day, plus (b) the Applicable ABR Margin, in  each
case changing when and as the Alternate Base Rate changes.

    "Floating  Rate  Advance"  means  an  Advance  which bears interest at the
     -----------------------                                                    
Floating Rate.

    "Governmental  Authority"  means  any  nation  or government, any state or
     -----------------------                                                    
other  political  subdivision  thereof  or  any  entity  exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government including, without limitation, any board of insurance, insurance
department or insurance commissioner.

    "Hazardous Materials" is defined in Section 5.19.
     -------------------                ------------                            

    "Indebtedness"  of  a  Person  means  such  Person's  (a)  obligations for
     ------------                                                               
borrowed money, (b)  obligations representing the  deferred purchase price  of
Property or  services (other  than accounts  payable arising  in the  ordinary
course of such Person's business payable on terms customary in the trade), (c)
obligations, whether or not  assumed, secured by Liens  or payable out of  the
proceeds or  production from  Property now  or hereafter  owned or acquired by
such Person,  (d) obligations  which are  evidenced by  notes, acceptances, or
other  instruments,  (e)  Capitalized  Lease  Obligations,  (f)  Rate  Hedging
Obligations, (g)  Contingent Obligations,  (h) obligations  pursuant to  or in
respect of a  Letter of Credit  and (i) repurchase  obligations or liabilities
with respect to Accounts or notes receivable sold by such Person.

    "Insurance Subsidiaries" means  20th Century, 21st  Century and any  other
     ----------------------                                                     
Subsidiary  in  the  insurance  business  which  is  approved as an "Insurance
Subsidiary" by the Required Lenders.

    "Interest Period" means,  with respect to  a Eurodollar Advance,  a period
     ---------------                                                            
of one, two, three or six months commencing on a Business Day selected by  the
Borrower pursuant to this Agreement.   Such Interest Period shall end on  (but
exclude) the day which corresponds numerically to such date one, two, three or
six months thereafter; provided, however, that if there is no such numerically
                       --------  -------                                        
corresponding day in such next, second, third or sixth succeeding month,  such
Interest Period shall end on the last Business Day of such next, second, third
or sixth succeeding month.  If an Interest Period would otherwise end on a day
which  is  not  a  Business  Day,  such  Interest Period shall end on the next
succeeding  Business  Day;  provided,  however,  that  if said next succeeding
                            --------   -------                                  
Business Day falls in a new calendar month, such Interest Period shall end  on
the immediately preceding Business Day.

    "Investment" of a Person means  any loan, advance (other than  commission,
     ----------                                                                 
travel and  similar advances  to officers  and employees  made in the ordinary
course  of  business),  extension  of  credit  (other than accounts receivable
arising in the ordinary course of  business on terms customary in the  trade),
deposit account or contribution of capital by such Person to any other  Person
or  any

investment  in,  or  purchase or other acquisition  of, the stock, partnership
interests,  notes,  debentures or other securities of any other Person made by
such Person.

    "Lenders" means the lending institutions listed on the signature pages  of
     -------                                                                    
this Agreement and their respective successors and assigns.

    "Lending Installation" means, with respect  to a Lender or the  Agent, any
     --------------------                                                       
office, branch, subsidiary or affiliate of such Lender or the Agent.

    "Letter  of  Credit"  of  a  Person  means  a  letter of credit or similar
     ------------------                                                         
instrument which is issued upon the  application of such Person or upon  which
such Person is an account party or for which such Person is in any way liable.

    "License" means  any license,  certificate of  authority, permit  or other
     -------                                                                    
authorization which is required to be obtained from any Governmental Authority
in  connection  with  the  operation,  ownership  or  transaction of insurance
business.

    "Lien" means any security  interest, lien (statutory or  other), mortgage,
     ----                                                                       
pledge,  hypothecation,  assignment,   deposit  arrangement,  encumbrance   or
preference, priority or other  security agreement or preferential  arrangement
of any kind or nature whatsoever (including, without limitation, the  interest
of a vendor or lessor under  any conditional sale, Capitalized Lease or  other
title retention agreement).

    "Loan"  means,  with  respect  to  a  Lender, such Lender's portion of any
     ----                                                                       
Advance and "Loans" means, with respect  to the Lenders, the aggregate of  all
             -----                                                              
Advances.

    "Loan Documents" means  this Agreement, the  Notes, the Pledge  Agreement,
     --------------                                                             
the  Pledge  Amendment  and  the  other  documents and agreements contemplated
hereby and executed by the Borrower in favor of the Agent or any Lender.

    "Margin Stock" has the meaning assigned to that term under Regulation U.
     ------------                                                               

    "Material  Adverse  Effect"  means  a  material  adverse effect on (a) the
     -------------------------                                                  
business, Property,  condition (financial  or other),  performance, results of
operations,  or  prospects  of  the  Borrower  and its Subsidiaries taken as a
whole,  (b)  the  ability  of  the  Borrower  or any Subsidiary to perform its
obligations under the Loan Documents, or (c) the validity or enforceability of
any of  the Loan  Documents or  the rights  or remedies  of the  Agent or  the
Lenders thereunder.

    "Multiemployer  Plan"  means  a  Plan  maintained pursuant to a collective
     -------------------                                                        
bargaining agreement  or any  other arrangement  to which  the Borrower or any
member of the Controlled Group is a party and to which more than one  employer
is obligated to make contributions.

    "NAIC" means the  National Association of  Insurance Commissioners or  any
     ----                                                                       
successor thereto, or in lieu thereof, any other association, agency or  other
organization performing advisory, coordination  or other like functions  among
insurance departments, insurance commissions and

similar Governmental Authorities of the various states of the United States of
America toward the promotion of uniformity in the practices of such Governmen-
tal Authorities.

    "Net  Income"  means,  for  any  computation  period,  with respect to the
     -----------                                                                
Borrower on a consolidated basis with its Subsidiaries, cumulative net  income
earned during such period in accordance with Agreement Accounting Principles.

    "Net Written  Premium" means,  with respect  to any  Insurance Subsidiary,
     --------------------                                                       
the net written  premiums thereof for  the relevant period  ("Underwriting and
Investment" statement, page 9, part 2B, column 4, line 32).

    "Net Worth" means at any date the consolidated stockholders equity of  the
     ---------                                                                  
Borrower  and  its  consolidated  Subsidiaries  determined  in accordance with
Agreement Accounting Principles, but excluding the effects of FASB 115.

    "Non-Excluded Taxes" is defined in Section 2.18(a).
     ------------------                ---------------                          

    "Note" means  a promissory  note in  substantially the  form of  Exhibit A
     ----                                                            ---------  
hereto, with appropriate insertions, duly executed and delivered to the  Agent
by the Borrower  and payable to  the order of  a Lender in  the amount of  its
Revolving Credit Commitment, including any amendment, modification, renewal or
replacement of such promissory note.

    "Notice of Assignment" is defined in Section 12.3.2.
     --------------------                --------------                         

    "Obligations"  means  all  unpaid  principal  of  and  accrued  and unpaid
     -----------                                                                
interest  on  the  Notes,  all  accrued  and  unpaid  fees  and  all expenses,
reimbursements,  indemnities  and  other  obligations  of  the Borrower to the
Lenders or to any Lender, the Agent, the Documentary Agent or any  indemnified
party hereunder arising under any of  the Loan Documents and any Rate  Hedging
Obligations of the Borrower relating to the Loans and owing to any Lender.

    "Participants" is defined in Section 12.2.1.
     ------------                --------------                                 

    "Payment  Date"  means  the  first  day  of  each January, April, July and
     -------------                                                              
October.

    "PBGC" means  the Pension  Benefit Guaranty  Corporation or  any successor
     ----                                                                       
thereto.

    "Person"  means  any  natural  person,  corporation,  firm, joint venture,
     ------                                                                     
partnership, association, enterprise, trust  or other entity or  organization,
or  any  government  or  political  subdivision  or  any agency, department or
instrumentality thereof.

    "Plan" means an employee pension benefit plan, as defined in Section  3(2)
     ----                                                                       
of ERISA, as to which the Borrower  or any member of the Controlled Group  may
have any liability.

    "Pledge Agreement" means that certain  Stock Pledge Agreement dated as  of
     ----------------                                                           
June 30, 1994  by the Borrower  in favor of  the Agent for  the benefit of the
Lenders, as the same is  being amended 

as of the  date hereof and as the  same may be  further amended, supplemented,
restated or otherwise modified from time to time.

    "Pledge Amendment" means that  certain amendment to the  Pledge Agreement,
     ----------------                                                           
dated as of the date hereof and in substantially the form of Exhibit B.
                                                             ---------          

    "Preferred  Stock"  means  the  Series  A convertible preferred stock, par
     ----------------                                                           
value $1.00 per share, of the Borrower having the preferences set forth on the
certificate of determination attached as Exhibit A to the AIG Agreement.

    "Prime Rate" means a  rate per annum equal  to the prime rate  of interest
     ----------                                                                 
announced by Union  Bank from time  to time, changing  when and as  said prime
rate changes.   The Prime Rate  is a reference  rate and does  not necessarily
represent  the  lowest  or  best  rate  of  interest  actually  charged to any
customer.  Union  Bank may make  commercial loans or  other loans at  rates of
interest at, above or below the Prime Rate.

    "Prior Credit Agreement" is defined in the recitals to this Agreement.
     ----------------------                                                     

    "Property"  of  a  Person  means  any  and  all  property,  whether  real,
     --------                                                                   
personal, tangible,  intangible, or  mixed, of  such Person,  or other  assets
owned, leased or operated by such Person.

    "pro-rata" means, when  used with respect  to a Lender,  and any described
     --------                                                                   
aggregate or total amount, an amount equal to such Lender's pro-rata share  or
portion based on its percentage  of the Aggregate Revolving Credit  Commitment
or  if  the  Aggregate  Revolving  Credit  Commitment has been terminated, its
percentage of the aggregate principal amount of outstanding Advances.

    "Purchase" means any transaction,  or any series of  related transactions,
     --------                                                                   
consummated on or after the date  of this Agreement, by which the  Borrower or
any  of  its  Subsidiaries  (a)   acquires  any  going  business  or   all  or
substantially all of the assets of any firm, corporation or division  thereof,
whether through purchase  of assets, merger  or otherwise, or  (b) directly or
indirectly acquires (in one transaction or as the most recent transaction in a
series  of  transactions)  at  least  a  majority  (in number of votes) of the
securities of a corporation which have ordinary voting power for the  election
of directors (other than  securities having such power  only by reason of  the
happening of a contingency) or a  majority (by percentage or voting power)  of
the outstanding partnership interests of a partnership.

    "Purchasers" is defined in Section 12.3.1.
     ----------                --------------                                   

    "Quarterly Statement"  means the  quarterly statutory  financial statement
     -------------------                                                        
of  any  Insurance  Subsidiary  required  to  be  filed  with  the   insurance
commissioner  (or  similar  authority)  of  its jurisdiction of incorporation,
which statement shall be in  the form required by such  Insurance Subsidiary's
jurisdiction of incorporation or, if no  specific form is so required, in  the
form  of  financial  statements  recommended  by  NAIC  to  be used for filing
quarterly  statutory  financial  statements  and  shall  contain  the  type of
information recommended  by NAIC  to be  disclosed therein,  together with all
exhibits or schedules filed therewith.

    "Rate Hedging Obligations"  of a Person  means any and  all obligations of
     ------------------------                                                   
such  Person,  whether  absolute  or  contingent  and howsoever and whensoever
created, arising,  evidenced or  acquired (including  all renewals, extensions
and modifications thereof and substitutions  therefor), under (a) any and  all
agreements, devices or  arrangements designed to  protect at least  one of the
parties thereto  from the  fluctuations of  interest rates,  exchange rates or
forward  rates  applicable  to  such  party's  assets, liabilities or exchange
transactions,  including,  but  not  limited  to, dollar-denominated or cross-
currency  interest  rate   exchange  agreements,  forward   currency  exchange
agreements, interest rate  cap or collar  protection agreements, forward  rate
currency or  interest rate  options, puts  and warrants,  and (b)  any and all
cancellations, buybacks, reversals, terminations or assignments of any of  the
foregoing.

    "Reference  Banks"  means  First  Chicago  and  Union  Bank.  In the event
     ----------------                                                           
either of such institutions shall cease to be a Lender, then "Reference Banks"
shall mean the institution which remains a Lender together with the additional
institution, if any, designated  as a Reference Bank  by the Borrower and  the
remaining Reference Bank.

    "Regulation  D"  means  Regulation  D  of  the  Board  of Governors of the
     -------------                                                              
Federal  Reserve  System  as  from  time  to  time in effect and any successor
thereto  or  other  regulation  or  official  interpretation  of said Board of
Governors   relating   to   reserve   requirements  applicable  to  depositary
institutions.

    "Regulation  G"  means  Regulation  G  of  the  Board  of Governors of the
     -------------                                                              
Federal Reserve System as  from time to time  in effect and shall  include any
successor or  other regulation  or official  interpretation of  said Board  of
Governors relating  to the  extension of  credit by  Persons other than banks,
brokers and dealers  for the purpose  of purchasing or  carrying margin stocks
applicable to such Persons.

    "Regulation  T"  means  Regulation  T  of  the  Board  of Governors of the
     -------------                                                              
Federal Reserve System as  from time to time  in effect and shall  include any
successor or  other regulation  or official  interpretation of  such Board  of
Governors  relating  to  the  extension  of  credit  by securities brokers and
dealers for the purpose of purchasing or carrying margin stocks applicable  to
such Persons.

    "Regulation  U"  means  Regulation  U  of  the  Board  of Governors of the
     -------------                                                              
Federal Reserve System  as from time  to time in  effect and any  successor or
other  regulation  or  official  interpretation  of  said  Board  of Governors
relating to the extension of credit by banks for the purpose of purchasing  or
carrying margin stocks applicable to such Persons.

    "Regulation  X"  means  Regulation  X  of  the  Board  of Governors of the
     -------------                                                              
Federal Reserve System as  from time to time  in effect and shall  include any
successor or  other regulation  or official  interpretation of  said Board  of
Governors relating to the extension of credit by the specified lenders for the
purpose of purchasing or carrying margin stocks applicable to such Persons.

    "Release"  is  defined   in  the  Comprehensive   Environmental  Response,
     -------                                                                    
Compensation and Liability Act, as amended, 42 U.S.C. 39601 et.seq.
                                                            ------              

    "Reportable Event" means a reportable event as defined in Section 4043  of
     ----------------                                                           
ERISA and the regulations issued under  such section, with respect to a  Plan,
excluding, however, such events as to which the PBGC has by regulation  waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event; provided, that a failure to meet the  minimum
                                 --------                                       
funding standard of Section 412 of the Code and of Section 302 of ERISA  shall
be a Reportable  Event regardless of  the issuance of  any such waiver  of the
notice  requirement  in  accordance  with  either  Section 4043(a) of ERISA or
Section 412(d) of the Code.

    "Required Lenders" means Lenders in the aggregate having at least  66-2/3%
     ----------------                                                           
of the Aggregate  Revolving Credit Commitment  or, if the  Aggregate Revolving
Credit Commitment  has been  terminated, Lenders  in the  aggregate holding at
least 66-2/3%  of the  aggregate unpaid  principal amount  of the  outstanding
Loans.

    "Reserve  Requirement"  means,  with  respect  to  an Interest Period, the
     --------------------                                                       
maximum  aggregate  reserve  requirement  (including  all basic, supplemental,
marginal and other reserves) which is imposed upon any Lender under Regulation
D on Eurocurrency liabilities.

    "Revolving Credit Commitment"  means, for each  Lender, the obligation  of
     ---------------------------                                                
such  Lender  to  make  Loans  to  the  Borrower pursuant to Section 2.1 in an
                                                             -----------        
aggregate amount  at any  one time  outstanding not  exceeding the  amount set
forth opposite its name under the heading "Revolving Credit Commitment" on the
signature page hereto, as such amount may be modified or reduced from time  to
time pursuant to the terms of this Agreement.

    "Risk-Based Capital Guidelines" is defined in Section 3.2.
     -----------------------------                -----------                   

    "SAP"  means,  with  respect  to  any  Insurance Subsidiary, the statutory
     ---                                                                        
accounting practices prescribed or permitted by the insurance commissioner (or
other similar authority) as in effect from time to time in the jurisdiction of
incorporation  of  such  Insurance  Subsidiary  for  the preparation of annual
statements and other financial reports by insurance companies of the same type
as  such  Insurance  Subsidiary;  provided,  however,  that  for  purposes  of
computations required to  be made with  respect to compliance  by the Borrower
with Section  6.22, such  term shall  mean the  statutory accounting practices
     -------------                                                              
prescribed  or  permitted  by  the  insurance  commissioner  (or other similar
authority) as of the date hereof in the jurisdiction of incorporation of  such
Insurance  Subsidiary  for  the  preparation  of  annual  statements and other
financial reports by  insurance companies of  the same type  as such Insurance
Subsidiary.

    "Section"  means  a  numbered  section  of  this Agreement, unless another
     -------                                                                    
document is specifically referenced.

    "Single  Employer  Plan"  means  a  Plan  subject  to  Title  IV  of ERISA
     ----------------------                                                     
maintained by the Borrower or any member of the Controlled Group for employees
of  the  Borrower  or  any  member  of  the  Controlled  Group,  other  than a
Multiemployer Plan.

    "Solvent" means, when  used with respect  to a Person,  that (a) the  fair
     -------                                                                    
saleable value of the assets of such  Person is in excess of the total  amount
of  the  present  value  of  its  liabilities  (including for purposes of this
definition  all  liabilities  (including

loss  reserves  as determined by  the Borrower), whether or not reflected on a
balance sheet prepared in  accordance with Agreement Accounting Principles and
whether  direct  or  indirect,  fixed  or contingent,  secured  or  unsecured,
disputed  or  undisputed),  (b)  such  Person  is  able  to  pay  its debts or
obligations in the ordinary course as they mature and (c) such Person does not
have unreasonably small capital to  carry out its business as conducted and as
proposed to be conducted.  "Solvency" shall  have a correlative meaning.

    "Statutory Net  Income" means  the after-tax  statutory net  income of the
     ---------------------                                                      
Borrower's Insurance Subsidiaries for  the relevant period (calculated  in the
manner set forth in the "Statement of  Income", page 4, line 16 of the  Annual
Statement).

    "Subsidiary" of a Person  means (a) any corporation  more than 50% of  the
     ----------                                                                 
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled,  directly or indirectly, by  such Person or by  one or
more  of  its  Subsidiaries  or  by  such  Person  and  one  or  more  of  its
Subsidiaries, or (b)  any partnership, association,  joint venture or  similar
business organization more than 50% of the ownership interests having ordinary
voting power of  which shall at  the time be  so owned or  controlled.  Unless
otherwise expressly provided,  all references herein  to a "Subsidiary"  shall
mean a Subsidiary of the Borrower.

    "Substantial Portion" means, with respect to the Property of the  Borrower
     -------------------                                                        
and  its  Subsidiaries,  Property  which  (a)  represents  more than 5% of the
consolidated assets of the Borrower and its Subsidiaries, as would be shown in
the consolidated financial statements of the Borrower and its Subsidiaries  as
at the end of the quarter next preceding the date on which such  determination
is made, or (b) is responsible for more than 5% of the consolidated net  sales
or of the consolidated net income of the Borrower and its Subsidiaries for the
12-month period ending as of the end of the quarter next preceding the date of
determination.

    "Surplus as Regards  Policyholders" means, with  respect to any  Insurance
     ---------------------------------                                          
Subsidiary at any  time, the "capital  stock" of such  Insurance Subsidiary at
such time,  as determined  in accordance  with SAP  ("Liabilities, Surplus and
Other Funds" statement, page 3, line 25 of the Annual Statement).

    "20th  Century"  means  20th  Century  Insurance  Company,  a   California
     -------------                                                              
corporation, and its successors and assigns.

    "21st  Century"  means  21st   Century  Casualty  Company,  a   California
     -------------                                                              
corporation, and its successors and assigns.

    "Termination Event"  means, with  respect to  a Plan  which is  subject to
     -----------------                                                          
Title IV of ERISA, (a) a Reportable Event, (b) the withdrawal of the  Borrower
or any other member of the Controlled Group from such Plan during a plan  year
in  which  the  Borrower  or  any  other  member of the Controlled Group was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA or was deemed
such under Section  4068(f) of ERISA,  (c) the termination  of such Plan,  the
filing of a  notice of intent  to terminate such  Plan or the  treatment of an
amendment of such Plan as a  termination under Section 4041 of ERISA,  (d) the
institution by the PBGC of proceedings to terminate such Plan 

or (e) any  event  or condition  which  might  constitute  grounds  under
Section 4042 of ERISA for the termination of, or appointment of a trustee
to administer, such Plan.

    "Transferee" is defined in Section 12.4.
     ----------                ------------                                     

    "Type" means, with respect to any  Advance, its nature as a Floating  Rate
     ----                                                                       
Advance or Eurodollar Advance.

    "UCC" means the  New York Uniform  Commercial Code as  amended or modified
     ---                                                                        
and in effect from time to time.

    "Unassigned Funds" means the "unassigned funds (surplus)" of 20th  Century
     ----------------                                                           
calculated in  the manner  set forth  in the  "Liabilities, Surplus  and Other
Funds" statement, page 3, line 24C of the Annual Statement.

    "Unfunded Liability" means the amount (if any) by which the present  value
     ------------------                                                         
of  all  vested  and  unvested  accrued  benefits under a Single Employer Plan
exceeds  the  fair  market  value  of  assets  allocable to such benefits, all
determined as of the then most  recent valuation date for such Plan  using the
actuarial assumptions as in effect for 1993 for each Plan.

    "Unmatured Default" means an event which but for the lapse of time or  the
     -----------------                                                          
giving of notice, or both, would constitute a Default.

    "Union  Bank"  means  Union  Bank  in  its  individual  capacity,  and its
     -----------                                                                
successors.

    "Warrants" means  the Series  A warrants  to purchase  common stock of the
     --------                                                                   
Borrower having the  terms and conditions  set forth on  Exhibit B to  the AIG
Agreement.

    "Wholly-Owned Subsidiary" of a Person means (a) any Subsidiary all of  the
     -----------------------                                                    
outstanding  voting  securities  of  which  shall  at  the  time  be  owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person,  or by such Person  and one or more  Wholly-Owned
Subsidiaries  of  such  Person,  or  (b)  any  partnership, association, joint
venture  or  similar  business  organization  100%  of the ownership interests
having  ordinary  voting  power  of  which  shall  at  the time be so owned or
controlled.

    The  foregoing  definitions  shall  be  equally  applicable  to  both  the
singular and plural forms of  the defined terms. The words  "herein," "hereof"
and words  of similar  import as  used in  this Agreement  shall refer to this
Agreement as a whole  and not to any  particular provision in this  Agreement.
References to "Articles," "Sections," "subsections," "paragraphs,"  "Exhibits"
and  "Schedules"  in  this  Agreement  shall  refer  to Sections, subsections,
paragraphs,  Exhibits  and  Schedules  of  this  Agreement  unless   otherwise
expressly provided; references to  Persons include their respective  permitted
successors  and  assigns  or,  in  the  case  of governmental Persons, Persons
succeeding to the  relevant functions of  such persons; and  all references to
statutes and related regulations shall include any amendments of same and  any
successor statutes and regulations.

    References  herein  to  particular  columns,  lines  or  sections  of  any
Person's Annual Statement shall be deemed, where appropriate, to be references
to  the  corresponding  column,  line  or  section  of such Person's Quarterly
Statement, or if no  such corresponding column, line  or section exists or  if
any report form changes, then to the corresponding item referenced thereby.

                            ARTICLE II

                           THE CREDITS
                           -----------                                          

    2.1. Advances.  (a)    From  and  including  the  date  hereof  to but not
         --------                                                               
including  the  Facility  Termination  Date,  each  Lender  severally (and not
jointly) agrees, on the terms and  conditions set forth in this Agreement,  to
make Advances to the  Borrower from time to  time in amounts not  to exceed in
the aggregate at any one time  outstanding the amount of its Revolving  Credit
Commitment existing at such time.  Subject to the terms of this Agreement, the
Borrower may  borrow, repay  and reborrow  Advances at  any time  prior to the
Facility Termination Date.

         (b)  The Borrower  hereby agrees  that if  at any  time the aggregate
balance of the  Loans exceeds the  Aggregate Revolving Credit  Commitment, the
Borrower shall repay immediately its then outstanding Loans in such amount  as
may be necessary to eliminate such excess.

         (c)  The Borrower's obligation to pay the principal of, and  interest
on, the Loans shall  be evidenced by the  Notes.  Although the  Notes shall be
dated the date hereof, interest in  respect thereof shall be payable only  for
the periods  during which  the Loans  evidenced thereby  are outstanding  and,
although the  stated amount  of each  Note shall  be equal  to the  applicable
Lender's Revolving  Credit Commitment,  each Note  shall be  enforceable, with
respect to the Borrower's obligation to pay the principal amount thereof, only
to  the  extent  of  the  unpaid  principal  amount  of  the Loans at the time
evidenced thereby.

         (d)  Each  Advance  included  in  the  Loans  shall  mature,  and the
principal amount thereof and the unpaid accrued interest thereon shall be  due
and payable, on the Facility Termination Date.

         (e)  Notwithstanding the requirements of  Sections 2.2 and 2.12  that
                                                   ------------     ----        
all Loans be  made, and all  payments be applied,  ratably among the  Lenders,
subject to the  satisfaction of the  conditions specified in  Sections 4.1 and
                                                              ------------      
4.2, on the date hereof the Lenders specified on Schedule 2.1 shall make Loans
- - ---                                              ------------                   
in  the  amounts  specified  on  such  Schedule 2.1 and the aggregate proceeds
                                       ------------                             
thereof shall  be applied  as specified  on such  Schedule 2.1  so that, after
                                                  ------------                  
giving  effect  to  such  Loans  and  application  of  proceeds, the aggregate
outstanding Loans shall be allocated ratably among the Lenders as specified on
such Schedule.

    2.2. Ratable Loans.   Each Advance hereunder  shall consist of  Loans made
         -------------                                                          
from  the  several  Lenders  ratably  in  proportion  to  the ratio that their
respective Revolving Credit Commitments bear to the Aggregate Revolving Credit
Commitment.

    2.3. Types of  Advances.   The Advances  may be  Floating Rate Advances or
         ------------------                                                     
Eurodollar Advances, or a combination thereof, as selected by the Borrower  in
accordance with Sections 2.8 and 2.9.

    2.4. Commitment Fee; Reductions in Aggregate Revolving Credit  Commitment;
         ---------------------------------------------------------------------
Amendment Fee.  (a)  The Borrower  agrees to pay to the Agent for  the account
- - -------------                                                                 
of each Lender a commitment fee of one half of one percent (.50%) per annum on
the daily unborrowed portion of such Lender's Revolving Credit Commitment from
the date  hereof to  and including  the Facility  Termination Date, payable in
arrears on each Payment Date  hereafter and on the Facility  Termination Date;
provided,  however,  that  for  any  calendar  month  for which the Applicable
Eurodollar  Margin  is  determined  pursuant  to  subpart  (c)  or  (d) of the
definition thereof, then such commitment fee shall be computed at the rate  of
 .375%  per  annum.    All  accrued  commitment  fees  shall  be payable on the
effective date of any  termination of the obligations  of the Lenders to  make
Loans hereunder.

         (b)  The  Borrower  may  permanently  reduce  the Aggregate Revolving
Credit Commitment in whole, or in part ratably among the Lenders in a  minimum
aggregate amount of $1,000,000 or  any integral multiple of $1,000,000  excess
thereof, upon at least  five (5) Business Days'  written notice to the  Agent,
which  notice  shall  specify  the  amount  of  any  such reduction; provided,
                                                                     --------   
however, that the amount of the Aggregate Revolving Credit Commitment may  not
- - -------                                                                         
be reduced below the aggregate  principal amount of the outstanding  Advances.
Such  reductions  shall  be  in  addition  to reductions occurring pursuant to
Section 2.7.
- - -----------                                                                     

         (c)  On the date hereof, the Borrower shall pay to the Agent for  the
account of each Existing Lender which is also a Lender hereunder an  amendment
fee of one  half of one  percent (.50%) of  such Existing Lender's  commitment
under the Prior  Credit Agreement (i.e.  such lender's pro  rata share of  the
aggregate revolving credit commitment  of $175,000,000 under the  Prior Credit
Agreement).

    2.5. Minimum Amount of Each Advance.  Each Eurodollar Advance shall be  in
         ------------------------------                                         
the minimum amount of $1,000,000  (and in integral multiples of  $1,000,000 if
in excess thereof),  and each Floating  Rate Advance shall  be in the  minimum
amount of  $1,000,000 (and  in integral  multiples of  $1,000,000 if in excess
thereof); provided, however, that (a) any Floating Rate Advance may be in  the
amount of the unused Aggregate Revolving Credit Commitment and (b) in no event
shall more than eight (8)  Eurodollar Advances be permitted to  be outstanding
at any time.

    2.6. Optional Principal  Payments.   The Borrower  may from  time to  time
         ----------------------------                                           
pay, without penalty or premium,  all outstanding Floating Rate Advances,  or,
in  a  minimum  aggregate  amount  of  $1,000,000  or any integral multiple of
$1,000,000 in  excess thereof,  any portion  of the  outstanding Floating Rate
Advances upon at  least three (3)  Business Days' prior  notice to the  Agent.
Subject to Section 3.4 and upon like notice, a Eurodollar Advance may be  paid
           -----------                                                          
prior to the last day of the applicable Interest Period.

    2.7. Mandatory Commitment Reductions and Prepayments.  (a)  The  Aggregate
         -----------------------------------------------                        
Revolving Credit Commitment shall be automatically and permanently reduced  by
the following amounts on the following dates:

         Date                     Reduction Amount
         ----                     ----------------                              

 April 1, 1996                               5,625,000
 July 1, 1996                                5,625,000
 October 1, 1996                            11,250,000
 January 1, 1997                            11,250,000
 April 1, 1997                              11,250,000
 July 1, 1997                               11,250,000
 October 1, 1997                            11,250,000
 January 1, 1998                            11,250,000
 April 1, 1998                              11,250,000
 July 1, 1998                               11,250,000
 October 1, 1998                            11,250,000
 January 1, 1999                            11,250,000
 April 1, 1999                              11,250,000
 July 1, 1999                               11,250,000
 October 1, 1999                            11,250,000
 January 1, 2000                            11,250,000
 April 1, 2000                              11,250,000
 July 1, 2000                               11,250,000
 October 1, 2000                            11,250,000
 January 1, 2001                            11,250,000
 April 1, 2001                              11,250,000
                                           -----------                          

 Aggregate Reductions                     $225,000,000

         (b)  The  Aggregate  Revolving   Credit  Commitment  shall   also  be
automatically and  permanently reduced  on the  date of  the Borrower's or any
Subsidiary's receipt thereof in the amount  of 50% of the net proceeds  to the
Borrower or such Subsidiary of  sales of equity securities (excluding  surplus
contributions  to  Insurance   Subsidiaries).    Contemporaneously   with  any
automatic reductions in the Aggregate Revolving Credit Commitment pursuant  to
this Section 2.7(b), the Borrower shall prepay the Loans in an amount equal to
     --------------                                                             
the lesser of (A) the outstanding principal amount of Loans and (B) the amount
of  such  reduction;  provided,  however,  that  no  such  prepayment shall be
                      --------   -------                                        
required if, at such time, the Borrower could satisfy the conditions set forth
in Section 4.2(b) for the  reborrowing thereof.  The preceding  sentence shall
   --------------                                                               
not affect the obligations of the Borrower under Section 2.1(b).
                                                 --------------                 

         (c)  Mandatory commitment reductions under this Section 2.7 shall  be
                                                         -----------            
cumulative and in addition to reductions occurring pursuant to Section 2.4(b).
                                                               --------------   
Any  mandatory  commitment  reductions  under  Section  2.7(b)  or   voluntary
                                               ---------------                  
commitment  reduction  pursuant  to  Section  2.4(b)  
                                     ---------------                            

shall  be applied to the  mandatory  commitment reductions required to be made
pursuant to Section 2.7(a) in the following order:
            --------------                                                      

         (i)  50%  of  such  commitment  reduction  shall  be  applied  in the
              inverse  order  of the dates  specified for reduction in Section
                                                                       -------  
              2.7(a); and
              ------                                                            

         (ii) 50%  of  such  commitment  reduction  shall  be  applied  to the
              remaining  commitment  reductions  specified  in  Section 2.7(a)
                                                                --------------  
              on a pro-rata basis.

         (d)  Any  reduction  in  the  Aggregate  Revolving  Credit Commitment
pursuant to this Section 2.7  or otherwise shall ratably reduce  the Revolving
                 -----------                                                    
Credit Commitment of each Lender.

    2.8. Method  of  Selecting  Types  and  Interest Periods for New Advances.
         --------------------------------------------------------------------   
The  Borrower  shall  select  the  Type  of  Advance  and, in the case of each
Eurodollar Advance, the Interest Period  applicable to each Advance from  time
to time.  The Borrower shall  give the Agent irrevocable notice (a  "Borrowing
                                                                     ---------  
Notice")  not  later  than  10:00  a.m.  (Los  Angeles  time) at least one (1)
- - ------                                                                          
Business Day before the  Borrowing Date of each  Floating Rate Advance and  at
least three (3)  Business Days before  the Borrowing Date  for each Eurodollar
Advance, specifying:

         (a)  the  Borrowing  Date,  which  shall  be  a Business Day, of such
              Advance;

         (b)  the aggregate amount of such Advance;

         (c)  the Type of Advance selected; and

         (d)  in  the  case  of  each  Eurodollar Advance, the Interest Period
    applicable  thereto,  which  shall  end  on  or  prior  to  the   Facility
    Termination Date.

Not later than  noon (Los Angeles  time) on each  Borrowing Date, each  Lender
shall make available its Loan or Loans, in funds immediately available in  Los
Angeles, to the Agent at its address specified pursuant to Article XIII.   The
                                                           ------------         
Agent  will  make  the  funds  so  received  from the Lenders available to the
Borrower  at  the  Agent's  aforesaid  address  not  later than 2:00 p.m. (Los
Angeles time).

    2.9  Conversion and  Continuation of  Outstanding Advances.  Floating Rate
         -----------------------------------------------------                  
Advances  shall  continue  as  Floating  Rate  Advances  unless and until such
Floating  Rate  Advances  are  converted  into  Eurodollar  Advances.     Each
Eurodollar Advance shall continue as a Eurodollar Advance until the end of the
then  applicable  Interest  Period  therefor,  at  which  time such Eurodollar
Advance shall be automatically converted  into a Floating Rate Advance  unless
the  Borrower  shall  have  given  the  Agent a Conversion/Continuation Notice
requesting that, at the end  of such Interest Period, such  Eurodollar Advance
continue as  a Eurodollar  Advance for  the same  or another  Interest Period.
Subject to the terms of Section 2.5, the Borrower may elect from time to  time
                        -----------                                             
to convert all or any  part of an Advance of  any Type into any other  Type or
Types of Advances;  provided, however, that  any conversion of  any Eurodollar
                    --------  -------                                           
Advance shall be  made on, and  only on, the  last day of  the Interest Period
applicable thereto.  The Borrower  shall give the Agent irrevocable  notice (a
"Conversion/
- - ------------

Continuation  Notice")  of  each  conversion  of  a  Floating  Rate Advance or
- - --------------------                                                            
Eurodollar  Advance  or continuation  of a  Eurodollar Advance  not later than
10:00 a.m. (Los Angeles time) at least one (1) Business Day, in the case of  a
conversion into a Floating Rate Advance, or at least three (3) Business  Days,
in the case of a  conversion  into  or  continuation of a Eurodollar  Advance,
prior to the date of  the  requested  conversion  or continuation, specifying:

         (a)  the  requested  date,  which  shall  be  a Business Day, of such
    conversion or continuation;

         (b)  the aggregate  amount and  Type of  the Advance  which is  to be
    converted or continued; and

         (c)  the amount and  Type(s) of Advance(s)  into or as  to which such
    Advance is to be converted or continued and, in the case  of a  conversion
    into or continuation of a Eurodollar Advance, the duration of the Interest
    Period  applicable thereto, which  shall end on  or prior to  the Facility
    Termination Date.

The conversion or continuation  of any Advance shall  not be deemed to  be the
making of an Advance for purposes of Section 4.2.
                                     -----------                                

    2.10.     Changes  in  Interest  Rate,  etc.    Each Floating Rate Advance
              ---------------------------------                                 
shall bear interest at the Floating  Rate from and including the date  of such
Advance or the date on which  such Advance was converted into a  Floating Rate
Advance to (but not including) the date on which such Floating Rate Advance is
paid or converted to a Eurodollar Advance.  Changes in the rate of interest on
that portion of any  Advance maintained as a  Floating Rate Advance will  take
effect  simultaneously  with  each  change  in  the Alternate Base Rate.  Each
Eurodollar Advance shall bear interest from and including the first day of the
Interest Period applicable thereto to, but not including, the last day of such
Interest  Period  at  the  interest  rate  determined  as  applicable  to such
Eurodollar Advance.  No Interest Period may end after the Facility Termination
Date.

    2.11.     Rates  Applicable  After  Default.   Notwithstanding anything to
              ---------------------------------                                 
the contrary  contained in  Section 2.8  or 2.9,  no Advance  may be  made as,
                            -----------     ---                                 
converted into or continued as  a Eurodollar Advance (except with  the consent
of the Agents and the Required Lenders) when any Default or Unmatured  Default
has occurred  and is  continuing.   During the  continuance of  a Default  the
Required Lenders may, at their option, by notice to the Borrower (which notice
may  be  revoked  at  the  option  of the Required Lenders notwithstanding any
provision of Section 8.2 requiring unanimous consent of the Lenders to changes
             -----------                                                        
in interest  rates), declare  that each  Eurodollar Advance  and Floating Rate
Advance shall  bear interest  (for the  remainder of  the applicable  Interest
Period in the case  of Eurodollar Advances) at  a rate per annum  equal to the
Alternate Base Rate plus two percent (2%) per annum.

    2.12.     Method of Payment.   All payments  of the Obligations  hereunder
              -----------------                                                 
shall  be  made,  without  setoff,  deduction  or counterclaim, in immediately
available funds  to the  Agent at  the Agent's  address specified  pursuant to
Article XIII, or at any other  Lending Installation of the Agent specified  in
- - ------------                                                                    
writing by the Agent to the Borrower,  by noon (Los Angeles time) on the  date
when due and shall  

be applied ratably by the Agent among the Lenders.  Each payment delivered  to
the Agent for  the  account  of  any Lender shall be delivered promptly by the
Agent to such Lender in the same type of funds that the Agent received at such
Lender's  address  specified  pursuant  to  Article  XIII  or  at any  Lending
Installation  specified in  a notice received  by the Agent  from such Lender.
The  Agent  is  hereby  authorized  to  charge  the  account  of  the Borrower
maintained with  Union Bank for  each payment of  principal, interest and fees
as it becomes due hereunder.

    2.13.     Notes; Telephonic Notices.  Each Lender is hereby authorized  to
              -------------------------                                         
record the principal  amount of each  of its Loans  and each repayment  on the
schedule attached to its Note; provided, however, that neither the failure  to
                               --------  -------
so  record  nor  any  error  in  such  recordation shall affect the Borrower's
obligations hereunder or under such Note.  The Borrower hereby authorizes  the
Lenders  and  the  Agent  to  extend,  convert  or  continue  Advances, effect
selections of  Types of  Advances and  to transfer  funds based  on telephonic
notices made by any  person or persons the  Agent or any Lender  in good faith
believes to  be acting  on behalf  of the  Borrower.   The Borrower  agrees to
deliver promptly to the Agent a written confirmation, if such confirmation  is
requested by the Agent or any  Lender, of each telephonic notice signed  by an
Authorized  Officer.    If  the  written  confirmation differs in any material
respect from the action taken by the Agent and the Lenders, the records of the
Agent and the Lenders shall govern absent manifest error.

    2.14.     Interest  Payment  Dates;  Interest  and  Fee  Basis.   Interest
              ----------------------------------------------------              
accrued on each Floating Rate Advance  shall be payable on each Payment  Date,
commencing October 1, 1994,  on any date on  which a Floating Rate  Advance is
prepaid, whether due to acceleration or otherwise, and at maturity.   Interest
accrued on that  portion of the  outstanding principal amount  of any Floating
Rate Advance converted into a Eurodollar Advance on a day other than a Payment
Date shall be  payable on the  date of conversion.   Interest accrued  on each
Eurodollar Advance shall be payable on the last day of its applicable Interest
Period, on any  date on which  the Eurodollar Advance  is prepaid, whether  by
acceleration  or  otherwise,  and  at  maturity.    Interest  accrued  on each
Eurodollar Advance having  an Interest Period  longer than three  months shall
also be  payable on  the last  day of  each three-month  interval during  such
Interest Period.  Interest and commitment fees shall be calculated for  actual
days elapsed on the basis of a 360-day year.  Interest shall be deemed paid on
a date if payment is received prior to noon (Los Angeles time) on such date at
the place  of payment.   If  any payment  of principal  of or  interest on  an
Advance shall become due  on a day which  is not a Business  Day, such payment
shall be  made on  the next  succeeding Business  Day and,  in the  case of  a
principal  payment,  such  extension  of  time  shall be included in computing
interest in connection with such payment.

    2.15.     Notification  of  Advances,  Interest  Rates,  Prepayments   and
              ----------------------------------------------------------------  
Commitment Reductions.  Promptly after receipt thereof, the Agent will  notify
- - ---------------------                                                           
each Lender  of the  contents of  each Aggregate  Revolving Credit  Commitment
reduction  notice,  Borrowing  Notice,  Conversion/Continuation  Notice,   and
repayment notice received by it hereunder.  The Agent will notify each  Lender
of  the  interest  rate  applicable  to  each Eurodollar Advance promptly upon
determination of such interest rate and will give each Lender prompt notice of
each change in the Alternate Base Rate.  Each Reference Bank agrees to furnish
timely information for the purpose of determining the Eurodollar Rate.

    2.16.     Lending Installations.   Each Lender may  book its Loans  at any
              ---------------------                                             
Lending  Installation  selected  by  such  Lender  and  may change its Lending
Installation from time to  time.  All terms  of this Agreement shall  apply to
any such  Lending Installation  and the  Notes shall  be deemed  held by  each
Lender for  the benefit  of such  Lending Installation.   Each  Lender may, by
written or telex  notice to the  Agent and the  Borrower, designate a  Lending
Installation through which Loans will be made by it and for whose account Loan
payments are to be made.

    2.17.     Non-Receipt of  Funds by  the Agent.   Unless  the Borrower or a
              -----------------------------------                               
Lender, as the case may be, notifies  the Agent prior to the date on  which it
is scheduled to make payment to the Agent of (a) in the case of a Lender,  the
proceeds  of  a  Loan,  or  (b)  in  the  case  of  the Borrower, a payment of
principal, interest or fees to the Agent for the account of the Lenders,  that
it  does  not  intend  to  make  such  payment, the Agent may assume that such
payment has been made.  The Agent may, but shall not be obligated to, make the
amount of such  payment available to  the intended recipient  in reliance upon
such assumption.   If the Borrower  has not in  fact made such  payment to the
Agent, the  Lenders shall,  on demand  by the  Agent, repay  to the  Agent the
amount so made available together with interest thereon in respect of each day
during the period commencing on the date such amount was so made available  by
the Agent until the  date the Agent recovers  such amount at a  rate per annum
equal to the Federal Funds Effective Rate for such day.  If any Lender has not
in fact made such payment to the Agent, such Lender or the Borrower shall,  on
demand by the Agent, repay to the Agent the amount so made available  together
with interest thereon in respect of  each day during the period commencing  on
the date such  amount was so  made available by  the Agent until  the date the
Agent recovers such  amount at a  rate per annum  equal to (a)  in the case of
payment by a Lender, the Federal Funds Effective Rate for such day, or (b)  in
the case  of payment  by the  Borrower, the  interest rate  applicable to  the
relevant Loan.

    2.18.     Taxes.  (a)  Any  payments  made  by  the  Borrower  under  this
              -----                                                             
Agreement  shall  be  made  free  and  clear  of,  and  without  deduction  or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or  hereafter  imposed,  levied,  collected,  withheld  or  assessed  by   any
Governmental Authority, excluding net income taxes and franchises taxes or any
other tax  based upon  any income  imposed on  an Agent  or any  Lender by any
jurisdiction in which  such Agent or  such Lender is  incorporated or has  its
principal place of business.  If any such non-excluded taxes, levies, imposts,
duties, charges,  fees deductions  or withholdings  ("Non-Excluded Taxes") are
                                                      ------------------        
required to be  withheld from any  amounts payable to  an Agent or  any Lender
hereunder,  the  amounts  so  payable  to  such  Agent or such Lender shall be
increased to the extent necessary to yield to such Agent or such Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts  payable
hereunder at  the rates  or in  the amounts  specified in  or pursuant to this
Agreement;  provided,  however,  that  the  Borrower  shall not be required to
            --------   -------                                                  
increase any such amounts  payable to any Lender  that is not organized  under
the laws of the U.S.  or a state thereof if  such Lender fails to comply  with
the requirements of  paragraph (b) of  this Section 2.18.   Whenever any  Non-
                                            ------------                        
Excluded  Taxes  are  payable  by  the  Borrower,  as  promptly as practicable
thereafter the Borrower shall  send to such Agent  for its own account  or for
the  account  of  such  Lender,  as  the  case  may be, a certified copy of an
original official receipt  received by the  Borrower showing payment  thereof.
If  the  Borrower  fails  to  pay  any  Non-Excluded  Taxes  when  due  to the
appropriate  taxing  authority  or  fails  to  remit to the Agent the required
receipts or other required documentary evidence, the Borrower shall  indemnify
the Agents 

and  the  Lenders  for  any  incremental taxes,  interest or penalties that may
become  payable  by any  Agent or any  Lender as a  result of any such failure.
The  agreements  in  this  Section 2.18  shall  survive the termination of this
                           ------------                                         
Agreement and the payment of all other amounts payable hereunder.

         (b)  At least  five Business  Days prior  to the  first date on which
interest or fees  are payable hereunder  for the account  of any Lender,  each
Lender  that  is  not  incorporated  under  the  laws  of the United States of
America,  or  a  state  thereof,  agrees  that  it will deliver to each of the
Borrower and  the Agent  two duly  completed copies  of United States Internal
Revenue Service Form 1001 or 4224, certifying in either case that such  Lender
is entitled  to receive  payments under  this Agreement  and the Notes without
deduction or  withholding of  any United  States federal  income taxes.   Each
Lender which so delivers a Form 1001 or 4224 further undertakes to deliver  to
each of the Borrower  and the Agent two  additional copies of such  form (or a
successor form) on or before the date that such form expires (currently, three
successive calendar years for Form 1001  and one calendar year for Form  4224)
or becomes obsolete or after the occurrence of any event requiring a change in
the most  recent forms  so delivered  by it,  and such  amendments thereto  or
extensions or renewals thereof as may be reasonably requested by the  Borrower
or the Agent, in each case certifying that such Lender is entitled to  receive
payments under this Agreement and  the Notes without deduction or  withholding
of any United States federal income taxes, unless an event (including, without
limitation, any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders  all
such  forms  inapplicable  or  which  would  prevent  such  Lender  from  duly
completing and delivering  any such form  with respect to  it and such  Lender
advises  the  Borrower  and  the  Agent  that  it  is not capable of receiving
payments without any deduction or withholding of United States federal  income
tax.

    2.19.     Agents' Fees.  The Borrower shall pay to the Agents those  fees,
              ------------                                                      
in  addition  to  the  commitment  fees  referenced  in Section 2.4(a), in the
                                                        --------------          
amounts and  at the  times separately  agreed to  between the  Agents and  the
Borrower.

                                       
                                  ARTICLE III
                                       
                            CHANGE IN CIRCUMSTANCES
                            -----------------------                             

    3.1. Yield Protection.   If,  after the  date hereof,  the adoption of, or
         ----------------                                                       
any  change  in,  any  law  or  any  governmental  or quasi-governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law),  or  any  interpretation  thereof,  or  the  compliance  of  any  Lender
therewith,

         (a)  subjects any  Lender or  any applicable  Lending Installation to
any tax, duty, charge or withholding on or from payments due from the Borrower
(excluding taxation  of the  overall net  income of  any Lender  or applicable
Lending  Installation  imposed  by  the  jurisdiction  in which such Lender or
Lending Installation is incorporated or has its principal place of  business),
or changes the basis of taxation of principal, interest or any other  payments
to any Lender or  Lending 

Installation  in  respect  of its  Eurodollar  Loans  or other  amounts due it
hereunder in respect thereof, or

         (b)  imposes or increases or deems applicable in connection with  its
Eurodollar Loans any reserve, assessment, insurance charge, special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, any Lender  or any applicable Lending Installation  (other
than reserves and assessments taken  into account in determining the  interest
rate applicable to Eurodollar Advances), or

         (c)  imposes any other condition the  result of which is to  increase
the  cost  to  any  Lender  or  any applicable Lending Installation of making,
funding or maintaining loans or reduces any amount receivable by any Lender or
any applicable Lending  Installation in connection  with Eurodollar Loans,  or
requires any Lender or any applicable Lending Installation to make any payment
calculated by reference  to the amount  of Eurodollar Loans  held, or interest
thereon received by it, by an amount deemed material by such Lender,

then, within 15  days of demand  by such Lender,  the Borrower shall  pay such
Lender that  portion of  such increased  expense incurred  or resulting  in an
amount  received  which  such  Lender  determines  is  attributable to making,
funding and  maintaining its  Eurodollar Loans  and its  Commitment in respect
thereof.

    3.2. Changes in Capital Adequacy Regulations.  If a Lender determines  the
         ---------------------------------------                                
amount of capital required  or expected to be  maintained by such Lender,  any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a  Change, then, within 15 days of demand  by such
Lender, the Borrower shall pay such Lender the amount necessary to  compensate
for any  shortfall in  the rate  of return  on the  portion of  such increased
capital which such  Lender determines is  attributable to this  Agreement, its
Loans or  its obligation  to make  Loans hereunder  (after taking into account
such Lender's policies as to capital adequacy).  "Change" means (a) any change
                                                  ------                        
after the date of this Agreement in the Risk-Based Capital Guidelines, or  (b)
any adoption of or change in any other law, governmental or quasi-governmental
rule, regulation, policy, guideline, interpretation, or directive (whether  or
not having the force  of law) after the  date of this Agreement  which affects
the amount of capital required or  expected to be maintained by any  Lender or
any Lending Installation  or any corporation  controlling any Lender.   "Risk-
                                                                         -----  
Based  Capital  Guidelines"  means  (a)  the  risk-based capital guidelines in
- - --------------------------                                                      
effect  in  the  United  States  on  the  date  of  this  Agreement, including
transition rules, and (b) the corresponding capital regulations promulgated by
regulatory authorities outside  the United States  implementing the July  1988
report of the Basle Committee on Banking Regulation and Supervisory  Practices
entitled  "International  Convergence  of  Capital  Measurements  and  Capital
Standards," including transition rules, and any amendments to such regulations
adopted prior to the date of this Agreement.

    3.3. Availability of  Types of  Advances.   If any  Lender determines that
         -----------------------------------                                    
maintenance  of  its  Eurodollar  Advances  at a suitable Lending Installation
would violate any applicable law,  rule, regulation, or directive, whether  or
not having the  force of law,  or if the  Required Lenders determine  that (a)
deposits of a type and maturity appropriate to match fund Eurodollar  Advances
are not available, or  (b) the interest rate  applicable to a Type  of Advance
does not accurately or fairly reflect  

the cost  of making or maintaining  such Advance, then the Agent shall suspend
the availability of the affected Type of Advance  and require  any  Eurodollar
Advances of the affected Type to be repaid.

    3.4. Funding  Indemnification.    If  any  payment of a Eurodollar Advance
         ------------------------                                               
occurs on a date which is not the last day of the applicable Interest  Period,
whether  because  of  acceleration,  prepayment  or otherwise, or a Eurodollar
Advance is not made on the date specified by the Borrower for any reason other
than default by the  Lenders, the Borrower will  indemnify the Agent and  each
Lender for  any loss  or cost  incurred by  it resulting therefrom, including,
without limitation,  any loss  or cost  in liquidating  or employing  deposits
acquired to fund or maintain the Eurodollar Advance.

    3.5. Lender Statements;  Survival of  Indemnity. To  the extent reasonably
         ------------------------------------------                             
possible, each Lender shall  designate an alternate Lending  Installation with
respect to its Eurodollar Advances to reduce any liability of the Borrower  to
such Lender under  Sections 3.1 and  3.2 or to  avoid the unavailability  of a
                   ---------------------                                        
Type  of  Advance  under  Section  3.3,  so  long  as  such designation is not
                          ------------                                          
disadvantageous to such Lender.  Each Lender shall deliver a written statement
of such Lender  to the Borrower  (with a copy  to the Agent)  as to the amount
due, if any, under Section 3.1, 3.2 or 3.4.  Such written statement shall  set
                   -----------------------                                      
forth in reasonable detail the calculations upon which such Lender  determined
such amount and shall be final, conclusive and binding on the Borrower in  the
absence  of  manifest  error.    Determination  of  amounts payable under such
Sections  in  connection  with  a  Eurodollar  Advances shall be calculated as
though  each  Lender  funded  its  Eurodollar  Loans through the purchase of a
deposit  of  the  type  and  maturity  corresponding  to the deposit used as a
reference in determining the Eurodollar Rate applicable to such Loan,  whether
in fact that is the case or not.  Unless otherwise provided herein, the amount
specified in the written  statement of any Lender  shall be payable on  demand
after receipt by the  Borrower of the written  statement.  The obligations  of
the Borrower  under Sections  3.1, 3.2  and 3.4  shall survive  payment of the
                    ---------------------------                                 
Obligations and termination of this Agreement.

                                       
                                  ARTICLE IV
                                       
                              CONDITIONS PRECEDENT
                              --------------------                              

    4.1. Effectiveness  of  this  Agreement  and  the Initial Loans Hereunder.
         --------------------------------------------------------------------   
The amendments to the Prior Credit Agreement embodied in this Agreement  shall
not be effective  (in which case  the Prior Credit  Agreement shall remain  in
full force and effect) and the Lenders shall have no obligation to make  Loans
hereunder unless  and until  the Borrower  has furnished  the following to the
Agents with  sufficient copies  for the  Lenders and  the other conditions set
forth below have been satisfied, in each case on or before December 31, 1995:

         (a)  Charter Documents.  Copies  of the certificate of  incorporation
              -----------------                                                 
of  the  Borrower,  together  with  all  amendments, and a certificate of good
standing,  both  certified  by  the  appropriate  governmental  officer in its
jurisdiction of incorporation.

         (b)  By-Laws and Resolutions.  Copies, certified by the Secretary  or
              -----------------------                                           
Assistant  Secretary  of  the  Borrower,  of  its  by-laws and of its Board of
Directors' resolutions authorizing the execution, delivery and performance  of
the Loan Documents to which the Borrower is a party.

         (c)  Secretary's Certificate.   An  incumbency certificate,  executed
              -----------------------                                           
by the Secretary or Assistant Secretary of the Borrower, which shall  identify
by name  and title  and bear  the signature  of the  officers of  the Borrower
authorized to sign the Loan  Documents and to make borrowings  hereunder, upon
which certificate the Agent  and the Lenders shall  be entitled to rely  until
informed of any change in writing by the Borrower.

         (d)  Officer's  Certificate.    A  certificate,  dated as of the date
              ----------------------                                            
hereof, signed by an Authorized Officer of the Borrower, in form and substance
satisfactory to the Agent, to the effect that: (i) as of the date hereof (both
before  and  after  giving  effect  to  the  making of the Loans hereunder) no
Default  or  Unmatured  Default  has  occurred  and is continuing; (ii) (A) no
injunction or temporary restraining order  which would prohibit the making  of
the Loans, and (B) no litigation (other than litigation disclosed on  Schedule
                                                                      --------  
5.8) which could reasonably be expected to have a Material Adverse Effect,  is
- - ---                                                                             
pending, issued or,  to the best  of such Person's  knowledge, threatened; and
(iii) the Borrower and Subsidiaries have satisfied, or are in compliance with,
all regulatory capital or other financial requirements or demands imposed upon
them.

         (e)  Legal Opinions.   Written  opinions of  Gibson Dunn  & Crutcher,
              --------------                                                    
counsel to the Borrower,  and John R. Bollington,  the general counsel of  the
Borrower, in each  case addressed to  the Agents and  the Lenders in  form and
substance acceptable to the Agents.

         (f)  Notes.   Promissory notes  payable to  the order  of each of the
              -----                                                             
Lenders duly  executed by  the Borrower  (upon receipt  of which each Existing
Lender will surrender its note delivered under the Prior Credit Agreement  for
cancellation).

         (g)  Other Loan Documents.   Originals of this Agreement  executed by
              --------------------                                              
each of the Borrower, the Agents and each Lender and fully executed  originals
of the  Pledge Amendment,  both of  which shall  be in  full force and effect,
together with  all schedules,  exhibits, certificates,  instruments, opinions,
documents and financial  statements required to  be delivered pursuant  hereto
and thereto.

         (h)  Payment of Certain  Amounts.  The  Borrower shall have  paid the
              ---------------------------                                       
Agent  for  the  ratable  account  of  the  Existing  Lenders all interest and
commitment fees accrued through the  date hereof pursuant to the  Prior Credit
Agreement.

         (i)  Reinsurance.    Evidence  satisfactory  to  the Required Lenders
              -----------                                                       
that the Borrower and its Insurance Subsidiaries have obtained reinsurance  of
risks  insured  by  the  Insurance  Subsidiaries  in  amounts  and  on   terms
substantially comparable to those in effect on July 1, 1995.

         (j)  Legislation.    No  legislation  shall  have  been enacted or be
              -----------                                                       
pending  which,  in  the  Required  Lenders'  judgment,  adversely affects the
Lenders' interests to a material extent.

         (k)  Regulatory Approvals.   Receipt  of any  required approvals from
              --------------------                                              
the  Insurance  Department  of  the  State  of  California and exemptions with
respect to the  Loan Documents and  the transactions contemplated  thereby and
all other required regulatory approvals.

         (l)  Other.  Such other documents as the Agents, any Lender or  their
              -----                                                             
counsel may have reasonably requested.

    4.2. Each Future Advance.  The Lenders  shall not be required to make  any
         -------------------                                                    
Advance unless on the applicable Borrowing Date:

         (a)  There  exists  no  Default  or  Unmatured Default and none would
result from such Advance;

         (b)  The representations  and warranties  contained in  Article V and
                                                                 ---------      
in the other  Loan Documents are  true and correct  as of such  Borrowing Date
except for changes in  the Schedules hereto (submitted  to the Agent and  each
Lender in writing by the  Borrower) reflecting transactions permitted by  this
Agreement; and

         (c)  A Borrowing Notice shall have been properly submitted.

    Each Borrowing Notice with respect  to each such Advance shall  constitute
a representation and warranty by the Borrower that the conditions contained in
Section 4.2  have been  satisfied.   Any Lender  may require  a duly completed
- - -----------                                                                     
compliance certificate in substantially the  form of Exhibit C as  a condition
                                                     ---------                  
to making an Advance.

                            ARTICLE V

                  REPRESENTATIONS AND WARRANTIES
                  ------------------------------                   

    The Borrower represents and warrants to the Lenders that:

    5.1.  Corporate Existence  and Standing.   Each  of the  Borrower and each
          ---------------------------------                                   
Subsidiary is a  corporation duly incorporated,  validly existing and  in good
standing under the laws of its respective jurisdiction of incorporation and is
duly qualified  and in  good standing  as a  foreign corporation  and is  duly
authorized to conduct its business in each jurisdiction in which its  business
is  conducted  or  proposed  to  be  conducted  where  the  absence  of   such
authorization would have a Material Adverse Effect.

    5.2.  Authorization and Validity.   The Borrower  has all requisite  power
          --------------------------                           
and authority (corporate and otherwise) and legal right to execute and deliver
(or file, as  the case may  be) each of  the Loan Documents  to which it  is a
party and to perform its  obligations thereunder.  The execution  and delivery
(or filing, as the case may be) by the Borrower of the Loan Documents to which
it is a party and the performance of its obligations thereunder have been duly
authorized by proper corporate  proceedings and the Loan  Documents constitute
legal, valid and binding

obligations of  the Borrower  enforceable against  the Borrower  in accordance
with  their  terms,  except  as  enforceability  may be limited by bankruptcy,
insolvency  or  similar  laws  affecting  the enforcement of creditors' rights
generally.

    5.3.  Compliance  with  Laws  and   Contracts.    The  Borrower   and  its
          ---------------------------------------
Subsidiaries  have  complied  in  all  material  respects  with all applicable
statutes,  rules,  regulations,  orders  and  restrictions  of any domestic or
foreign  government   or  any   instrumentality  or   agency  thereof,  having
jurisdiction over the conduct of their respective businesses or the  ownership
of their respective properties, except for compliance with Proposition 103 and
except where the failure to so comply could not reasonably be expected to have
a Material Adverse Effect.  Neither the execution and delivery by the Borrower
and  each  Subsidiary  of  the  Loan  Documents  to  which  it is a party, the
application  of  the  proceeds  of   the  Loans,  or  any  other   transaction
contemplated in the Loan Documents, nor compliance with the provisions of  the
Loan Documents, will, or at the relevant time did, (a) violate any law,  rule,
regulation  (including  Regulation  G,  T,  U  or  X),  order, writ, judgment,
injunction, decree or award binding on  the Borrower or any Subsidiary or  the
Borrower's  or   any  Subsidiary's   charter,  articles   or  certificate   of
incorporation  or  by-laws,  (b)  violate  the  provisions  of  or require the
approval or consent of any party to any indenture, instrument or agreement  to
which the Borrower or any Subsidiary is a party or is subject, or by which it,
or  its  property,  is  bound,  or  conflict  with  or  constitute  a  default
thereunder, or result in  the creation or imposition  of any Lien (other  than
Liens  permitted  by  the  Loan  Documents)  in,  of or on the property of the
Borrower  or  any  Subsidiary  pursuant  to  the  terms of any such indenture,
instrument or agreement, or (c) require any consent of the stockholders of any
Person, except  for any  violation of,  or failure  to obtain  an approval  or
consent required under, any such indenture, instrument or agreement that could
not reasonably be expected to have a Material Adverse Effect.

    5.4.  Governmental Consents.  No order, consent, approval,  qualification,
          ---------------------                                                 
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, or other action in respect of, any court,  governmental
or  public  body  or  authority,  or  any  subdivision thereof, any securities
exchange  or  any  other  Person  is  or  at the relevant time was required to
authorize, or is or at the  relevant time was required in connection  with the
execution,  delivery,  consummation  or  performance  of,  or  the   legality,
validity, binding effect or enforceability of, any of the Loan Documents,  the
application  of  the  proceeds  of  the  Loans  or  the  consummation  of  any
transaction contemplated in the Loan Documents.

    5.5.  Financial  Statements.    The  Borrower  has heretofore furnished to
          ---------------------                                                 
each of the Lenders (a)  the December 31, 1994 audited  consolidated financial
statements  of  the   Borrower  and  its   Subsidiaries,  (b)  the   unaudited
consolidated financial statements of the Borrower and its Subsidiaries through
September  30,  1995,  (c)  the  December  31,  1994  Annual Statements of the
Insurance Subsidiaries, and (d) the September 30, 1995 Quarterly Statements of
the Insurance Subsidiaries (collectively,  the "Financial Statements").   Each
                                                --------------------            
of  the  Financial  Statements  was  prepared  in  accordance  with  Agreement
Accounting  Principles  or  SAP,  as  applicable,  and  fairly  presents   the
consolidated  financial  condition  and  operations  of  the  Borrower and its
Subsidiaries at such  dates and the  consolidated results of  their operations
for the respective periods then ended  (except, in the case of such  unaudited
statements, for normal year-end audit adjustments); provided, however, that
                                                    --------  -------

the financial statements referred to in subsections (c) and (d) above are  not
prepared on a consolidated basis.

    5.6.  Material  Adverse  Change.    No  material  adverse  change  in  the
          -------------------------                                             
business, Property, condition (financial or otherwise), performance, prospects
or results  of operations  of the  Borrower and  its Subsidiaries has occurred
since September 30, 1995.

    5.7.  Taxes.  Except as  set forth on Schedule  5.7, (a) the Borrower  and
          -----                           -------------                         
its Subsidiaries have  filed or caused  to be filed  on a timely  basis and in
correct form all United States federal and applicable foreign, state and local
tax returns and all other tax returns which are required to be filed and  have
paid all  taxes due  pursuant to  said returns  or pursuant  to any assessment
received by the Borrower or any Subsidiary, except such taxes, if any, as  are
being contested  in good  faith and  as to  which adequate  reserves have been
provided in accordance with Agreement Accounting Principles and as to which no
Lien exists, (b) there are  no pending audits or investigations  regarding the
Borrower's or its Subsidiaries' federal,  foreign, state or local tax  returns
and (c) no  tax liens have  been filed and  no claims are  being asserted with
respect  to  any  such  taxes  which  could  reasonably  be expected to have a
Material Adverse Effect.  The charges,  accruals and reserves on the books  of
the  Borrower  and  its  Subsidiaries  in  respect  of  any  taxes  or   other
governmental charges are in accordance with Agreement Accounting Principles.

    5.8.  Litigation  and  Contingent  Obligations.    Except  as set forth on
          ----------------------------------------                              
Schedule  5.8,  there  is  no  litigation, arbitration, proceeding, inquiry or
- - -------------                                                                   
governmental  investigation  (including,  without  limitation,  by the Federal
Trade  Commission)  pending  or,  to  the  knowledge of any of their officers,
threatened against or affecting the Borrower or any Subsidiary or any of their
respective Properties which  could reasonably be  expected to have  a Material
Adverse Effect or to prevent, enjoin  or unduly delay the making of  the Loans
or Advances under this Agreement.  As of the date hereof neither the  Borrower
nor any Subsidiary has any material contingent obligations except as set forth
on Schedule 5.8.
   ------------                                                                 

    5.9.  Capitalization.  Schedule 5.9  contains (a) an accurate  description
          --------------   ------------                                         
of  the  Borrower's  capitalization  and  (b)  an  accurate list of all of the
existing Subsidiaries, in each case as of the date of this Agreement,  setting
forth their respective  jurisdictions of incorporation  and the percentage  of
their capital stock owned by the  Borrower or other Subsidiaries.  All  of the
issued and outstanding  shares of capital  stock of the  Borrower and of  each
Subsidiary have been duly authorized and validly issued and are fully paid and
non-assessable, and all such shares of  each Subsidiary are free and clear  of
all Liens, other than the Liens created by the Loan Documents.  No  authorized
but unissued or treasury shares of capital stock of any Subsidiary are subject
to any option, warrant, right to call or commitment of any kind or  character.
Except as set forth on Schedule  5.9, no Subsidiary has any outstanding  stock
                       -------------                                            
or securities convertible into or  exchangeable for any shares of  its capital
stock, or  any right  issued to  any Person  (either preemptive  or other)  to
subscribe for  or to  purchase, or  any options  for the  purchase of,  or any
agreements providing  for the  issuance (contingent  or otherwise)  of, or any
calls, commitments or claims of any  character relating to any of its  capital
stock or any stock or securities  convertible into or exchangeable for any  of
its capital  stock other  than as  expressly set  forth in  the certificate or
articles of incorporation  of such Subsidiary.   Neither the  Borrower nor any
Subsidiary  is  subject  to  any  obligation  (contingent  or  otherwise)   to
repurchase or

otherwise acquire or retire any shares of its capital stock or any convertible
securities, rights or options of the type described in the preceding  sentence
except as otherwise set forth on Schedule 5.9.
                                 ------------                                   

    5.10. ERISA.  Except as disclosed on Schedule 5.10, as of the date  hereof
          -----                          -------------                          
(a)  neither  the  Borrower  nor  any  other  member  of  the Controlled Group
maintains  any  Single  Employer  Plans,  and  no Single Employer Plan has any
Unfunded Liability  and (b) neither  the Borrower nor any other member  of the
Controlled  Group   maintains,  or   is  obligated   to  contribute   to,  any
Multiemployer Plan or  has incurred, or  is reasonably expected  to incur, any
withdrawal liability  to any  Multiemployer Plan.   Each  Plan complies in all
material respects  with all  applicable requirements  of law  and regulations.
Neither the Borrower nor any member of the Controlled Group has, with  respect
to any Plan, failed to make any contribution or pay any amount required  under
Section 412 of  the Code or  Section 302 of  ERISA or the  terms of such Plan.
There are no pending or, to the knowledge of the Borrower, threatened  claims,
actions, investigations or lawsuits  against any Plan, any  fiduciary thereof,
or the Borrower or any member of the Controlled Group with respect to a  Plan.
The Borrower  has not  engaged in  any prohibited  transaction (as  defined in
Section 4975 of the Code or Section 406 of ERISA) in connection with any  Plan
which would subject the Borrower to  any material liability.  Within the  last
five years neither  the Borrower nor  any member of  the Controlled Group  has
engaged in  a transaction  which resulted  in a  Single Employer  Plan with an
Unfunded  Liability  being  transferred  out  of  the  Controlled  Group.   No
Termination Event has occurred or is reasonably expected to occur with respect
to any Plan which is subject to Title IV of ERISA.

    5.11. Defaults.    No  Default  or  Unmatured  Default has occurred and is
          --------                                                              
continuing.

    5.12. Federal  Reserve  Regulations.     Neither  the  Borrower  nor   any
          -----------------------------                                         
Subsidiary is engaged, directly or  indirectly, principally, or as one  of its
important  activities,  in  the  business  of  extending, or arranging for the
extension of, credit for the  purpose of purchasing or carrying  Margin Stock.
No part  of the  proceeds of  any Loan  will be  used in  a manner which would
violate, or result in a violation of, Regulation G, Regulation T, Regulation U
or Regulation X.  Neither the making of any Advance hereunder, the use of  the
proceeds thereof, nor any other  aspect of the financing contemplated  hereby,
will  violate  or  be  inconsistent  with  the  provisions  of  Regulation  G,
Regulation T, Regulation U or Regulation X.  Following the application of  the
proceeds  of  the  Loans,  less  than  25%  of the value (as determined by any
reasonable method) of  the assets of  the Borrower and  its Subsidiaries which
are subject to any limitation on sale, pledge, or other restriction  hereunder
taken as a  whole have been,  and will continue  to be, represented  by Margin
Stock.

    5.13. Investment Company.  Neither the Borrower nor any Subsidiary is,  or
          ------------------                                                    
after giving  effect to  any Advance  will be,  an "investment  company" or  a
company "controlled"  by an  "investment company"  within the  meaning of  the
Investment Company Act of 1940, as amended.

    5.14. Certain Fees.  No broker's or finder's fee or commission was, is  or
          ------------                                                          
will be payable by the Borrower or  any Subsidiary with respect to any of  the
transactions contemplated by  this Agreement.   The Borrower hereby  agrees to
indemnify the Agents and the Lenders against and agrees that it will hold each
of them harmless from any claim, demand or liability for broker's or  finder's
fees  or  commissions  alleged  to  have  been  incurred  by  the  Borrower in
connection with any

of  the  transactions  contemplated   by  this  Agreement  and   any  expenses
(including, without limitation, attorneys' fees and time charges of  attorneys
for the Agents or any Lender,  which attorneys may be employees of  the Agents
or any Lender) arising in connection with any such claim, demand or liability.

    5.15. Solvency.    As  of  the  date  hereof,  after  giving effect to the
          --------                                                              
consummation of the  transactions contemplated by  the Loan Documents  and the
payment of all fees, costs and  expenses payable by the Borrower with  respect
to the transactions contemplated by  the Loan Documents, each of  the Borrower
and each Subsidiary is Solvent.

    5.16. Ownership of Properties.  Except  as set forth on Schedule  5.16, as
          -----------------------                           --------------      
of  the  date  hereof  the  Borrower  and  its  Subsidiaries have a subsisting
leasehold interest in or good and  marketable title, free of all Liens,  other
than those permitted by  Section 6.16 or by  any of the other  Loan Documents,
                         ------------                                           
to, all of the properties and assets reflected in the Financial Statements  as
being owned by it, except  for assets sold, transferred or  otherwise disposed
of  in  the  ordinary  course  of  business  since  the  date thereof.  To the
knowledge of the Borrower, there are no actual, threatened or alleged defaults
with respect to any  leases of real property  under which the Borrower  or any
Subsidiary is lessee or  lessor which could reasonably  be expected to have  a
Material Adverse  Effect.   The Borrower  and its  Subsidiaries own or possess
rights to use all licenses, patents, patent applications, copyrights,  service
marks,  trademarks  and  trade  names  necessary  to continue to conduct their
business as heretofore conducted, and no such license, patent, service mark or
trademark has been declared invalid, been limited by order of any court or  by
agreement  or  is  the  subject  of  any infringement, interference or similar
proceeding or challenge, except for proceedings and challenges which could not
reasonably be expected to have a Material Adverse Effect.

    5.17. Employee Controversies.   There  are no  strikes, work  stoppages or
          ----------------------                                                
controversies pending or threatened between the Borrower or any Subsidiary and
any of its employees, other  than employee grievances arising in  the ordinary
course of business, which, in the aggregate, could not reasonably be  expected
to have a Material Adverse Effect.

    5.18. Material Agreements.  Neither the  Borrower nor any Subsidiary is  a
          -------------------                                                   
party  to  any  agreement  or  instrument  or  subject to any charter or other
corporate restriction which  could reasonably be  expected to have  a Material
Adverse Effect.  Neither the Borrower nor any Subsidiary is in default in  the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any  agreement to which it  is a party, which  default
could reasonably  be expected  to have  a Material  Adverse Effect.   The  AIG
Agreement is in  full force and  effect and has  not been amended  or modified
except as disclosed to the Lenders.  No party is in material breach thereof.

    5.19.  Environmental   Laws.     There  are   no  claims,  investigations,
           --------------------                                                 
litigation,  administrative  proceedings,  notices,  requests for information,
whether pending or threatened, or judgments or orders asserting violations  of
applicable federal, state and local environmental, health and safety statutes,
regulations,  ordinances,  codes,  rules,  orders,  decrees,  directives   and
standards ("Environmental Laws") or relating to any toxic or hazardous  waste,
            ------------------                                                  
substance  or  chemical  or  any  pollutant,  contaminant,  chemical  or other
substance defined or regulated pursuant to any

Environmental Law, including,  without limitation, asbestos,  petroleum, crude
oil  or  any  fraction  thereof  ("Hazardous  Materials") asserted against the
                                   --------------------                         
Borrower or any of its Subsidiaries which could reasonably be expected to have
a Material Adverse Effect.

    5.20.  Insurance.    The  Borrower  and  its  Subsidiaries  maintain  with
           ---------                                                            
financially  sound  and  reputable  insurance  companies  insurance  on  their
Property in such amounts and covering  such risks as is consistent with  sound
business practice.

    5.21. Security.  The Pledge Agreement is effective to create and give  the
          --------                                                              
Agent, for the benefit  of the Lenders, as  security for the repayment  of the
obligations secured thereby, a  legal, valid, perfected and  enforceable first
priority Lien upon and security interest in the capital stock pledged thereby.

    5.22. Insurance Licenses.  Schedule 5.22 attached hereto lists all of  the
          ------------------   -------------                                    
jurisdictions in which any Insurance  Subsidiary holds active Licenses and  is
authorized to transact  property and casualty  insurance business.   Except as
set forth on Schedule 5.22, no such License is the subject of a proceeding for
             -------------                                                      
suspension or revocation, there is no sustainable basis for such suspension or
revocation, and to the Borrower's  knowledge no such suspension or  revocation
has  been  threatened  by  any  Governmental  Authority.    Schedule 5.22 also
                                                            -------------       
indicates  the  line  or  lines  of  insurance  in  which  each such Insurance
Subsidiary is permitted to engage with respect to each License therein listed.

    5.23.  Disclosure.    None  of  the  (a)  information, exhibits or reports
           ----------                                                           
furnished or to be furnished in  writing by the Borrower or any  Subsidiary to
the  Agent,  the  Documentary  Agent  or  any  Lender  in  connection with the
negotiation of the Loan Documents, or (b) representations or warranties of the
Borrower contained in  this Agreement, the  other Loan Documents  or any other
document,  certificate  or  written  statement  furnished  to  the  Agent, the
Documentary  Agent  or  the  Lenders  by  or  on behalf of the Borrower or any
Subsidiary for use  in connection with  the transactions contemplated  by this
Agreement, as the case may be, when considered as a whole, contained, contains
or will contain any untrue statement  of a material fact or omitted,  omits or
will omit to state a material  fact necessary in order to make  the statements
contained herein or  therein not misleading  in light of  the circumstances in
which the same were made.  There is no fact known to the Borrower on the  date
hereof (other than matters of a general economic nature) that has had or could
reasonably be expected to have a Material Adverse Effect and that has not been
disclosed  herein  or  in  such  other  documents, certificates and statements
furnished  to  the  Lenders  for  use  in  connection  with  the  transactions
contemplated by this Agreement.

                            ARTICLE VI

                            COVENANTS
                            ---------                                           

    During  the  term  of  this  Agreement,  unless the Required Lenders shall
otherwise consent in writing:

    6.1.  Financial Reporting.   The  Borrower will  maintain, for  itself and
          -------------------                                                   
each  Subsidiary,  a  system  of  accounting  established  and administered in
accordance  with   generally  accepted   accounting  principles   or  SAP  (as
applicable), consistently applied, and furnish  to the Agent on behalf  of the
Lenders:

          (a)  As soon as  practicable and in  any event within  90 days after
the close of  each of its  fiscal years, an  unqualified auditor's opinion  of
independent certified public accountants, acceptable to the Lenders,  prepared
in accordance with generally accepted accounting principles on a  consolidated
basis for itself and its Subsidiaries, including a balance sheet as of the end
of  such  period,  related  profit  and  loss  and  reconciliation  of surplus
statements,  and  a  statement  of  cash  flows, accompanied by (i) any letter
prepared by said accountants  regarding reportable conditions with  respect to
Borrower, (ii)  a statement  of said  accountants that,  in the  course of the
examination necessary for their audit opinion, they have obtained no knowledge
of any financial  or accounting Default  or Unmatured Default,  or if, in  the
opinion  of  such  accountants,  any  such  Default or Unmatured Default shall
exist,  stating  the  nature  and  status  thereof,  (iii) a statement of such
accountants identifying any  variations between generally  accepted accounting
principles in effect on the date hereof and the generally accepted  accounting
principles utilized in the preparation  of such financial statements and  (iv)
an acknowledgment from  said accountants that  the Lenders intend  to use such
financial  statements  as  part  of  their  monitoring  of the credit extended
hereunder and authorizing such use

          (b)  As soon as practicable and in any event within sixty (60)  days
after the close  of the first  three quarterly periods  of each of  its fiscal
years, for itself and its Subsidiaries, a consolidated unaudited balance sheet
as at  the close  of each  such period  and consolidated  profit and  loss and
reconciliation of  surplus statements  and a  statement of  cash flows for the
period from the beginning of such fiscal year to the end of such quarter,  all
prepared  in  accordance  with  generally  accepted  accounting principles for
interim financial  information on  a consolidated  basis and  certified by its
chief financial officer.

          (c)  (i)  Upon  the  earlier  of  (A)  fifteen  (15)  days after the
regulatory filing date or (B) seventy-five  (75) days after the close of  each
fiscal year of  each Insurance Subsidiary,  copies of the  Annual Statement of
each of the Insurance Subsidiaries, certified by the president, secretary  and
treasurer for each such Insurance  Subsidiary and prepared on the  NAIC annual
statement blanks (or such other form as shall be required by the  jurisdiction
of incorporation of each such Insurance Subsidiary), all such statements to be
prepared in accordance  with SAP consistently  applied throughout the  periods
reflected therein  and (ii)  by June  1 of  each year  a certification of such
Annual  Statement  by  independent  certified  public  accountants  reasonably
acceptable to the Agent if so required by any Governmental Authority.

          (d)  Upon the  earlier of  (i) five  (5) days  after the  regulatory
filing date or (ii) sixty (60) days after the close of each of the first three
fiscal quarters of  each Fiscal Year  of each Insurance  Subsidiary, copies of
the Quarterly Statement  of each of  the Insurance Subsidiaries,  certified by
the president, secretary and treasurer  of each such Insurance Subsidiary  and
prepared on the NAIC quarterly statement  blanks (or such other form as  shall
be required by the jurisdiction

of incorporation of each such Insurance Subsidiary), all such statements to be
prepared  in  accordance  with  SAP  consistently  applied  through the period
reflected therein.

          (e)  Promptly  and  in  any  event  within  ten  days after learning
thereof, notification of any changes after the date hereof in the rating given
by A.M. Best & Co. in respect of any Insurance Subsidiary.

          (f)  As soon as available, but in any event not later than the  last
Business  Day  in  February  of  each  year,  a copy of the projections of the
Borrower and its Subsidiaries for the next fiscal year.

          (g)  Together with the financial statements required by clauses  (a)
                                                                  ------------  
and (b) above, a compliance certificate in substantially the form of Exhibit C
- - -------                                                              ---------  
signed by its  chief financial officer  showing the calculations  necessary to
determine  compliance  with  this  Agreement  and  stating  that no Default or
Unmatured  Default  exists,  or  if  any  Default or Unmatured Default exists,
stating the nature and status thereof.

          (h)  Within  20  days  after  the  end  of  each  calendar  month, a
certificate  in  substantially  the  form  of  Exhibit  D  signed by its chief
                                               ----------                       
financial officer.

          (i)  (i)  By March  1 of each calendar  year, an actuarial   opinion
from  a  qualified  actuary  (who  may  be  an  employee of the Borrower or an
Insurance Subsidiary), the form of  which opinion shall be in  compliance with
all applicable  insurance laws  and regulations  and all  applicable published
actuarial standards, opining  as to the  amount and the  reasonableness of the
loss and loss adjustment expense  reserves of each Insurance Subsidiary  as of
the preceding December  31 and (ii)  within 20 days  after receipt thereof,  a
copy  of  any  such  opinion  from  time  to  time  prepared by an independent
actuarial firm.

          (j)  Within  270  days  after  the  close  of  each  fiscal  year, a
statement of the Unfunded Liabilities of each Single Employer Plan,  certified
as correct by an actuary enrolled under ERISA.

          (k)  As soon as possible and in  any event within 10 days after  the
Borrower knows  that any  Termination Event  has occurred  with respect to any
Plan, a  statement, signed  by the  chief financial  officer of  the Borrower,
describing said Termination Event and  the action which the Borrower  proposes
to take with respect thereto.

          (l)  As  soon  as  possible  and  in  any event within 10 days after
receipt by the Borrower, (i) a  copy of any notice, claim, complaint  or order
from any Governmental Authority to the effect that the Borrower or any of  its
Subsidiaries is or may be liable to  any Person as a result of the  release by
the Borrower, any of  its Subsidiaries, or any  other Person of any  Hazardous
Materials into the environment or requiring that action be taken to respond to
or clean up a Release of Hazardous Materials into the environment, (ii) a copy
of any notice, complaint or citation from any Governmental Authority  alleging
any  violation   of  any   Environmental  Law   or  environmental   permit  or
authorization by the Borrower or any  of its Subsidiaries and (iii) notice  of
the

commencement of any litigation against the Borrower or its Subsidiaries  which
could reasonably be expected to have a Material Adverse Effect.

          (m)  Promptly upon  the furnishing  thereof to  the shareholders  of
the Borrower, copies of all financial statements, reports and proxy statements
so furnished.

          (n)  Promptly upon  the filing  thereof, copies  of all registration
statements and annual, quarterly, monthly  or other regular reports which  the
Borrower or  any of  its Subsidiaries  files with  the Securities and Exchange
Commission.

          (o)  Such  other  information  (including non-financial information)
as the Agent or any Lender may from time to time reasonably request.

    6.2.  Use of Proceeds.  The Borrower will, and will cause each  Subsidiary
          ---------------                                                       
to, use the proceeds  of the Advances to  meet the general corporate  needs of
the Borrower and its Subsidiaries.  The Borrower will not, nor will it  permit
any Subsidiary  to, use  any of  the proceeds  of the  Advances to purchase or
carry any Margin Stock.

    6.3.  Notice of Default  and Other Matters.   The Borrower  will, and will
          ------------------------------------                                  
cause each Subsidiary to, give prompt notice in writing to the Lenders of  (a)
the occurrence of  any Default or  Unmatured Default, together  with a written
explanation of the nature and status thereof; (b) the occurrence of any  other
development, financial or otherwise, relating specifically to the Borrower  or
any of its Subsidiaries  (and not of a  general economic or political  nature)
which could reasonably be expected to have a Material Adverse Effect; (c)  the
receipt  of  any  notice  from  any  Governmental  Authority of the expiration
without  renewal,  revocation  or  suspension  of,  or  the institution of any
proceedings to revoke  or suspend, any  License now or  hereafter held by  any
Insurance  Subsidiary  which  is  required  to  conduct  insurance business in
compliance with all  applicable laws and  regulations; (d) the  receipt of any
notice from any Governmental Authority of the institution of any  disciplinary
proceedings against or in respect of any Insurance Subsidiary, or the issuance
of any order,  the taking of  any action or  any request for  an extraordinary
audit for cause by any Governmental Authority which, if adversely  determined,
could have a  Material Adverse Effect;  or (e) any  judicial or administrative
order  limiting  or  controlling  the  insurance  business  of  any  Insurance
Subsidiary (and not the insurance industry generally) which has been issued or
adopted and  which has  had, or  is reasonably  expected to  have, a  material
adverse effect on the operations of the insurance businesses conducted by  the
Insurance Subsidiaries, taken as a whole.

    6.4.  Conduct  of  Business.    The  Borrower  will,  and  will cause each
          ---------------------                                                 
Subsidiary to, (a) carry on and conduct its business in substantially the same
manner and in substantially the same  fields of enterprise as it is  presently
conducted; (b) do  all things necessary  to remain duly  incorporated, validly
existing and in good standing as a domestic corporation in its jurisdiction of
incorporation and maintain all requisite authority to conduct its business  in
each jurisdiction in which its business is conducted where the absence of such
authorization  may  not  reasonably  be  expected  to  have a Material Adverse
Effect; and  (c) do  all things  necessary to  renew, extend  and continue  in
effect all Licenses which may at any  time and from time to time be  necessary
for any Insurance Subsidiary to  operate its insurance business in  compliance
with all applicable laws and regulations.

    6.5.  Taxes. The Borrower will, and will cause each Subsidiary to,  timely
          -----                                                                 
file complete and correct United States federal and applicable foreign,  state
and local tax returns required by  applicable law and pay when due  all taxes,
assessments and governmental charges and levies upon it or its income, profits
or  Property,  except  those  which  are  being  contested  in  good  faith by
appropriate proceedings and with respect to which adequate reserves have  been
set aside in accordance with Agreement Accounting Principles.

    6.6.  Compliance  with  Laws.    The  Borrower  will,  and will cause each
          ----------------------                                                
Subsidiary  to,  comply  with  all  laws,  rules,  regulations, orders, writs,
judgments, injunctions,  decrees or  awards to  which it  may be  subject, the
failure to comply with which could  reasonably be expected to have a  Material
Adverse Effect.  The  Borrower shall timely file  any reports with respect  to
the execution and consummation of this Agreement and the other Loan  Documents
that may be required by the California Insurance Code or otherwise.

    6.7.  Maintenance of Properties.  The  Borrower will, and will cause  each
          -------------------------                                             
Subsidiary to, do all things necessary to maintain, preserve, protect and keep
Property material to its business in good repair, working order and condition,
and make all necessary and  proper repairs, renewals and replacements  to such
material Property so that its business carried on in connection therewith  may
be properly conducted at all times.

    6.8.  Inspection.  The Borrower will,  and will cause each Subsidiary  to,
          ----------                                                            
permit the  Agent and  the Lenders,  by their  respective representatives  and
agents, to inspect any of the Property, corporate books and financial  records
of the Borrower and each Subsidiary,  to examine and make copies of  the books
of accounts and other financial  records of the Borrower and  each Subsidiary,
and to discuss  the affairs, finances  and accounts of  the Borrower and  each
Subsidiary  with,  and  to  be  advised  as  to  the same by, their respective
officers at such reasonable times and intervals as the Lenders may  designate.
The Borrower will keep or cause to be kept, and cause each Subsidiary to  keep
or  cause  to  be  kept,  appropriate  records  and  books of account in which
complete  entries  are  to  be  made  reflecting  its  and  their business and
financial transactions, such entries to  be made in accordance with  Agreement
Accounting Principles consistently applied.

    6.9.  Capital Stock  and Dividends.   The  Borrower will  not, nor will it
          ----------------------------                                          
permit  any  Subsidiary  to,  (a)  issue  any  preferred stock or other equity
securities of any kind (other than (i) common stock, (ii) options or  warrants
to  acquire  common  stock,  (iii)  Preferred  Stock  issued pursuant to or as
contemplated  by  the  AIG  Agreement,  (iv)  payment  in kind Preferred Stock
dividends thereon and (v) preferred  stock having no sinking fund  payments or
mandatory redemptions or payments  prior to July 30,  2001) or (b) declare  or
pay any dividends or make any  distributions on its capital stock (other  than
dividends payable in its own capital stock) or redeem, repurchase or otherwise
acquire or retire any  of its capital stock  (each a "Restricted Payment")  at
any  time  outstanding,  except  that  (i)  any Subsidiary may declare and pay
dividends or make distributions to the Borrower, (ii) so long as no Default or
Unmatured Default is pending before or after giving effect to the  declaration
or payment of such  dividends or repurchase or  redemption of such stock,  (A)
the Borrower may pay cash dividends on the Preferred Stock, (B) after June 30,
1996 and on or  prior to December 31,  1996, the Borrower may  declare and pay
cash dividends on its capital stock so long as at the time of and after giving
effect to such Restricted Payment, the

Adjusted Earned  Surplus (as  defined below)  is positive  and any such common
stock dividends do not exceed $17,000,000  in the aggregate, and (C) from  and
after  January  1,  1997,  the  Borrower  may  make  Restricted Payments.  For
purposes  hereof,  "Adjusted  Earned  Surplus"  means,  at  any  time, (1) the
Unassigned Funds plus (2) the  aggregate amount of cash dividends  theretofore
paid by 20th Century to the  Borrower during calendar year 1996 minus  (3) the
aggregate  of  all  interest  and  Restricted Payments (including the proposed
Restricted Payment) paid by the  Borrower during calendar year 1996  and minus
(4) the amount of all principal payments  in respect of the Loans made by  the
Borrower in calendar year 1996  pursuant to Section 2.1(b) in  connection with
                                            --------------                      
mandatory reductions  of the  Aggregate Revolving  Credit Commitment  required
pursuant to  subsection 2.7(a).   Solely  in determining  whether a Default or
             -----------------                                                  
Unmatured  Default  is  pending  for  purposes  of  Section  6.9(b)(ii),   the
                                                    -------------------         
denominator of the Coverage Ratio as of the most recently ended fiscal quarter
shall be calculated  by adding thereto  the amount of  the proposed Restricted
Payment.  At least  five Business Days prior  to any such Restricted  Payment,
the  Borrower  shall  provide  the  Agents  a  written  computation reflecting
compliance with the Coverage Ratio requirement as set forth above with respect
thereto.

    6.10. Indebtedness.    The  Borrower  will  not,  nor  will  it permit any
          ------------                                                          
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:

          (a)  the Loans and the other Obligations;

          (b)  Indebtedness  existing  on  the  date  hereof  and described in
Schedule 6.10;
- - -------------                                                                   

          (c)  Indebtedness  issued,  incurred  or  assumed  in  an  aggregate
amount not to exceed $50,000,000 in principal amount at any time  outstanding,
which Indebtedness  (i) is  unsecured and  subordinated to  the Obligations on
terms reasonably  satisfactory to  the Required  Lenders, (ii)  has a maturity
date after July 30, 2001,  and no scheduled principal payments  or redemptions
prior to such date, (iii) is at or below a market rate of interest at the time
incurred, and (iv) has financial  and other covenants and defaults  reasonably
satisfactory to the Required Lenders;

          (d)  Capitalized Lease Obligations  not exceeding $5,000,000  in the
aggregate at any time outstanding provided that each agreement evidencing such
obligations contains no cross default provisions except to other leases by the
same lessors;

          (e)  Indebtedness not exceeding $2,000,000  in the aggregate at  any
time  outstanding  incurred  in  respect  of  the  purchase  price  of  office
equipment;

          (f)  Rate Hedging Obligations in respect of the Obligations; and

          (g)  any intercompany loans  made by the  Borrower to any  Insurance
Subsidiary or made by any Insurance Subsidiary to the Borrower for the purpose
of repaying all or any portion of the Obligations if such loan is repayable on
demand.

    6.11. Merger. The  Borrower will  not, nor  will it  permit any Subsidiary
          ------                                                                
to,  merge  or  consolidate  with  or  into  any  other  Person, except that a
Subsidiary may merge into the  Borrower or any Wholly-Owned Subsidiary  of the
Borrower.

    6.12. Sale of  Assets.   The Borrower  will not,  nor will  it permit  any
          ---------------                                                       
Subsidiary to, lease, sell, transfer or otherwise dispose of its Property,  to
any other Person (a) except for sales of Investments in the ordinary course of
business  and  transfers  of  Property  constituting  Investments permitted by
Section 6.14 and (b) except for leases, sales, transfers or other dispositions
- - ------------                                                                    
of its Property that, together with all other Property of the Borrower and its
Subsidiaries previously leased, sold or otherwise disposed of as permitted  by
this  Section  6.12  since  the  date  hereof  do not constitute a Substantial
      -------------                                                             
Portion of the Property of the Borrower and its Subsidiaries.

    6.13. Sale and Leaseback.  The Borrower  will not, nor will it permit  any
          ------------------                                                    
Subsidiary to, sell or transfer any  of its Property in order to  concurrently
or subsequently lease as lessee such or similar Property.

    6.14. Investments and Purchases.
          -------------------------                                             

          (a)  The Borrower will not, nor will it permit any Subsidiary  which
is not an  Insurance Subsidiary to,  make or suffer  to exist any  Investments
(including, without limitation, loans and  advances to or for the  account of,
and other Investments in, Subsidiaries), or commitments therefor, or to create
any Subsidiary or to  become or remain a  partner in any partnership  or joint
venture, or to make any Purchases of any Person, except:

               (i)   Short-term obligations  of, or  fully guaranteed  by, the
    United States of America;

               (ii)  Commercial  paper  rated  A-l  or  better by Standard and
    Poor's Rating Group,  a division of  the McGraw-Hill Companies,  or P-l or
    better by Moody's Investors Service, Inc.;

               (iii) Demand  deposit  accounts  maintained  in  the   ordinary
    course of business;

               (iv)  Certificates of deposit issued by and time deposits  with
    commercial banks (whether domestic or foreign) having capital and  surplus
    in excess of $100,000,000;

               (v)   Existing   Investments   in   Subsidiaries   and    other
    Investments in  existence on  the date  hereof and  described in  Schedule
                                                                      --------  
    6.14;
    ----                                                                        

               (vi)  Investments in 20th Century and 21st Century; and

               (vii) Investments in  any joint  venture or  strategic alliance
    with  AIG  or  its  Affiliates  as  contemplated  under the AIG Agreement;
    provided that such Investments shall

    not exceed in the aggregate (together with Investments made pursuant to
    Section 6.14(b)(iii)) $15,000,000 prior to January 1, 1998.
    --------------------                                                       

          (b)  The Borrower will not  permit any Insurance Subsidiary  to make
or suffer to  exist any Investments  (including without limitation,  loans and
advances to or for the account of, and other Investments in, Subsidiaries), or
commitments therefor, or  to create any  Subsidiary or to  become or remain  a
partner in any partnership  or joint venture, or  to make any Purchase  of any
Person, except:

               (i)   Investments rated NAIC-2 or better;

               (ii)  other  investments  (excluding  Investments in Affiliates
    of  the  Borrower)  amounting  to  no  greater than 2% of the consolidated
    Investments of the Insurance Subsidiaries; and

               (iii) Investments  in  connection  with  any  joint  venture or
    strategic alliance with  AIG or its  Affiliates as contemplated  under the
    AIG Agreement;  provided that  such Investments  shall not  exceed in  the
    aggregate   (together   with   Investments   made   pursuant   to  Section
                                                                       -------  
    6.14(a)(vii)) $15,000,000 prior to January 1, 1998.
    ------------                                                                

    6.15. Contingent Obligations.  The Borrower  will not, nor will it  permit
          ----------------------                                                
any  Subsidiary  to,  make  or  suffer  to  exist  any  Contingent  Obligation
(including, without limitation, any Contingent Obligation with respect to  the
obligations of a Subsidiary), except by endorsement of instruments for deposit
or collection in the ordinary course of business.

    6.16. Liens.   The Borrower  will not,  nor will  it permit any Subsidiary
          -----                                                                 
to, create, incur, or suffer  to exist any Lien in,  of or on the Property  of
the Borrower or any of its Subsidiaries, except:

          (a)  Liens for taxes, assessments or governmental charges or  levies
on its Property if the same shall not at the time be delinquent or  thereafter
can be  paid without  penalty, or  are being  contested in  good faith  and by
appropriate proceedings  and for  which adequate  reserves in  accordance with
generally accepted principles of accounting  shall have been set aside  on its
books;

          (b)  Liens imposed  by law,  such as  carriers', warehousemen's  and
mechanics' liens  and other  similar liens  arising in  the ordinary course of
business which secure payment of obligations not more than 60 days past due or
which are  being contested  in good  faith by  appropriate proceedings and for
which adequate reserves shall have been set aside on its books;

          (c)  Liens  arising  out  of  pledges  or  deposits  under  worker's
compensation laws, unemployment insurance,  old age pensions, or  other social
security or retirement benefits, or similar legislation;

          (d)  Utility  easements,  building   restrictions  and  such   other
encumbrances or  charges against  real property  as are  of a nature generally
existing with respect to properties of a

similar  character  and  which  do   not  in  any  material  way   affect  the
marketability of the same or interfere with the use thereof in the business of
the Borrower or the Subsidiaries;

          (e)  Liens existing  on the  date hereof  and described  in Schedule
                                                                      --------  
6.16;
- - ----                                                                            

          (f)  Liens in favor of the Agent or the Lenders granted pursuant  to
the Pledge Agreement;

          (g)  Deposits made  by any  Insurance Subsidiary  with the insurance
regulatory authority in its  jurisdiction of incorporation or  other statutory
liens or liens or  claims imposed or required  by applicable insurance law  or
regulation against  the assets  of any  Insurance Subsidiary,  in each case in
favor of all  policyholders of such  Insurance Subsidiary and  in the ordinary
course of such Insurance Subsidiary's business; and

          (h)  Liens  securing  Indebtedness  permitted  by  Section  6.10(e),
                                                             ----------------   
which  Liens  are  created  at  the  time  of  acquisition  or  completion  of
construction of such property or within 30 days thereafter, or are existing on
such  property  at  the  time  of  acquisition  thereof  (and  not incurred in
anticipation thereof); provided, however, that  such Liens do not at  any time
                       --------  -------                                        
encumber any property  other than the  property financed by  such Indebtedness
secured by  any such  Lien and  shall at  no time  exceed 100% of the original
purchase price of such property.

    6.17. Affiliates.    The  Borrower  will  not,  and  will  not  permit any
          ----------                                                            
Subsidiary to, enter into any transaction (including, without limitation,  the
purchase or  sale of  any Property  or service)  with, or  make any payment or
transfer  to,  any  Affiliate  except  in  the ordinary course of business and
pursuant to the reasonable requirements of the Borrower's or such Subsidiary's
business and upon fair and reasonable terms no less favorable to the  Borrower
or such  Subsidiary than  the Borrower  or such  Subsidiary would  obtain in a
comparable arms-length transaction.  This Section shall not prohibit dividends
or distributions permitted by Section 6.9 or Investments permitted by  Section
                              -----------                              -------  
6.14.
- - ----                                                                            

    6.18. Environmental Matters.  The Borrower  shall and shall cause each  of
          ---------------------                                                 
its Subsidiaries to (a) at all times comply with all applicable  Environmental
Laws except where  non-compliance could not  reasonably be expected  to have a
Material Adverse Effect and (b)  promptly take any and all  necessary remedial
actions in response to the presence, storage, use, disposal, transportation or
Release of any Hazardous Materials on, under or about any real property owned,
leased or operated by the Borrower or any of its Subsidiaries.

    6.19. Change  in  Corporate  Structure;  Fiscal  Year.  The Borrower shall
          -----------------------------------------------                       
not,  nor  shall  it  permit  any  Subsidiary  to, (a) permit any amendment or
modification to be made to its certificate or articles of incorporation or by-
laws which  is materially  adverse to  the interests  of the Lenders (provided
that  the  Borrower  shall  notify  the  Agent  of  any  other  amendment   or
modification thereto  as soon  as practicable  thereafter) or  (b) change  its
fiscal year to end on any date other than December 31 of each year.

    6.20. Inconsistent  Agreements.    The  Borrower  shall  not, nor shall it
          ------------------------                                              
permit any Subsidiary to, enter  into any indenture, agreement, instrument  or
other arrangement which (a) directly or indirectly prohibits or restrains,  or
has the effect  of prohibiting or  restraining, or imposes  materially adverse
conditions upon,  the incurrence  of the  Obligations, the  granting of  Liens
pursuant to the Loan Documents, or  the amending of the Loan Documents  or (b)
contains any provision which  would be violated or  breached by the making  of
Advances or by the performance by the Borrower or any Subsidiary of any of its
obligations under any Loan Document.

    6.21. Financial Covenants.  Subject  to normal year-end and  closing audit
          -------------------                                                   
adjustments  for  calculations  or  determinations  made  in  accordance  with
Agreement Accounting  Principles prior  to the  end of  their fiscal year, the
Borrower on a consolidated basis with its Subsidiaries shall:

          6.21.1   Minimum Net  Worth.   At all  times after  the date hereof,
                   ------------------                                           
maintain a  minimum consolidated  Net Worth  of not  less than  the sum of (a)
$350,000,000 plus (b) 50% of the consolidated Net Income, if positive, of  the
Borrower  and  its  Subsidiaries  for  each  fiscal quarter ending on or after
December 31,  1995 plus  (c) 50%  of the  net proceeds  to the Borrower or its
Subsidiaries of sales of equity securities (excluding surplus contributions to
Insurance Companies).

    6.22. Insurance Company Financial Covenants.   Subject to normal  year-end
          -------------------------------------                                 
and  closing  audit  adjustments  for  calculations  or determinations made in
accordance with  SAP prior  to the  end of  a Fiscal  Year, the Borrower shall
cause its Consolidated Insurance Subsidiaries to:

          6.22.1.  Surplus as Regards  Policyholders.  As  of the end  of each
                   ---------------------------------                            
calendar quarter from and including  December 31, 1995, maintain an  aggregate
Surplus as Regards Policyholders of at least the sum of (a) $250,000,000  plus
(b) 25% of the Borrower's consolidated Statutory Net Income, if positive,  for
each fiscal quarter ending on or after December 31, 1995.

          6.22.2.  Operating  Leverage.    As  of  the  end  of  each calendar
                   -------------------                                          
quarter from and including  December 31, 1995, maintain  a ratio for the  four
calendar quarters  then ended  of (a)  Net Written  Premiums to  (b) aggregate
Surplus as Regards Policyholders of less than or equal to the ratios set forth
below opposite the following periods:

                   Period                        Ratio

              the date hereof to 6/30/96         3.50 to 1.00
              7/1/96 and thereafter              3.25 to 1.00

          6.22.3.  Coverage Ratio.   As of the  end of each  fiscal quarter of
                   --------------                                               
the  Borrower  from  and  including  December  31,  1995 maintain a ratio (the
"Coverage Ratio") of  (a) consolidated Statutory  Net Income of  the Insurance
Subsidiaries for the most  recent four fiscal quarters  then ended to (b)  the
sum of (i) the  amount of principal and  interest paid during the  four fiscal
quarters then ended on all Indebtedness of the Borrower (other than repayments
of principal on the  Loans pursuant to Sections  2.6 and 2.7(b)) and  (ii) the
amount of cash dividends paid on  its capital stock, and all amounts  expended
to redeem  or repurchase  its capital  stock, during  the four fiscal quarters
then ended of not less than 1.50 to 1.00.

    6.23. Tax Consolidation.   The Borrower will  not and will  not permit any
          -----------------                                                     
of its Subsidiaries to (a) file or consent to the filing of any  consolidated,
combined or unitary income tax return with any Person other than the  Borrower
and  its  Subsidiaries,  (b)  enter  into  a  tax sharing agreement or similar
arrangement  or  (c)  amend  any  existing  tax  sharing agreement in a manner
materially adverse to the Borrower.

    6.24. ERISA Compliance.
          ----------------                                                      

    With respect to any Plan, neither the Borrower nor any Subsidiary shall:

          (a)  engage  in  any  "prohibited  transaction"  (as  such  term  is
defined in Section 406 of ERISA or Section 4975 of the Code) for which a civil
penalty pursuant to Section 502(i) of ERISA or a tax pursuant to Section  4975
of the Code in excess of $1,000,000 could be imposed;

          (b)  incur any  "accumulated funding  deficiency" (as  such term  is
defined in  Section 302  of ERISA)  in excess  of $1,000,000,  whether or  not
waived, or permit any Unfunded Liability to exceed $6,000,000;

          (c)  permit  the  occurrence  of  any  Termination Event which could
result in a liability  to the Borrower or  any other member of  the Controlled
Group in excess of $1,000,000;

          (d)  be an "employer"  (as such term  is defined in  Section 3(5) of
ERISA) required  to contribute  to any  Multiemployer Plan  or a  "substantial
employer" (as such term in defined in Section 4001(a)(2) of ERISA) required to
contribute to any Multiemployer Plan; or

          (e)  permit the establishment  or amendment of  any Plan or  fail to
comply with the applicable  provisions of ERISA and  the Code with respect  to
any Plan which could result in  liability to the Borrower or any  other member
of  the  Controlled  Group  which,  individually  or  in  the aggregate, could
reasonably be expected to have a Material Adverse Effect.

    6.25. No  Earthquake  Insurance  Coverage.    Neither the Borrower nor its
          -----------------------------------                                   
Insurance  Subsidiaries  shall  issue  or  have outstanding policies providing
earthquake coverage except as the Required Lenders may otherwise agree.

                           ARTICLE VII

                             DEFAULTS
                             --------                                           

    The  occurrence  of  any  one  or  more  of  the  following  events  shall
constitute a Default:

    7.1.  Any representation or warranty made  or deemed made by or  on behalf
of the Borrower or any of its  Subsidiaries to the Lenders or the Agent  under
or  in  connection  with  this  Agreement,  any  Loan,  or  any certificate or
information delivered in connection with this Agreement

or any other Loan Document shall be false in any material respect on the  date
as of which made or deemed made.

    7.2.  Nonpayment of (a)  principal of any  Note when due,  or (b) interest
upon any Note or any commitment fee  or other fee or obligations under any  of
the Loan Documents within five days after the same becomes due.

    7.3.  The breach by the Borrower of any of the terms or provisions of  any
of Section  6.2, Section  6.3(a), Sections  6.9 through  6.17 or  Section 6.19
   ------------  ---------------  --------------------------------------------  
through 6.25.
- - ------------                                                                    

    7.4.  The breach by the Borrower (other than a breach which constitutes  a
Default under Section 7.1,  7.2 or 7.3) of  any of the terms  or provisions of
              ------------------------                                          
this Agreement  which is  not remedied  within twenty  (20) days after written
notice from the Agent or any Lender.

    7.5.  The  default  by  the  Borrower  or  any  of its Subsidiaries in the
performance of any term, provision or condition contained in any agreement  or
agreements under which  any Indebtedness aggregating  in excess of  $5,000,000
was created or is governed, or the occurrence of any other event or  existence
of any other condition, the effect of  any of which is to cause, or  to permit
the holder  or holders  of such  Indebtedness to  cause, such  Indebtedness to
become due  prior to  its stated  maturity; or  any such  Indebtedness of  the
Borrower or any of its Subsidiaries shall be declared to be due and payable or
required to be prepaid (other than by a regularly scheduled payment) prior  to
the stated maturity thereof or shall not be paid on the maturity date thereof.

    7.6.  The Borrower or any of its Subsidiaries shall (a) have an order  for
relief entered with respect to it under the Federal bankruptcy laws as now  or
hereafter in effect, (b) make an assignment for the benefit of creditors,  (c)
apply for, seek, consent to, or  acquiesce in, the appointment of a  receiver,
custodian, trustee,  examiner, liquidator  or similar  official for  it or any
Substantial Portion of its Property,  (d) institute any proceeding seeking  an
order for  relief under  the Federal  bankruptcy laws  as now  or hereafter in
effect  or  seeking  to  adjudicate  it  a  bankrupt  or insolvent, or seeking
dissolution, winding up, liquidation, reorganization, arrangement,  adjustment
or  composition  of  it  or  its  debts  under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors or fail to file an answer or
other pleading denying the material  allegations of any such proceeding  filed
against it, (e) take  any corporate action to  authorize or effect any  of the
foregoing actions set forth in this  Section 7.6, (f) fail to contest  in good
                                     -----------                                
faith any  appointment or  proceeding described  in Section  7.7 or (g) become
                                                    ----------                  
unable, not pay, or admit in writing its inability to pay, its debts generally
as they become due.

    7.7.  Without the application, approval or consent of the Borrower or  any
of  its  Subsidiaries,  a  receiver,  trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any of its Subsidiaries or any
Substantial Portion  of its  Property, or  a proceeding  described in  Section
                                                                       -------  
7.6(d) shall be instituted against the Borrower or any of its Subsidiaries and
- - ------                                                                          
such  appointment   continues  undischarged   or  such   proceeding  continues
undismissed or unstayed for a period of thirty consecutive days.

    7.8.  Any court,  government or  governmental agency  shall condemn, seize
or  otherwise   appropriate,  or   take  custody   or  control   of  (each   a
"Condemnation"), all or any  portion of the Property  of the Borrower and  its
 ------------                                                                   
Subsidiaries  which,  when  taken  together  with  all  other  Property of the
Borrower and  its Subsidiaries  so condemned,  seized, appropriated,  or taken
custody or control of, during the twelve-month period ending with the month in
which any such Condemnation occurs, constitutes a Substantial Portion.

    7.9.  The Borrower  or any  of its  Subsidiaries shall  fail within thirty
days to pay, bond or otherwise discharge any judgment or order for the payment
of  money  in  excess  of  $500,000  (or  multiple judgments or orders for the
payment of an aggregate amount in  excess of $1,000,000), which is not  stayed
on appeal or otherwise being appropriately contested in good faith.

    7.10. Any Change in Control shall occur.

    7.11. The occurrence  of any  "default", as  defined in  any Loan Document
(other than this Agreement or the Notes) or the breach of any of the terms  or
provisions of  any Loan  Document (other  than this  Agreement or  the Notes),
which default or breach continues beyond any period of grace therein provided.

    7.12. The Pledge  Agreement shall  for any  reason fail  to create a valid
and perfected first priority security interest in any collateral purported  to
be covered thereby, except as permitted  by the terms of the Pledge  Agreement
or the Pledge Agreement  shall fail to remain  in full force or  effect or any
action shall be taken by the  Borrower or any Subsidiary to discontinue  or to
assert the invalidity or unenforceability of the Pledge Agreement.

    7.13. The Borrower  or any  Insurance Subsidiary  shall become  subject to
any  conservation,  liquidation,  cease  and  desist  order  or similar order,
directive or mandate issued by any Governmental Authority which is not  stayed
within  ten  (10)  days  other  than  cease  and desist orders which could not
reasonably be expected to have a Material Adverse Effect.

    7.14. Any  License  of  any  Insurance  Subsidiary  held by such Insurance
Subsidiary  on  the  date  hereof  or  acquired  by  such Insurance Subsidiary
thereafter, the loss of  which would have, in  the reasonable judgment of  the
Required Lenders, a Material Adverse Effect (a) shall be revoked by the  state
which  shall  have  issued  such  License,  or  any  action (administrative or
judicial)  to  revoke  such  License  shall  have  been commenced against such
Insurance Subsidiary and shall not have  been dismissed within 30 days of  the
commencement thereof, (b)  shall be suspended  by such state  for a period  in
excess of 30 days or (c) shall  not be reissued or renewed by such  state upon
the expiration thereof following application for such reissuance or renewal by
such Insurance Subsidiary.

    7.15. Any Insurance Subsidiary  shall be fined  in an amount  in excess of
$1,000,000  in  any  single  instance  by,  or  at  the  request of, any state
insurance regulatory  agency as  a result  of the  violation by such Insurance
Subsidiary  of  such  state's  applicable  insurance  laws  or the regulations
promulgated in connection therewith; provided, however, that the imposition of
                                     --------  -------                          
any such fine shall not constitute a Default if (a) the Agent receives  notice
of such fine within five (5) Business Days of its imposition, and (b) (i)  the
Borrower provides the Agent within five (5) Business Days of the

imposition of  such fine  with evidence  reasonably satisfactory  to the Agent
that the cause of such fine has  been corrected or (ii) neither such fine  nor
the circumstances  leading to  its imposition  would have  a Material  Adverse
Effect.

                                ARTICLE VIII

          ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
          ----------------------------------------------                        

    8.1.  Acceleration.    If  any  Default  described  in  Section 7.6 or 7.7
          ------------                                      -----------    ---  
occurs with respect to  the Borrower, the obligations  of the Lenders to  make
Loans  hereunder  shall  automatically  terminate  and  the  Obligations shall
immediately become due and payable without any election or action on the  part
of the Agent or any Lender and without presentment, demand, protest or  notice
of any kind, all of which the Borrower hereby expressly waives.  If any  other
Default occurs, the  Required Lenders (or  the Agent with  the consent of  the
Required Lenders) may terminate or  suspend the obligations of the  Lenders to
make Loans hereunder,  or declare the  Obligations to be  due and payable,  or
both, whereupon  (in the  event of  declaration) the  Obligations shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which the Borrower hereby expressly waives.

    If, within  ten Business  Days after  acceleration of  the maturity of the
Obligations or  termination of  the obligations  of the  Lenders to make Loans
hereunder as a result of any  Default (other than any Default as  described in
Section 7.6 or 7.7  with respect to the  Borrower) and before any  judgment or
- - -----------    ---                                                              
decree for  the payment  of the  Obligations due  shall have  been obtained or
entered, the Required Lenders (in their sole discretion) shall so direct,  the
Agent shall, by  notice to the  Borrower, rescind and  annul such acceleration
and/or termination.

    8.2.  Amendments.   Subject to  the provisions  of this  Article VIII, the
          ----------                                         ------------       
Required Lenders (or  the Agent with  the consent in  writing of the  Required
Lenders) and the  Borrower may enter  into agreements supplemental  hereto for
the purpose of  adding or modifying  any provisions to  the Loan Documents  or
changing in any manner the rights of the Lenders or the Borrower hereunder  or
waiving any Default;  provided, however, that  no such supplemental  agreement
                      --------  -------                                         
shall, without the consent of each Lender:

          (a)  Extend the  final maturity  of any  Loan or  Note or reduce the
principal amount thereof, or reduce the rate or extend the time of payment  of
interest or fees thereon;

          (b)  Reduce the percentage specified  in the definition of  Required
Lenders;

          (c)  Reduce the amount or extend the payment date for the  mandatory
payments or reductions required under Section 2.1(b) or 2.7(b) or increase the
                                      ------------------------                  
amount of the Commitment of any Lender hereunder;

          (d)  Extend the Facility Termination Date;

          (e)  Amend this Section 8.2;
                          -----------                                           

          (f)  Release all or  substantially all of  the Collateral under  and
as defined in the Pledge Agreement; or

          (g)  Permit any  assignment by  the Borrower  of its  Obligations or
its rights hereunder (other than an assignment by operation of law pursuant to
a merger of the Borrower permitted hereby).

No amendment of any provision of  this Agreement relating to the Agent  or the
Documentary Agent shall be effective without the written consent of the  Agent
or the Documentary Agent, as applicable.   The Agent may waive payment  of the
fee required under Section 12.3.2  without obtaining the consent of  any other
                   --------------                                               
party to this Agreement.

    8.3.  Preservation of Rights.  No delay or omission of the Lenders or  the
          ----------------------                                                
Agent to exercise any right under  the Loan Documents shall impair such  right
or be  construed to  be a  waiver of  any Default  or Unmatured  Default or an
acquiescence therein, and the making  of a Loan notwithstanding the  existence
of a Default or Unmatured Default or the inability of the Borrower to  satisfy
the  conditions  precedent  to  such  Loan  shall not constitute any waiver or
acquiescence.   Any single  or partial  exercise of  any such  right shall not
preclude any other or  further exercise thereof or  the exercise of any  other
right, and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents  whatsoever shall be valid unless  in writing
signed by the Lenders required pursuant  to Section 8.2, and then only  to the
                                            -----------                         
extent in such writing specifically set forth.  All remedies contained in  the
Loan  Documents  or  by  law  afforded  shall  be  cumulative and all shall be
available to the Agent and the Lenders until the Obligations have been paid in
full.

    8.4.  Limitation  of  Rights.        Notwithstanding  any  other  term  or
          ----------------------                                                
condition contained herein or in the Pledge Agreement, so long as the Borrower
controls, within  the meaning  of California  Insurance Code  Section 1215, an
insurance  company  domiciled  or  commercially  domiciled  in  the  State  of
California and subject to regulation by the California Department of Insurance
(the "Department"), the Lenders shall not  vote or sell the Pledged Stock  (as
      ----------                                                                
defined in the Pledge Agreement)  or exercise direct or indirect  control over
the direction of the management and  policies of 20th Century or 21st  Century
without first filing with the  Department a statement, and obtaining  from the
Department  an  approval,  in  accordance  with the requirements of California
Insurance Code Section 1215.2.

                            ARTICLE IX

                        GENERAL PROVISIONS
                        ------------------                                      

    9.1.  Survival of Representations.  All representations and warranties  of
          ---------------------------                                           
the Borrower contained in this Agreement or of the Borrower or any  Subsidiary
contained in any other Loan Document  shall survive delivery of the Notes  and
the making of the Loans herein contemplated.

    9.2.  Governmental Regulation.   Anything  contained in  this Agreement to
          -----------------------                                               
the contrary notwithstanding, no Lender shall be obligated to extend credit to
the Borrower  in violation  of any  limitation or  prohibition provided by any
applicable statute or regulation.

    9.3.  Taxes.  Any stamp, documentary  or similar taxes or charges  payable
          -----                                                                 
or  ruled  payable  by  any  governmental  authority  in  respect  of the Loan
Documents shall be paid by the Borrower, together with interest and penalties,
if any.

    9.4.  Headings.    Section  headings   in  the  Loan  Documents   are  for
          --------                                                              
convenience of reference only, and shall not govern the interpretation of  any
of the provisions of the Loan Documents.

    9.5.  Entire Agreement.   The Loan Documents  embody the entire  agreement
          ----------------                                                      
and understanding among the Borrower, the Agent and the Lenders and  supersede
all prior agreements and understandings among the Borrower, the Agent and  the
Lenders relating  to the  subject matter  thereof other  than the  fee letters
executed from time to time by the Borrower in favor of First Chicago and Union
Bank.

    9.6.  Several Obligations;  Benefits of  this Agreement.   The  respective
          -------------------------------------------------                     
obligations of the Lenders hereunder are  several and not joint and no  Lender
shall be the partner or agent of any other (except to the extent to which  the
Agent is authorized to act as such).  The failure of any Lender to perform any
of its obligations hereunder  shall not relieve any  other Lender from any  of
its obligations hereunder.   This Agreement  shall not be  construed so as  to
confer any right  or benefit upon  any Person other  than the parties  to this
Agreement and their respective successors and assigns.

    9.7.  Expenses; Indemnification.  The Borrower shall reimburse the  Agents
          -------------------------                                             
for any costs and out-of-pocket expenses (including reasonable attorneys' fees
and time charges of attorneys for  the Agents) paid or incurred by  such Agent
in connection with the preparation, negotiation, execution, delivery,  review,
amendment,  modification,  and  administration  of  the  Loan  Documents.  The
Borrower also agrees to  reimburse the Agents and  the Lenders for any  costs,
internal charges and  out-of-pocket expenses (including  reasonable attorneys'
fees and time  charges of attorneys  for the Agents  and the Lenders)  paid or
incurred by such  Agent or any  Lender in connection  with the collection  and
enforcement of the Loan Documents.   The Borrower further agrees  to indemnify
the Agents and  each Lender, their  directors, officers and  employees against
all losses,  claims, damages,  penalties, judgments,  liabilities and expenses
(including,  without  limitation,  all  expenses  of litigation or preparation
therefor whether or not any Agent or any Lender is a party thereto) which  any
of them may  pay or incur  arising out of  or relating to  this Agreement, the
other Loan Documents,  the transactions contemplated  hereby or the  direct or
indirect  application  or  proposed  application  of  the proceeds of any Loan
hereunder except to the extent that they arise out of the gross negligence  or
willful misconduct of the party  seeking indemnification.  The obligations  of
the Borrower  under Section  5.14, this  Section 9.7  and Section  9.1 of  the
                    -------------        -----------                            
Pledge Agreement shall survive the termination of this Agreement.

    9.8.  Numbers of Documents.  Except  as otherwise specified herein or  for
          --------------------                                                  
documents delivered by  fax, all statements,  notices, closing documents,  and
requests hereunder by the Borrower

shall be furnished to the Agent with sufficient counterparts so that the Agent
may, and the Agent shall, furnish one to each of the Lenders.

    9.9.  Accounting.    Except  as  provided  to  the  contrary  herein,  all
          ----------                                                            
accounting  terms  used  herein  shall  be  interpreted  and  all   accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.

    9.10. Severability  of  Provisions.    Any  provision in any Loan Document
          ----------------------------                                          
that is held to be inoperative, unenforceable, or invalid in any  jurisdiction
shall,  as  to  that  jurisdiction,  be inoperative, unenforceable, or invalid
without  affecting  the  remaining  provisions  in  that  jurisdiction  or the
operation,  enforceability,  or  validity  of  that  provision  in  any  other
jurisdiction,  and  to  this  end  the  provisions  of  all Loan Documents are
declared to be severable.

    9.11. Non-liability of  Lenders.   The relationship  between the  Borrower
          -------------------------                                             
and the Lenders and  the Agents shall be  solely that of borrower  and lender.
Neither the Agents nor any Lender shall have any fiduciary responsibilities to
the Borrower.  Neither the Agents nor any Lender undertakes any responsibility
to the Borrower to review or  inform the Borrower of any matter  in connection
with any phase of the Borrower's  business or operations.  Neither the  Agents
nor any  Lender shall  have any  liability with  respect to,  and the Borrower
hereby waives, releases and  agrees not to sue  for, any special, indirect  or
consequential damages suffered by the Borrower in connection with, arising out
of,  or  in  any  way  related  to,  the  Loan  Documents  or the transactions
contemplated thereby.

    9.12. CHOICE OF LAW.   THE LOAN  DOCUMENTS (OTHER THAN  THOSE CONTAINING A
          -------------                                                         
CONTRARY EXPRESS  CHOICE OF  LAW PROVISION)  SHALL BE  CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF  THE
STATE OF NEW YORK,  BUT GIVING EFFECT TO  FEDERAL LAWS APPLICABLE TO  NATIONAL
BANKS.

    9.13. NON-EXCLUSIVE CONSENT  TO JURISDICTION.   THE  BORROWER, THE  AGENTS
          --------------------------------------                                
AND EACH LENDER HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF
ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK CITY  IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS  AND
THE BORROWER,  THE AGENTS  AND EACH  LENDER HEREBY  IRREVOCABLY AGREE THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED  IN
ANY SUCH COURT AND  IRREVOCABLY WAIVES ANY OBJECTION  IT MAY NOW OR  HEREAFTER
HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH  A
COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.  NOTHING HEREIN SHALL LIMIT
THE  RIGHT  OF  THE  AGENTS  OR  ANY  LENDER  TO BRING PROCEEDINGS AGAINST THE
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.

    9.14. WAIVER OF  JURY TRIAL.   THE  BORROWER, THE  AGENTS AND  EACH LENDER
          ---------------------                                                 
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,

DIRECTLY OR  INDIRECTLY, ANY  MATTER (WHETHER  SOUNDING IN  TORT, CONTRACT  OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH, ANY  LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

    9.15. Disclosure.   The Borrower  and each  Lender hereby  (a) acknowledge
          ----------                                                            
and agree that the Agents and/or  their Affiliates from time to time  may hold
other investments in, make other loans to or have other relationships with the
Borrower, including, without limitation, in connection with any interest  rate
hedging instruments  or agreements  or swap  transactions, and  (b) waive  any
liability of  each Agent  or such  Affiliate to  the Borrower  or any  Lender,
respectively, arising  out of  or resulting  from such  investments, loans  or
relationships other than  liabilities arising out  of the gross  negligence or
willful misconduct of the Agents or their Affiliates.

    9.16. Counterparts.    This  Agreement  may  be  executed in any number of
          ------------                                                          
counterparts, all of which taken together shall constitute one agreement,  and
any of  the parties  hereto may  execute this  Agreement by  signing any  such
counterpart.  This Agreement shall be  effective when it has been executed  by
the Borrower, the Agents and the Lenders and each party has notified the Agent
by telex or telephone that it has taken such action.

    9.17. Consent.  Each of the Existing Lenders signatory hereto consents  to
          -------                                                               
the Agents' execution of the Pledge Amendment.

    9.18. Effect of Restatement.   This Agreement  shall, except as  otherwise
          ---------------------                                                 
expressly set  forth herein,  supersede the  Prior Credit  Agreement from  and
after the effective date hereof with respect to the transactions hereunder and
with respect to the loans outstanding  under the Prior Credit Agreement as  of
such effective date.  The parties hereto acknowledge and agree, however,  that
(i)  this  Agreement  and  all  other  Loan  Documents  executed and delivered
herewith do not constitute a novation, payment and reborrowing or  termination
of  the  Obligations  under  the  Prior  Credit  Agreement  and the other Loan
Documents as in effect prior to such effective date, (ii) such Obligations are
in all respects continuing with only  the terms being modified as provided  in
this Agreement  and the  other Loan  Documents, (iii)  the liens  and security
interests  in  favor  of  the  Agent  for  the benefit of the Lenders securing
payment of such Obligations are in  all respects continuing and in full  force
and effect  with respect  to all  Obligations and  (iv) all  references in the
other Loan Documents to the Prior  Agreement shall be deemed to refer  without
further amendment to this Agreement.

    9.19. Exiting Lender.   Upon the effectiveness  of this Agreement  and the
          --------------                                                        
payment to Bank One Texas, N.A. (the "Exiting Lender") of the Obligations  due
it, the Commitment of the Exiting Lender shall be reduced to zero and it shall
cease  to  have  any  rights  or  duties  as  a Lender hereunder.  The Exiting
Lender's execution hereof shall be  deemed to evidence only (a)  its agreement
with the preceding sentence and (b) its consent, solely in its capacity as  an
Existing Lender  under the  Prior Credit  Agreement, to  the amendments of the
Prior Credit Agreement embodied herein.

                            ARTICLE X

                            THE AGENT
                            ---------                                           

    10.1. Appointment.   Union Bank  is hereby  appointed Agent  hereunder and
          -----------                                                           
under each other Loan Document, and  each of the Lenders authorizes the  Agent
to act as the agent of such Lender.  The Agent agrees to act as such upon  the
express conditions contained in  this Article X.   The Agent shall not  have a
fiduciary relationship in respect of the  Borrower or any Lender by reason  of
this Agreement.

    10.2. Powers.   The Agent  shall have  and may  exercise such powers under
          ------                                                                
the Loan Documents as are specifically delegated to the Agent by the terms  of
each thereof, together with such powers as are reasonably incidental  thereto.
The Agent shall have  no implied duties to  the Lenders, or any  obligation to
the Lenders,  to take  any action  thereunder, except  any action specifically
provided by the Loan Documents to be taken by the Agent.

    10.3. General  Immunity.    Neither  the  Agent  nor any of its directors,
          -----------------                                                     
officers, agents or employees  shall be liable to  the Borrower or any  Lender
for any action taken or omitted to  be taken by it or them hereunder  or under
any other Loan Document or in connection herewith or therewith except for  its
or their own gross negligence or willful misconduct.

    10.4. No Responsibility for Loans, Recitals,  etc.  Neither the Agent  nor
          --------------------------------------------                          
any of its directors, officers,  agents or employees shall be  responsible for
or have  any duty  to ascertain,  inquire into,  or verify  (a) any statement,
warranty or representation  made in connection  with any Loan  Document or any
borrowing hereunder, (b) the performance or observance of any of the covenants
or  agreements  of  any  obligor  under  any Loan Document, including, without
limitation, any  agreement by  an obligor  to furnish  information directly to
each Lender; (c)  the satisfaction of  any condition specified  in Article IV,
                                                                   ----------   
except receipt of items required to  be delivered to the Agent and  not waived
at closing; or (d) the validity, effectiveness, sufficiency or  enforceability
or  genuineness  of  any  Loan  Document  or  any  other instrument or writing
furnished in connection therewith.  The  Agent shall have no duty to  disclose
to  the  Lenders  information  that  is  not  required  to be furnished by the
Borrower  to  the  Agent  at  such  time,  but is voluntarily furnished by the
Borrower to the Agent  (either in its capacity  as Agent or in  its individual
capacity).

    10.5. Action on Instructions of Lenders.  The Agent shall in all cases  be
          ---------------------------------                                     
fully protected in acting, or  in refraining from acting, hereunder  and under
any other Loan Document in accordance with written instructions signed by  the
Required Lenders (or  all Lenders, as  applicable), and such  instructions and
any action taken or failure to act pursuant thereto shall be binding on all of
the Lenders and on all holders of  Notes.  The Agent shall be fully  justified
in failing or refusing to take  any action hereunder and under any  other Loan
Document  unless  it  shall  first  be  indemnified to its satisfaction by the
Lenders pro rata against any and  all liability, cost and expense that  it may
incur by reason of taking or continuing to take any such action.

    10.6. Employment of Agents and Counsel.  The Agent may execute any of  its
          --------------------------------                                      
duties as  Agent hereunder  and under  any other  Loan Document  by or through
employees, agents and

attorneys-in-fact and  shall not  be answerable  to the  Lenders, except as to
money or securities received by it  or its authorized agents, for the  default
or misconduct  of any  such agents  or attorneys-in-fact  selected by  it with
reasonable care.  The Agent shall be entitled to advice of counsel  concerning
all matters pertaining to the  agency hereby created and its  duties hereunder
and under any other Loan Document.

    10.7. Reliance on  Documents; Counsel.   The  Agent shall  be entitled  to
          -------------------------------                                       
rely upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by  it to be genuine and correct  and to
have been signed or sent by the  proper person or persons, and, in respect  of
legal  matters,  upon  the  opinion  of  counsel  selected by the Agent, which
counsel may be employees of the Agent.

    10.8. Agent's Reimbursement  and Indemnification.   The  Lenders agree  to
          ------------------------------------------                            
reimburse and indemnify  the Agent ratably  in proportion to  their respective
Commitments (or,  if the  Commitments have  been terminated,  in proportion to
their Commitments immediately prior to  such termination) (a) for any  amounts
not  reimbursed  by  the  Borrower   for  which  the  Agent  is   entitled  to
reimbursement by  the Borrower  under the  Loan Documents,  (b) for  any other
expenses incurred by the  Agent on behalf of  the Lenders, in connection  with
the preparation,  execution, delivery,  administration and  enforcement of the
Loan Documents,  and (c)  for any  liabilities, obligations,  losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of  any
kind and nature whatsoever  which may be imposed  on, incurred by or  asserted
against the Agent in any way relating to or arising out of the Loan  Documents
or any other  document delivered in  connection therewith or  the transactions
contemplated thereby, or the enforcement of any of the terms thereof or of any
such other documents;  provided, however, that  no Lender shall  be liable for
                       --------  -------                                        
any of the  foregoing to the  extent they arise  from the gross  negligence or
willful misconduct of the  Agent.  The obligations  of the Lenders under  this
Section 10.8 shall survive payment of the Obligations and termination of  this
- - ------------                                                                    
Agreement.

    10.9. Notice of Default.  The Agent shall not be deemed to have  knowledge
          -----------------                                                     
or notice  of the  occurrence of  any Default  or Unmatured  Default hereunder
unless the Agent  has received written  notice from a  Lender or the  Borrower
referring to this Agreement describing  such Default or Unmatured Default  and
stating that  such notice  is a  "notice of  default".   In the event that the
Agent receives such a  notice, the Agent shall  give prompt notice thereof  to
the Lenders.

    10.10.     Rights as a Lender.   In the event  the Agent is a  Lender, the
               ------------------                                               
Agent shall have the same rights and powers hereunder and under any other Loan
Document as any  Lender and may  exercise the same  as though it  were not the
Agent, and the term "Lender" or "Lenders" shall, at any time when the Agent is
a Lender,  unless the  context otherwise  indicates, include  the Agent in its
individual capacity.  The Agent may  accept deposits from, lend money to,  and
generally engage in any kind of  trust, debt, equity or other transaction,  in
addition to those contemplated by  this Agreement or any other  Loan Document,
with the Borrower  or any of  its Subsidiaries in  which the Borrower  or such
Subsidiary is not restricted hereby from engaging with any other Person.   The
Agent, in its individual capacity, is not obligated to remain a Lender.

    10.11.     Lender Credit Decision.  Each Lender acknowledges that it  has,
               ----------------------                                           
independently and  without reliance  upon the  Agent or  any other  Lender and
based on  the financial  statements prepared  by the  Borrower and  such other
documents and information  as it has  deemed appropriate, made  its own credit
analysis  and  decision  to  enter  into  this  Agreement  and  the other Loan
Documents.   Each Lender  also acknowledges  that it  will, independently  and
without  reliance  upon  the  Agent  or  any  other  Lender  and based on such
documents and information as it  shall deem appropriate at the  time, continue
to make its  own credit decisions  in taking or  not taking action  under this
Agreement and the other Loan Documents.

    10.12.     Successor Agent.   The Agent may  resign at any  time by giving
               ---------------                                                  
written notice thereof to the Lenders and the Borrower, such resignation to be
effective upon the appointment of a successor Agent or, if no successor  Agent
has been appointed, forty-five days  after the retiring Agent gives  notice of
its intention  to resign.   Upon  any such  resignation, the  Required Lenders
shall have the right to appoint, on behalf of the Lenders, a successor  Agent.
If no successor Agent shall have been so appointed by the Required Lenders and
shall have accepted  such appointment within  thirty days after  the resigning
Agent's giving notice of its intention to resign, then the resigning Agent may
appoint,  on  behalf  of  the  Lenders,  a  successor Agent.  If the Agent has
resigned and no  successor Agent has  been appointed, the  Lenders may perform
all the duties of the Agent hereunder and the Borrower shall make all payments
in respect  of the  Obligations to  the applicable  Lender and  for all  other
purposes shall  deal directly  with the  Lenders. No  successor Agent shall be
deemed to be appointed hereunder  until such successor Agent has  accepted the
appointment.    Any  such  successor  Agent  shall be a commercial bank having
capital and retained earnings of at least $50,000,000.  Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor  Agent
shall thereupon  succeed to  and become  vested with  all the  rights, powers,
privileges and duties of the resigning  Agent.  Upon the effectiveness of  the
resignation of  the Agent,  the resigning  Agent shall  be discharged from its
duties and obligations  hereunder and under  the other Loan  Documents.  After
the  effectiveness  of  the  resignation  of  an Agent, the provisions of this
Article X shall continue in effect for the benefit of such Agent in respect of
- - ---------                                                                       
any actions taken  or omitted to  be taken by  it while it  was acting as  the
Agent hereunder and under the other Loan Documents.

    10.13.     Documentary Agent.   The Documentary Agent  shall not have  any
               -----------------                                                
right,  power,  obligation,  liability,  responsibility  or  duty  under  this
Agreement other  than in  connection with  (i) the  initial syndication of the
Loans  and  Commitments  hereunder  and  (ii) the preparation, negotiation and
execution  of  the  Loan  Documents  and  any subsequent waivers, supplements,
amendments or other  modifications thereto.   The Agent agrees  to act jointly
with the Documentary  Agent in the  preparation, negotiation and  execution of
any future  waiver, supplement,  amendment or  other modification  to any Loan
Document.  All provisions of this Article X with respect to the Agent shall be
                                  ---------                                     
applicable to the Documentary Agent in connection with its activities pursuant
to this Section.   None of  the Lenders identified  on the cover  page of this
Agreement as a "Co-Agent" shall have any right, power, obligation,  liability,
responsibility or duty under this  Agreement or any other Loan  Document other
than those applicable to all Lenders as such.

                            ARTICLE XI

                     SETOFF; RATABLE PAYMENTS
                     ------------------------                                   

    11.1. Setoff.  In  addition to, and  without limitation of,  any rights of
          ------                                                                
the Lenders under applicable law,  if the Borrower becomes insolvent,  however
evidenced, or any  Default or Unmatured  Default occurs, any  and all deposits
(including all account balances, whether  provisional or final and whether  or
not collected or  available) and any  other Indebtedness at  any time held  or
owing by any  Lender to or  for the credit  or account of  the Borrower may be
offset and applied toward the payment of the Obligations owing to such Lender.

    11.2. Ratable Payments.   If any Lender,  whether by setoff  or otherwise,
          ----------------                                                      
has payment made to it upon  its Loans (other than payments received  pursuant
to Section 3.1, 3.2 or 3.4) in a greater proportion than its pro-rata share of
   -----------------------                                                      
such Loans, such Lender agrees, promptly upon demand, to purchase a portion of
the Loans held by  the other Lenders so  that after such purchase  each Lender
will  hold  its  ratable  proportion  of  Loans.    If  any Lender, whether in
connection  with  setoff  or  amounts  which  might  be  subject  to setoff or
otherwise, receives collateral or other protection for its Obligations or such
amounts which  may be  subject to  setoff, such  Lender agrees,  promptly upon
demand, to  take such  action necessary  such that  all Lenders  share in  the
benefits of such collateral ratably in proportion to their Loans.  In case any
such payment is disturbed by legal process, or otherwise, appropriate  further
adjustments shall be made.   If an amount  to be set off  is to be applied  to
Indebtedness of the Borrower to a Lender, other than Indebtedness evidenced by
any of the Notes held by such Lender, such amount shall be applied ratably  to
such other Indebtedness and to the Indebtedness evidenced by such Notes.

                           ARTICLE XII

        BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
        -------------------------------------------------                       

    12.1. Successors  and  Assigns.    The  terms  and  provisions of the Loan
          ------------------------                                              
Documents shall be binding upon and  inure to the benefit of the  Borrower and
the Lenders and their respective  successors and assigns, except that  (a) the
Borrower shall not have  the right to assign  its rights or obligations  under
the Loan Documents without the consent of all Lenders, and (b) any  assignment
by any Lender must be made  in compliance with Section 12.3.   Notwithstanding
                                               ------------                     
clause (b) of this Section, any Lender may at any time, without the consent of
- - ----------                                                                      
the Borrower or the Agents, assign all or any portion of its rights under this
Agreement and its Notes to a Federal Reserve Bank; provided, however, that  no
                                                   --------  -------            
such assignment to a Federal Reserve Bank shall release the transferor  Lender
from its obligations hereunder.  The Agent may treat the payee of any Note  as
the owner thereof for all purposes hereof unless and until such payee complies
with Section 12.3 in the case of an assignment thereof or, in the case of  any
     ------------                                                               
other transfer, a  written notice of  such transfer is  filed with the  Agent.
Any assignee or transferee of a Note agrees by acceptance thereof to be  bound
by all the terms and provisions of the Loan Documents.  Any request, authority
or consent of  any Person, who  at the time  of making such  request or giving
such authority or consent is the holder of any Note, shall be

conclusive and  binding on  any subsequent  holder, transferee  or assignee of
such Note or of any Note or Notes issued in exchange therefor.

    12.2. Participations.
          --------------                                                        

          12.2.1.  Permitted Participants;  Effect.   Any Lender  may, in  the
                   -------------------------------                              
ordinary course of its business and in accordance with applicable law, at  any
time  sell  to   one  or  more   banks  or  other   entities  ("Participants")
                                                                ------------    
participating interests in  any Loan owing  to such Lender,  the Note held  by
such Lender,  the Commitment  of such  Lender or  any other  interest of  such
Lender  under  the  Loan  Documents;  provided,  however,  that  any sale of a
                                      --------   -------                        
participation to an  insurance company or  a company known  by such Lender  to
control or  be controlled  by or  be under  common control  with an  insurance
company shall require the prior written consent of the Borrower, which consent
shall not be unreasonably withheld.  In the event of any such sale by a Lender
of participating interests to  a Participant, such Lender's  obligations under
the Loan  Documents shall  remain unchanged,  such Lender  shall remain solely
responsible  to  the  other  parties  hereto  for  the  performance  of   such
obligations, such  Lender shall  remain the  holder of  any such  Note for all
purposes under the Loan Documents,  all amounts payable by the  Borrower under
this  Agreement  shall  be  determined  as  if  such  Lender had not sold such
participating interests, and the Borrower and the Agent shall continue to deal
solely and directly with such  Lender in connection with such  Lender's rights
and obligations under the Loan Documents.

          12.2.2.  Voting Rights.  Each Lender shall retain the sole right  to
                   -------------                                                
approve, without the consent  of any Participant, any  amendment, modification
or waiver of  any provision of  the Loan Documents  other than any  amendment,
modification or waiver  which effects any  of the modifications  referenced in
clauses (a) through (g)  of Section 8.2 and  which the Lender and  Participant
                            -----------                                         
agree shall require approval of the Participant.

          12.2.3.  Benefit  of  Setoff.     The  Borrower  agrees  that   each
                   -------------------                                          
Participant shall be deemed  to have the right  of setoff provided in  Section
                                                                       -------  
11.1 in respect of its participating interest in amounts owing under the  Loan
- - ----                                                                            
Documents to the same  extent as if the  amount of its participating  interest
were owing directly to it as a Lender under the Loan Documents; provided, that
each Lender shall  retain the right  of setoff provided  in Section 11.1  with
                                                            ------------        
respect to  the amount  of participating  interests sold  to each Participant.
The Lenders  agree to  share with  each Participant,  and each Participant, by
exercising the right of setoff provided in Section 11.1, agrees to share  with
                                           ------------                         
each Lender,  any amount  received pursuant  to the  exercise of  its right of
setoff, such amounts to be shared  in accordance with Section 11.2 as  if each
                                                      ------------              
Participant were a Lender.

    12.3. Assignments.
          -----------                                                           

          12.3.1.  Permitted Assignments.   Any  Lender may,  in the  ordinary
                   ---------------------                                        
course of  its business  and in  accordance with  applicable law,  at any time
assign to one or more banks  or other entities ("Purchasers") all or  any part
                                                 ----------                     
of its  rights and  obligations under  the Loan  Documents; provided, however,
                                                            --------  -------   
that in the case  of an assignment to  an entity which is  not a Lender or  an
Affiliate  of  a  Lender,  such  assignment  shall  be  in a minimum amount of
$5,000,000 and shall require the  prior written consent of the  Borrower, such
consent not to be unreasonably withheld.

Such assignment shall  be substantially in  the form of  Exhibit E or  in such
                                                         ---------              
other form as may be agreed to by the parties thereto.

          12.3.2.  Effect; Effective Date.   Upon (a)  delivery to the  Agents
                   ----------------------                                       
of a notice of assignment, substantially in the form attached as Exhibit I  to
Exhibit E (a "Notice of  Assignment"), together with any consents  required by
- - ---------     ---------------------                                             
Section 12.3.1, and (b)  payment of a $2,000  fee to the Agent  for processing
- - --------------                                                                  
such assignment, such assignment shall become effective on the effective  date
specified in such Notice  of Assignment.  On  and after the effective  date of
such assignment, (a) such Purchaser shall  for all purposes be a Lender  party
to this  Agreement and  any other  Loan Document  executed by  the Lenders and
shall  have  all  the  rights  and  obligations  of  a  Lender  under the Loan
Documents, to the same extent as if it were an original party hereto, and  (b)
the transferor Lender shall be released with respect to the percentage of  the
Aggregate Revolving  Credit Commitment  and Loans  assigned to  such Purchaser
without any  further consent  or action  by the  Borrower, the  Lenders or the
Agent.  Upon  the consummation of  any assignment to  a Purchaser pursuant  to
this Section 12.3.2, the transferor  Lender, the Agent and the  Borrower shall
     --------------                                                             
make appropriate  arrangements so  that a  replacement Note  is issued to such
transferor Lender and a  new Note or, as  appropriate, a replacement Note,  is
issued to such Purchaser, in  each case in principal amounts  reflecting their
Revolving Credit Commitment, as adjusted pursuant to such assignment.

    12.4. Dissemination of Information.   The Borrower authorizes each  Lender
          ----------------------------                                          
to disclose to any Participant or  Purchaser or any other Person acquiring  an
interest in the Loan Documents by  operation of law (each a "Transferee")  and
                                                             ----------         
any  prospective  Transferee,  subject  to  the  Borrower's consent (not to be
unreasonably withheld) to  such Transferee if  such consent is  required under
Section 12.2.1 or 12.3.1, any and all information in such Lender's  possession
- - --------------    ------                                                        
concerning the creditworthiness of the Borrower and its Subsidiaries.

    12.5. Tax Treatment.  If any interest in any Loan Document is  transferred
          -------------                                                         
to any Transferee which is organized under the laws of any jurisdiction  other
than the United States or any State thereof, the transferor Lender shall cause
such  Transferee,  concurrently  with  the  effectiveness of such transfer, to
comply with the provisions of Section 2.18.
                              ------------                                      

                           ARTICLE XIII

                             NOTICES
                             -------                                            

    13.1. Giving Notice.  Except as  otherwise permitted by Section 2.15  with
          -------------                                     ------------        
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement  or any other Loan Document shall  be in
writing,  by  facsimile,  first  class  U.S.  mail  or  overnight  courier and
addressed  or  delivered  to  such  party  at  its address set forth below its
signature hereto or at such other  address as may be designated by  such party
in  a  notice  to  the  other  parties.    Any  notice, if mailed and properly
addressed with first class postage prepaid, return receipt requested, shall be
deemed given  three (3)  Business Days  after deposit  in the  U.S. mail;  any
notice, if transmitted by facsimile,  shall be deemed given when  transmitted;
and any notice given by overnight courier shall be deemed given when  received
by the addressee.

    13.2. Change of  Address.   The Borrower,  the Agents  and any  Lender may
          ------------------                                                    
each change the address for service of  notice upon it by a notice in  writing
to the other parties hereto.

                     [Signature pages follow]

         IN WITNESS  WHEREOF, the  Borrower, the  Lenders and  the Agents have
executed this Agreement as of the date first above written.

                             20TH CENTURY INDUSTRIES

                             By:  William L. Mellick

                             Title: President & Chief Executive Officer
                                   6301 Owensmouth Avenue
                                   Woodland Hills, California  91367

                             Attention:  William L. Mellick,
                                         President and Chief Executive Officer

                             Telephone:  (818) 704-3393
                             Telecopy:    (818) 704-6223

    Commitments
    -----------
    $32,000,000                   THE FIRST NATIONAL BANK OF CHICAGO,
                                  individually and as Documentary Agent

                             By:  Paul T. Schultz

                             Title:  Vice President
                                    One First National Plaza
                                    Chicago, Illinois  60670

                                Attention:  Paul T. Schultz

                             Telephone:   (312) 732-7074
                             Telecopy:    (312) 732-4033

    Commitments
    -----------

    $32,000,000                   UNION BANK, individually and as Agent

                             By:  Robert C. Dawson

                             Title:  Vice President
                                  445 Figueroa Street
                                  Los Angeles, California  90071

                               Attention:   Robert C. Dawson

                             Telephone:   (213) 236-4249
                             Telecopy:    (213) 629-5328

    Commitments
    -----------

    $29,000,000                   THE BANK OF NEW YORK

                             By:  Christine M. Herrick

                             Title:
                                    One Wall Street
                                    New York, New York  10286

                                Attention:  Christine M. Herrick

                             Telephone:   (212) 635-7853
                             Telecopy:    (212) 809-9520

    Commitments
    -----------

    $0                       BANK ONE TEXAS, N.A.

                             By:  D. Keith Thompson

                             Title:  Assistant Vice President
                                    1717 Main Street, 4th Floor
                                    Dallas, Texas  75201

                                Attention:  D. Keith Thompson

                             Telephone:  (214) 290-2303
                             Telecopy:    (214) 290-2332

    Commitments
    -----------

    $25,000,000              FIRST UNION NATIONAL BANK OF
                               NORTH CAROLINA

                             By:  Bill A. Shirley

                             Title:  Vice President
                                    One First Union Center TW19
                                    Charlotte, North Carolina  28288

                                Attention:  Tammy F. Anderson

                             Telephone:   (704) 374-6928
                             Telecopy:    (704) 383-9144

    Commitments
    -----------

    $19,000,000                   SANWA BANK CALIFORNIA

                             By:  John C. Hyche

                             Title:  Vice President
                                    Sanwa Bank Plaza, 8th Floor
                                    601 South Figueroa Street
                                    Los Angeles, California  90017

                                Attention:  John Hyche

                             Telephone:   (213) 896-7543
                             Telecopy:    (213) 896-7282

    Commitments
    -----------

    $29,000,000                   FLEET NATIONAL BANK OF CONNECTICUT

                             By:  James H. Steane II

                             Title:  Senior Vice President
                                    777 Main Street, MSN 250
                                    Hartford, Connecticut  06115

                                Attention:  James H. Steane II

                             Telephone:  (203) 986-2810
                             Telecopy:    (203) 986-1264

    Commitments
    -----------

    $8,000,000                    BANK OF AMERICA

                             By:  Gary R. Pett

                             Title:  Senior Vice President
                                    231 South LaSalle Street
                                    Chicago, Illinois  60697

                                Attention:  Colleen Mullins

                             Telephone:   (312) 828-8206
                             Telecopy:    (312) 828-4203

    Commitments
    -----------

    $11,000,000                   CREDIT LYONNAIS CAYMAN ISLANDS BRANCH

                             By:  William J. Fischer

                             Title:
                                    Three Embarcadero Center, Suite 1640
                                    San Francisco, California  94111

                                Attention:  Ed Leong

                             Telephone:   (415) 956-7002
                             Telecopy:    (415) 956-7008

    Commitments
    -----------

    $11,000,000                   WELLS FARGO BANK, N.A.

                             By:  Richard H. Palmer

                             Title:  Vice President
                                    333 South Grand Avenue, 12th Floor
                                    Los Angeles, California  90071

                                Attention:  Richard Palmer

                             Telephone:  (213) 253-6137
                             Telecopy:    (213) 617-7620

    Commitments
    -----------

    $29,000,000                   THE CHASE MANHATTAN BANK, N.A.

                             By:

                             Title:
                                    One Chase Manhattan Plaza, 4th Floor
                                    New York, New York  10081

                                Attention:  Jill D. Schildkraut

                             Telephone:   (212) 552-7757
                             Telecopy:    (212) 552-1999

    Total:
    $225,000,000
    ============
Document Number:  0055902.11CREDIT.AGR
12-6-95/06:20pm

                            EXHIBIT A
                            ---------                                           

                             FORM OF
                         PROMISSORY NOTE

$________________                                             December 7, 1995

      FOR  VALUE  RECEIVED,  the  undersigned,  20TH  CENTURY  INDUSTRIES,   a
California corporation  ("Borrower"), unconditionally  promises to  pay to the
                          --------                                              
order of _____________________ ("Lender"), at the main office of Union Bank in
                                 ------                                         
Los Angeles, California, in lawful money  of the United States of America  and
in immediately  available funds,  the principal  amount of ___________________
DOLLARS ($__________), or, if less,  the aggregate unpaid principal amount  of
all Advances made by the Lender  to the undersigned pursuant to Article  II of
the Credit Agreement (as defined below).  The principal amount of each Advance
evidenced  hereby  shall  be  payable  as  set  forth  in the Credit Agreement
hereinafter referred to, with any outstanding principal amount of the Advances
made by the Lender being payable  on the Facility Termination Date.   Borrower
further agrees to pay interest on  the unpaid principal amount hereof in  like
money from time  to time from  the date hereof  at the rates  and on the dates
specified in the  Credit Agreement.   The Lender is  authorized to record  the
date and  amount of  each Advance  and the  date and  amount of each principal
payment hereunder on the schedule annexed hereto and made a part hereof (or on
a continuation thereof which shall be attached hereto and made a part  hereof)
or otherwise  on the  records of  the Lender,  and any  such recordation shall
constitute  prima  facie  evidence  of  the  accuracy  of  the  information so
            -----  -----                                                        
recorded;  provided,  however,  that  the  failure  of the Lender to make such
           --------   -------                                                   
recordation  (or  any  error  in  such  recordation)  shall  not  affect   the
obligations of Borrower hereunder or under the Credit Agreement.

      This Promissory Note is one of the Notes referred to in the Amended  and
Restated  Credit  Agreement  dated  as  of  December  7,  1995    (as amended,
supplemented, restated or  otherwise modified from  time to time,  the "Credit
                                                                        ------  
Agreement") among Borrower, The First National Bank of Chicago, as Documentary
- - ---------                                                                       
Agent, Union Bank, as Agent, and the Lenders named therein, and is subject  to
the provisions thereof, and  reference is hereby made  for a statement of  the
terms and conditions governing this  Promissory Note, including the terms  and
conditions under  which this  Promissory Note  may be  prepaid or its maturity
accelerated.    Capitalized  terms  defined  in  the Credit Agreement are used
herein with their defined meanings unless otherwise defined herein.

      Upon the occurrence of any one or more of the Defaults specified in  the
Credit Agreement all amounts then remaining unpaid on this Promissory Note may
become, or may be declared to  be, immediately due and payable as  provided in
the Credit Agreement.

      All parties  now and  hereafter liable  with respect  to this Promissory
Note,  whether  maker,  principal,  surety,  guarantor, endorser or otherwise,
hereby waive presentment, demand, protest and all other notices of any kind.

      THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

                                   20TH CENTURY INDUSTRIES

                                   By:_______________________________

                                   Print:____________________________

                                   Title:____________________________

Document Number:  0058224.06
12-7-95/10:23am

                 Schedule to the Promissory Note
                 -------------------------------

                         REVOLVING CREDIT
                 LOANS AND PAYMENTS OF PRINCIPAL
                 -------------------------------

             Amount               Amount of           Unpaid          Notation
Date      of Advances          Principal Repaid    Principal Balance  Made By
- - ----      -----------          ----------------    -----------------  --------

                            EXHIBIT B
                            ---------

                   AMMENDMENT OF PLEDGE AGREEMENT
                   ------------------------------

      This Amendment, dated  as of December  7, 1995, is  by and between  20TH
CENTURY INDUSTRIES, a California corporation (the "Borrower"), and UNION BANK,
as agent for the Lenders (as defined below).

                         R E C I T A L S:
                         ---------------                                        

      A.    Reference  is  made  to  that  certain Amended and Restated Credit
Agreement dated as of the date hereof among the Borrower, Union Bank, as Agent
and as lender, The First National Bank of Chicago, as Documentary Agent and as
lender,  and  the  other  financial  institutions  party  thereto (the "Credit
Agreement").   Each capitalized  term used  but not  otherwise defined  herein
shall have the meaning ascribed to it by the Credit Agreement.

      B.    The Borrower  and Union  Bank, as  Agent, entered  into a  certain
Pledge Agreement dated as of  June 30, 1994 (the "Pledge  Agreement") pursuant
to which the stock of 20th Century and 21st Century was pledged to secure  the
Obligations.

      C.The Borrower and  the Agent, acting  with the consent  of the Lenders,
wish to amend the Pledge Agreement.

      NOW,  THEREFORE,  in  consideration  of  the mutual execution hereof and
other good and valuable consideration, the parties hereto agree as follows:

            1.    Amendment of Pledge Agreement.
                  -----------------------------                                 

            (a)   The definition  of "Credit  Agreement" in  Section 1  of the
      Pledge Agreement is hereby amended in its entirety to read as follows:

                  "'Credit  Agreement'  means  that  certain  Credit Agreement
                    -----------------                                           
            dated as  of June  30, 1994  among the  Company, the  Lenders, the
            Agent  and  the  Documentary  Agent,  as  amended  and restated on
            December 7, 1995 and as  it may be further amended,  supplemented,
            restated or otherwise modified from time to time."

            (b)   A  new  definition  is  added  to  Section  1  of the Pledge
      Agreement in appropriate alphabetical order as follows:

                  "'Default  Rate'  means  the  rate  prescribed by the second
                    -------------                                               
            sentence of Section 2.11 of the Credit Agreement."

            (c)   The definition of "Pledged Stock" in Section 1 of the Pledge
      Agreement is hereby amended in its entirety to read as follows:

                  "'Pledged  Stock'  means  all  of  the outstanding shares of
                    --------------                                              
            capital stock of 20th Century and 21st Century."

            (d)   Section 5.1 is hereby amended by deleting the last  sentence
      thereof in its entirety and inserting the following:

                  "The  Company  will  hold  in  trust  for the Agents and the
            Lenders upon  receipt and  immediately thereafter  deliver to  the
            Agent such additional shares  and any other instrument  evidencing
            or constituting  Collateral (except,  prior to  the occurrence  of
            an Unmatured  Default or  a Default,  ordinary cash  dividends, if
            any, paid with respect to  the Pledged Stock and the  Stock Rights
            and permitted  by the  Credit Agreement);  provided, however, that
                                                       --------  -------        
            the  Company  may  direct  the  application  of dividends received
            during an  Unmatured Default  to specified  principal and interest
            payments under the Credit Agreement."

            (e)   Section  9.6  is  hereby  amended  by  adding  the words "or
      obligations" after the words "its rights" in line 5 of such Section.

            (f)   Section 9.13 is  hereby amended in  its entirety to  read as
      follows:

                  "9.13.  CHOICE  OF  LAW.    THIS  PLEDGE  AGREEMENT SHALL BE
                          ---------------                                       
            CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS, WITHOUT REGARD  TO
            CONFLICT OF LAWS PROVISIONS, OF THE STATE OF NEW YORK, BUT  GIVING
            EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS."

            (g)   Schedule  A  to  the  Pledge  Agreement  is  amended  in its
      entirety to read as set      forth on Schedule A hereto.

            2.    Representations and Warranties.  The Borrower hereby remakes
                  ------------------------------                                
and affirms as of the date hereof the representations and warranties set forth
in Section 4 of the Pledge Agreement.

            3.    Affirmation of  Pledge.   The Borrower  hereby reaffirms its
                  ----------------------                                        
pledge of  the Collateral  to the  Agent pursuant  to the  Pledge Agreement to
secure the Obligations and acknowledges that the Agent holds the Pledged Stock
and related stock powers for the benefit of the Agents and all the Lenders  to
secure the Obligations.

            4.    Effect.   Except as  specifically amended  above, the Pledge
                  ------                                                        
Agreement shall remain in full force and effect and is hereby in all respects,
ratified and confirmed.  From and after the date hereof, each reference in the
Pledge Agreement to "this Agreement", "hereunder", "hereof", "herein" or words
of similar import  shall mean and  be a reference  to the Pledge  Agreement as
amended hereby.

            5.    This  Amendment  shall  be  governed  by  and  construed  in
accordance with the internal laws (as opposed to conflicts of laws provisions)
of the  State of  New York  but giving  effect to  federal laws  applicable to
national banks.

            6.    This   Amendment   may   be   executed   in  any  number  of
counterparts, each of which when so  executed shall be deemed an original  but
all such counterparts shall constitute one and the same instrument.

      IN WITNESS WHEREOF, the parties  have executed this Amendment of  Pledge
Agreement as of the day and year first written above.

                                   UNION BANK, as Agent

                                   By:____________________________

                                   Its:___________________________

                                   20TH CENTURY INDUSTRIES

                                   By:____________________________

                                   Its:___________________________

Document Number:  0059101.05
12-7-95/10:23am



                                       Schedule A to
                                     Pledge Agreement

                                       Pledged Stock

         Pledged Stock          Jurisdiction         No. of          No. of    Par Value    % of Outstanding
       Corporation Name          of Domicile    Stock Certificate    Shares    Per Share      Capital Stock
       ----------------          -----------    -----------------    ------    ---------      -------------

                                                                                                                  
20th Century Insurance Company    California           1             10,000        $300.00       100%

21st Century Casualty Company     California           1              1,300      $1,000.00       100%

EXHIBIT C FORM OF COMPLIANCE CERTIFICATE ---------------------- To: The Lenders parties to the Credit Agreement described below. This Compliance Certificate is furnished pursuant to that certain Amended and Restated Credit Agreement dated as of December 7, 1995, among 20th Century Industries (the "Borrower"), the Lenders party thereto, Union Bank, as Agent for the Lenders, and The First National Bank of Chicago, as Documentary Agent for the Lenders (as amended, supplemented, restated or otherwise modified from time to time, the "Agreement"). Unless otherwise defined herein, the terms used in this Compliance Certificate have the meanings ascribed thereto in the Agreement. THE UNDERSIGNED IN HIS/HER CAPACITY AS AN OFFICER OF THE BORROWER, HEREBY CERTIFIES THAT: A. I am the duly elected __________________ of the Borrower; 1. I have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Borrower and its Subsidiaries during the accounting period covered by the attached financial statements; 2. The examinations described in paragraph 1 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Default or Unmatured Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth below; and 3. Schedule I attached hereto sets forth financial data and computations evidencing the Borrower's compliance with certain covenants of the Agreement, all of which data and computations are true, complete and correct. Described below are the exceptions, if any, to paragraph 2 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition or event: ------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------ The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this ________ day of _____________ , 19___. ____________________________ [SAMPLE] SCHEDULE "I" TO COMPLIANCE CERTIFICATE -------------------------------------- Schedule of Compliance as of _________________ With Provisions of Section 6.14, 6.21 and 6.22 of the Agreement 6.14. AIG Investments. - - ---- --------------- Investments by the Borrower and its Subsidiaries in any joint venture or strategic alliance with AIG or its Affiliates as contemplated under the AIG Agreement $___________ MAXIMUM INVESTMENTS PER COVENANTS $15,000,000 6.14(b)(ii). Investments - - ----------- ----------- A. Investments (excluding Investments in Affiliates) not rated NAIC-2 or better. $___________ B. Consolidated Investments of Insurance Subsidiaries $___________ Ratio of A to B ____________ MAXIMUM RATIO: .02 to 1.00 6.21.1. Minimum Net Worth. - - ------ ----------------- Net Worth (actual) $__________ MINIMUM CONSOLIDATED NET WORTH: (i) $350,000,000 $__________ + (ii) Positive Net Income for each fiscal quarter ending on or after 12/31/95 X .50 $__________ + (iii) 50% of the net proceeds to the Borrower or its Subsidiaries of sales of equity securities (excluding surplus contributions to Insurance Companies) $__________ SUM of (i), (ii) and (iii) $_________ __________ 6.22.1. Surplus as Regards Policyholders. - - ------ -------------------------------- MINIMUM SURPLUS: (i) Surplus as Regards Policyholders $_________ MINIMUM SURPLUS AS REGARDS POLICYHOLDERS PER COVENANT (i) $250,000,000 $__________ + (ii) Borrower's aggregate consolidated Statutory Net Income, if positive, for each fiscal quarter ending on or after 12/31/95 X .25 $__________ SUM of (i) and (ii) 6.22.2. Operating Leverage. - - ------ ------------------ (i) Net Written Premiums for preceding four fiscal quarters $ (ii) Aggregate Surplus as Regards Policyholders $ Ratio of (i) to (ii) _______:1.0 MAXIMUM RATIOS: Period Ratio ------ ----- to 6/30/96 3.50 to 1.00 7/01/96 and thereafter 3.25 to 1.00 6.22.3. Coverage Ratio. - - ------ -------------- A. Consolidated Statutory Net Income of Insurance Subsidiaries for the four most recent fiscal quarters then ended $_________ B. (i) Principal and interest paid during the four fiscal quarters then ended on all Indebtedness of the Borrower (other than repayments of principal on Loans pursuant to sections 2.6 and 2.7(b)) $_________ + (ii) Cash dividends paid on capital stock and all repurchases or redemptions of capital stock during the four most recent fiscal quarters then ended $_________ SUM of (i) and (ii) $________ Ratio of A to B ______ : 1.0 MINIMUM RATIO: 1.50 to 1.00 Information relating to determination of Applicable Eurodollar Margin and Applicable ABR Margin: A. Unassigned Funds are [positive/negative] B. Ratio of Aggregate Revolving Credit Commitment to Surplus as Regards Policyholders is .____ to 1.00. Document Number: 0058237.06 12-7-95/10:24am EXHIBIT D FORM OF MONTHLY CERTIFICATE ------------------- To: The Lenders parties to the Credit Agreement described below. This Monthly Certificate is furnished pursuant to that certain Amended and Restated Credit Agreement dated as of December 7, 1995, among 20th Century Industries (the "Borrower"), the Lenders party thereto, Union Bank, as Agent -------- for the Lenders, and The First National Bank of Chicago, as Documentary Agent for the Lenders (as amended, supplemented, restated or otherwise modified from time to time, the "Agreement"). Unless otherwise defined herein, the terms --------- used in this Monthly Certificate have the meanings ascribed thereto in the Agreement. THE UNDERSIGNED IN HIS/HER CAPACITY AS AN OFFICER OF THE BORROWER, HEREBY CERTIFIES THAT: 1. I am the duly elected Chief Financial Officer of the Borrower; and 2. Schedule I attached hereto sets forth certain financial data and ---------- computations of 20th Century Insurance Company ("20th Century"), all of which ------------ data and computations are true, complete and correct. The foregoing certifications, together with the computations set forth in Schedule I hereto are made and delivered this ________ day of _____________ ---------- , 19___. ----------------------------------- Chief Financial Officer [SAMPLE] SCHEDULE "I" TO MONTHLY CERTIFICATE ----------------------------------- Schedule of Computation with respect to 20th Century as of ______[date]_______ , _______ Information relating to determination of Applicable Eurodollar Margin and Applicable ABR Margin: A. Unassigned Funds as of __________, ____ was [positive/negative] $________. B. Ratio of Aggregate Revolving Credit Commitment to Surplus as Regards Policyholders of 20th Century was ____ to 1.00. (i) Aggregate Revolving Credit Commitment as of $__________ __________, ____ (ii) Surplus as Regards Policyholders of 20th Century as of ___________, ____ $__________ (iii) Ratio of (i) to (ii) _____ to 1.00 Document Number: 0062811.04 12-7-95/10:27am EXHIBIT E FORM OF ASSIGNMENT AGREEMENT -------------------- This Assignment Agreement (this "Assignment Agreement") between ________________(the "Assignor") and __________________ (the "Assignee") is dated as of _______________ , 19__. The parties hereto agree as follows: 1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit ---------------------- Agreement (which, as it may be amended, modified, renewed or extended from time to time is herein called the "Credit Agreement") described in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to them in the Credit Agreement. 2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns ------------------------- to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor's rights and obligations under the Credit Agreement such that after giving effect to such assignment the Assignee shall have purchased pursuant to this Assignment Agreement the percentage interest specified in Item 3 of Schedule 1 of all outstanding rights and obligations under the Credit Agreement relating to the facility identified on Schedule 1 and the other Loan Documents. The aggregate Commitment (or Loans, if the applicable Commitment has been terminated) purchased by the Assignee hereunder is set forth in Item 4 of Schedule 1. 3. EFFECTIVE DATE. The effective date of this Assignment Agreement -------------- (the "Effective Date") shall be the later of the date specified in Item 5 of Schedule 1 or two Business Days (or such shorter period agreed to by the Agent) after a Notice of Assignment substantially in the form of Exhibit "I" attached hereto has been delivered to the Agent. Such Notice of Assignment must include any consents required to be delivered to the Agent by Section 12.3.1 of the Credit Agreement. In no event will the Effective Date occur if the payments required to be made by the Assignee to the Assignor on the Effective Date under Sections 4 and 5 hereof are not made on the proposed Effective Date. The Assignor will notify the Assignee of the proposed Effective Date no later than the Business Day prior to the proposed Effective Date. As of the Effective Date, (i) the Assignee shall have the rights and obligations of a Lender under the Loan Documents with respect to the rights and obligations assigned to the Assignee hereunder and (ii) the Assignor shall relinquish its rights and be released from its corresponding obligations under the Loan Documents with respect to the rights and obligations assigned to the Assignee hereunder except its rights to indemnification by the Borrower under the Credit Agreement. 4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the --------------------- Assignee shall be entitled to receive from the Agent all payments of principal, interest and fees with respect to the interest assigned hereby. The Assignee shall advance funds directly to the Agent with respect to all Loans and reimbursement payments made on or after the Effective Date with respect to the interest assigned hereby. [In consideration for the sale and assignment of Loans hereunder, (i) the Assignee shall pay the Assignor, on the Effective Date, an amount equal to the principal amount of the portion of all Floating Rate Advances assigned to the Assignee hereunder and (ii) with respect to each Eurodollar Loan made by the Assignor and assigned to the Assignee hereunder which is outstanding on the Effective Date, (a) on the last day of the Interest Period therefor or (b) on such earlier date agreed to by the Assignor and the Assignee or (c) on the date on which any such Eurodollar Loan either becomes due (by acceleration or otherwise) or is prepaid (the date as described in the foregoing clauses (a), (b) or (c) being hereinafter referred to as the "Payment Date"), the Assignee shall pay the Assignor an amount equal to the principal amount of the portion of such Eurodollar Loan assigned to the Assignee which is outstanding on the Payment Date. If the Assignor and the Assignee agree that the Payment Date for such Eurodollar Loan shall be prior to the last day of the Interest Period therefor, they shall agree on the interest rate applicable to the portion of such Loan assigned hereunder for the period from the Effective Date to the end of the existing Interest Period applicable to such Eurodollar Loan (the "Agreed Interest Rate") and any interest received by the Assignee in excess of the Agreed Interest Rate shall be remitted to the Assignor. In the event interest for the period from the Effective Date to but not including the Payment Date is not paid by the Company with respect to any Eurodollar Loan sold by the Assignor to the Assignee hereunder, the Assignee shall pay to the Assignor interest for such period on the portion of such Eurodollar Loan sold by the Assignor to the Assignee hereunder at the applicable rate provided by the Credit Agreement. In the event a prepayment of any Eurodollar Loan which is existing on the Payment Date and assigned by the Assignor to the Assignee hereunder occurs after the Payment Date but before the end of the Interest Period applicable to such Eurodollar Loan, the Assignee shall remit to the Assignor the excess of the prepayment penalty paid with respect to the portion of such Eurodollar Loan assigned to the Assignee hereunder over the amount which would have been paid if such prepayment penalty was calculated based on the Agreed Interest Rate. The Assignee will also promptly remit to the Assignor (i) any principal payments received from the Agent with respect to Eurodollar Loans prior to the Payment Date and (ii) any amounts of interest on Loans and fees received from the Agent which relate to the portion of the Loans assigned to the Assignee hereunder for periods prior to the Effective Date, in the case of Floating Rate Advances, or the Payment Date, in the case of Eurodollar Loans, and not previously paid by the Assignee to the Assignor.]* In the event that either party hereto receives any payment to which the other party hereto is entitled under this Assignment Agreement, then the party receiving such amount shall promptly remit it to the other party hereto. *Each Assignor may insert its standard payment provisions in lieu of the payment terms included in this Exhibit. [5. FEES PAYABLE BY THE ASSIGNEE. The Assignee shall pay to the -------------------------------- Assignor a fee on each day on which a payment of interest or commitment fees is made under the Credit Agreement with respect to the amounts assigned to the Assignee hereunder (other than a payment of interest or commitment fees for the period prior to the Effective Date or, in the case of Eurodollar Loans, the Payment Date, which the Assignee is obligated to deliver to the Assignor pursuant to Section 4 hereof). The amount of such fee shall be the difference between (i) the interest or fee, as applicable, paid with respect to the amounts assigned to the Assignee hereunder and (ii) the interest or fee, as applicable, which would have been paid with respect to the amounts assigned to the Assignee hereunder if each interest rate was of 1% less than the interest rate paid by the Borrower or if the commitment fee was of 1% less than the commitment fee paid by the Borrower, as applicable. In addition, the Assignee agrees to pay % of the recordation fee required to be paid to the Agent in connection with this Assignment Agreement.] 6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S ------------------------------------------------------------------ LIABILITY. The Assignor represents and warrants that it is the legal and - - --------- beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim created by the Assignor. It is understood and agreed that the assignment and assumption hereunder are made without recourse to the Assignor and that the Assignor makes no other representation or warranty of any kind to the Assignee. Neither the Assignor nor any of its officers, directors, employees, agents or attorneys shall be responsible for (i) the due execution, legality, validity, enforceability, genuineness, sufficiency or collectibility of any Loan Document, including without limitation, documents granting the Assignor and the other Lenders a security interest in assets of the Borrower or any guarantor, (ii) any representation, warranty or statement made in or in connection with any of the Loan Documents, (iii) the financial condition or creditworthiness of the Borrower or any guarantor, (iv) the performance of or compliance with any of the terms or provisions of any of the Loan Documents, (v) inspecting any of the Property, books or records of the Borrower, (vi) the validity, enforceability, perfection, priority, condition, value or sufficiency of any collateral securing or purporting to secure the Loans or (vii) any mistake, error of judgment, or action taken or omitted to be taken in connection with the Loans or the Loan Documents. 7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that ------------------------------- it has received a copy of the Credit Agreement, together with copies of the financial statements requested by the Assignee and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement, (ii) agrees that it will, independently and without reliance upon the Agents, the Assignor or any other Lender and based on such documents and information at it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, (iii) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto, (iv) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender, (v) agrees that its payment instructions and notice instructions are as set forth in the attachment to Schedule 1, (vi) confirms that none of the funds, monies, assets or other consideration being used to make the purchase and assumption hereunder are "plan assets" as defined under ERISA and that its rights, benefits and interests in and under the Loan Documents will not be "plan assets" under ERISA, [and (vii) attaches the forms prescribed by the Internal Revenue Service of the United States certifying that the Assignee is entitled to receive payments under the Loan Documents without deduction or withholding of any United States federal income taxes.*] *to be inserted if the Assignee is not incorporated under the laws of the United States, or a state thereof. 8. INDEMNITY. The Assignee agrees to indemnify and hold harmless the --------- Assignor against any and all losses, costs and expenses (including, without limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor in connection with or arising in any manner from the Assignee's non- performance of the obligations assumed under this Assignment Agreement. 9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee ---------------------- shall have the right pursuant to Section 12.3.1 of the Credit Agreement to assign the rights which are assigned to the Assignee hereunder to any entity or person, provided that (i) any such subsequent assignment does not violate any of the terms and conditions of the Loan Documents or any law, rule, regulation, order, writ, judgment, injunction or decree and that any consent required under the terms of the Loan Documents has been obtained and (ii) unless the prior written consent of the Assignor is obtained, the Assignee is not thereby released from its obligations to the Assignor hereunder, if any remain unsatisfied, including, without limitation, its obligations under [Sections 4, 5 and 8] hereof. 10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the ------------------------------------- Aggregate Revolving Credit Commitment occurs between the date of this Assignment Agreement and the Effective Date, the percentage interest specified in Item 3 of Schedule 1 shall remain the same, but the dollar amount purchased shall be recalculated based on the reduced Aggregate Revolving Credit Commitment. [11. ENTIRE AGREEMENT. This Assignment Agreement and the attached ----------------- Notice of Assignment embody the entire agreement and understanding between the parties hereto and supersede all prior agreements and understandings between the parties hereto relating to the subject matter hereof.] 12. GOVERNING LAW. This Assignment Agreement shall be governed by the ------------- internal law, and not the law of conflicts, of the State of New York. 13. NOTICES. Notices shall be given under this Assignment Agreement ------- in the manner set forth in the Credit Agreement. For the purpose hereof, the addresses of the parties hereto (until notice of a change is delivered) shall be the address set forth in the attachment to Schedule 1. IN WITNESS WHEREOF, the parties hereto have executed this Assignment Agreement by their duly authorized officers as of the date first above written. [NAME OF ASSIGNOR] By:___________________________ Title:________________________ ________________________ ________________________ [NAME OF ASSIGNEE] By:___________________________ Title:________________________ ________________________ ________________________ SCHEDULE "1" TO ASSIGNMENT AGREEMENT ----------------------- 1. Description and Date of Credit Agreement: Amended and Restated Credit Agreement dated as of December 7, 1995 among 20th Century Industries, Union Bank as agent and lender, The First National Bank of Chicago, as documentary agent and lender, and the other lenders party thereto, as amended from time to time. 2. Date of Assignment Agreement: ____________________________ , 19__ 3. Amounts (As of Date of Item 2 above): a. Total of Commitments (Loans)** under Credit Agreement $_________________ b. Assignee's Percentage of Facility purchased under the Assignment Agreement*** ______ % c. Amount of Assigned Share in Facility purchased under the Assignment Agreement $____________ 4. Assignee's Aggregate (Loan Amount)** Commitment Amount Purchased Hereunder: $____________ 5. Proposed Effective Date: Accepted and Agreed: [NAME OF ASSIGNOR] [NAME OF ASSIGNEE] By:____________________________ By:____________________________ Title:_________________________ Title:____________________ ** If a Commitment has been terminated, insert outstanding Loans in place of Commitment *** Percentage taken to 10 decimal places ATTACHMENT TO SCHEDULE "1" TO ASSIGNMENT AGREEMENT -------------------------------------------------- Attach Assignor's Administrative Information Sheet, which must include notice address for the Assignor and the Assignee EXHIBIT "I" TO ASSIGNMENT AGREEMENT NOTICE OF ASSIGNMENT ------------- _____________ , 19__ To: Union Bank, as Agent From: [NAME OF ASSIGNOR] (the "Assignor") [NAME OF ASSIGNEE] (the "Assignee") 1. We refer to that Credit Agreement (the "Credit Agreement") described in Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to them in the Credit Agreement. 2. This Notice of Assignment (this "Notice") is given and delivered to the Agent pursuant to Section 12.3.2 of the Credit Agreement. 3. The Assignor and the Assignee have entered into an Assignment Agreement, dated as of ____________________ , 19___(the "Assignment"), pursuant to which, among other things, the Assignor has sold, assigned, delegated and transferred to the Assignee, and the Assignee has purchased, accepted and assumed from the Assignor, the percentage interest specified in Item 3 of Schedule 1 of all outstandings, rights and obligations under the Credit Agreement relating to the facility identified on Schedule 1 and the other Loan Documents. The Effective Date (as defined in the Assignment) shall be the later of the date specified in Item 5 of Schedule 1 or two Business Days (or such shorter period as agreed to by the Agent) after this Notice of Assignment and any consents and fees required by Sections 12.3.1 and 12.3.2 of the Credit Agreement have been delivered to the Agent, provided that the Effective Date shall not occur if any condition precedent agreed to by the Assignor and the Assignee has not been satisfied. 4. The Assignor and the Assignee hereby give to the Borrower and the Agent notice of the assignment and delegation referred to herein. The Assignor will confer with the Agent before the date specified in Item 5 of Schedule 1 to determine if the Assignment will become effective on such date pursuant to Section 3 hereof, and will confer with the Agent to determine the Effective Date pursuant to Section 3 hereof if it occurs thereafter. The Assignor shall notify the Agent if the Assignment does not become effective on any proposed Effective Date as a result of the failure to satisfy the conditions precedent agreed to by the Assignor and the Assignee. At the request of the Agent, the Assignor will give the Agent written confirmation of the satisfaction of the conditions precedent. 5. The Assignor or the Assignee shall pay to the Agent on or before the Effective Date the processing fee of $2,000 required by Section 12.3.2 of the Credit Agreement. 6. If Notes are outstanding on the Effective Date, the Assignor and the Assignee request and direct that the Agent prepare and cause the Borrower to execute and deliver new Notes or, as appropriate, replacement Notes, to the Assignor and the Assignee. The Assignor and, if applicable, the Assignee each agree to deliver to the Agent the original Note received by it from the Borrower upon its receipt of a new Note in the appropriate amount. 7. The Assignee advises the Agent that notice and payment instructions are set forth in the attachment to Schedule 1. 8. The Assignee hereby represents and warrants that none of the funds, monies, assets or other consideration being used to make the purchase pursuant to the Assignment are "plan assets" as defined under ERISA and that its rights, benefits, and interests in and under the Loan Documents will not be "plan assets" under ERISA. 9. The Assignee authorizes the Agent to act as its agent under the Loan Documents in accordance with the terms thereof. The Assignee acknowledges that the Agent has no duty to supply information with respect to the Borrower or the Loan Documents to the Assignee until the Assignee becomes a party to the Credit Agreement. The Assignee shall, if the Assignee is not incorporated under the laws of the United States of America or a state thereof, deliver the forms required by Section 2.18 of the Credit Agreement at least five Business Days prior to the Effective Date. NAME OF ASSIGNOR NAME OF ASSIGNEE By:_________________________ By:___________________________ Title:______________________ Title:___________________ ACKNOWLEDGED BY UNION BANK, ACKNOWLEDGED AND CONSENTED TO as Agent BY 20TH CENTURY INDUSTRIES By:_________________________ By:___________________________ Title:______________________ Title:__________________ [Attach photocopy of Schedule 1 to Assignment] EXHIBIT "II" TO ASSIGNMENT AGREEMENT CONSENT AND RELEASE ------------------- TO: [NAME OF ASSIGNOR] ________________________ ________________________ [NAME OF ASSIGNEE] ________________________ ________________________ _______________ , 19_____ 1. We acknowledge receipt from _______________________ (the "Assignor") and _______________________ (the "Assignee") of the Notice of Assignment, dated as of _________________, 19___ (the "Notice"). Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to them in the Notice. 2. In consideration of the assumption by the Assignee of the obligations of the Assignor as referred to in the Notice, the Borrower hereby (i) irrevocably consents, as required by Section 12.3.1 of the Credit Agreement, to the assignment and delegation referred to in the Notice and (ii) as of the Effective Date, irrevocably releases the Assignor from its obligations to the Borrower, under the Loan Documents to the extent that such obligations have been assumed by the Assignee. The Borrower and the Agent agree that, as of the Effective Date, the Borrower shall consider the Assignee as a "Lender" for all purposes under the Loan Documents to the extent of the assignment and delegation referred to in the Notice. UNION BANK, as Agent By:___________________________ Title:________________________ 20TH CENTURY INDUSTRIES By:___________________________ Title:________________________ 0058229.05 Schedule 2.1 ------------ LOANS AND REPAYMENTS -------------------- Aggregate Loans Principal Repayment Loan Balance After Giving Outstanding Under Prior Loan to be Made to be Received on Effect to Loans to be Made Lender or Existing Lender Credit Agreement on Date Hereof the Date Hereof and/or Repaid on the Date Hereof - - ------------------------- ---------------- -------------- --------------- -------------------------------- The First National Bank of Chicago $30,000,000 $ --- $5,111,111.11 $24,888,888.89 Union Bank 30,000,000 --- 5,111,111.11 24,888,888.89 Bank One, Texas, N.A. 25,000,000 --- 25,000,000.00 0.00 First Union National Bank 25,000,000 --- 5,555,555.55 19,444,444.45 of North Carolina Sanwa Bank California 15,000,000 --- 222,222.22 14,777,777.78 Shawmut Bank Connecticut, N.A. 25,000,000 --- 2,444,444.45 22,555,555.55 The Bank of New York 25,000,000 --- 2,444,444.45 22,555,555.55 Bank of America 0 6,222,222.22 --- 6,222,222.22 Credit Lyonnais, San Francisco 0 8,555,555.56 --- 8,555,555.56 Wells Fargo Bank 0 8,555,555.56 --- 8,555,555.56 Chase Manhattan Bank 0 22,555,555.55 --- 22,555,555.55 -------------------- ---------------- ----------------- ------------------------ $175,000,000.00 $45,888,888.89 $45,888,888.89 $175,000,000.00
Schedule 5.7 TAXES ----- Federal income tax returns for calendar years 1991 through 1994 are currently being examined by the Internal Revenue Service ("IRS"). The statute of limitations for assessment for the calendar year 1991 and 1992 returns has been extended until December 31, 1996. The statute of limitations for the 1993 and 1994 returns will expire September, 1997 and March, 1998, respectively. Prior to this current examination, the latest IRS examination (covering calendar years 1981 through 1986 and 1988) was concluded in October, 1991 with a "no change" letter from the IRS District Director. A deficiency assessment for California Premium Tax for calendar years 1989 and 1990 was issued by the California State Board of Equalization ("SBE") on October 8, 1993, as follows: Year Due Date Gross Premiums Rate Tax Interest* ---- -------- -------------- ---- --- --------- 1989 4-1-90 19,992,089 2.37% 473,813 344,187 1990 4-1-91 14,751,589 2.46% 362,889 198,360 Amount Due 836,702 542,547 * Interest to November 30, 1995. The deficiency arises because the Borrower did not pay premium tax on premiums which were to be rebated to its policyholders under Proposition 103. The Department of Insurance contends the Borrower should have paid the premium tax on those premiums because it did not pay those rebates but only accrued the liability. The Borrower timely filed a petition of redetermination with the SBE on November 5, 1993, and has not heard anything further. If the Borrower loses the appeal it would have to pay additional interest as well as a 10% penalty of $83,670. Schedule 5.8 LITIGATION AND MATERIAL CONTINGENT OBLIGATIONS ---------------------------------------------- TITLE CASE NO. DESCRIPTION - - ----- -------- ----------- The Proposition 103 972727 Per the terms of the Enforcement Project (the Stipulation and Order entered "Project") v. Chuck into with the Insurance Quackenbush; 20th Century Commissioner on January 27 Insurance Co. and 21st and January 28, 1995 Century Casualty Co., Real respectively, the Insurance Party in Interest Subsidiaries resolved their Proposition 103 rollback liabilities. This settlement was approved by the Department on August 29, 1995 but challenged by the Project in this Superior Court case, filed on September 22, 1995. Evidence has been presented and we are awaiting the Court's decision. Schedule 5.9 CAPITALIZATION -------------- The consolidated capitalization of 20th Century Industries as of October 31, 1995 is as follows: Stockholders' Equity (Amount in thousands) Capital Stock Preferred Stock par value $1.00 per share, authorized 500,000 shares, none issued. Series A Convertible Preferred Stock, stated value $1,000 per share, authorized 376,126 shares, outstanding 224,950 shares. $224,950,000 Common stock without par value; authorized 110,000,000 shares, outstanding 51,495,636 shares. 69,756,343 Common stock warrants 16,000,000 Unrealized investment gains (losses), net 20,021,248 Retained earnings 111,493,907 ------------ Total stockholders' equity $442,221,498 ------------ Both Subsidiaries are incorporated in California and owned 100% by 20th Century Industries. Their capitalization is as follows: 20th Century Insurance Company ------------------------------ Preferred Stock -0- Common Stock 100,000 shares authorized 10,000 shares outstanding $300 par value per share Treasury Shares -0- 21st Century Casualty Company ----------------------------- Preferred Stock -0- Common Stock 100,000 shares authorized 1,300 outstanding $1,000 par value per share Treasury Shares -0- Schedule 5.10 ERISA ----- The Borrower maintains the 20th Century Industries Pension Plan, a Single Employer Plan, and the Unfunded Liability for such Plan as of December 31, 1994 was not in excess of $5,000,000. Schedule 5.16 OWNED AND LEASED PROPERTIES --------------------------- 20th Century Industries and its Subsidiaries do not own any real property. Its leasehold interests are free of all Liens. Schedule 5.22 LICENSE JURISDICTIONS --------------------- SUBSIDIARY LICENSE ---------- ------- 20th Century Insurance Company California 21st Century Casualty Company California Each Insurance Subsidiary currently sells personal lines automobile insurance. Additionally, 20th Century sells personal excess liability coverage. 20th Century Insurance Company's Certificate of Authority permits the Insurance Subsidiary to write classes of insurance defined as Fire, Marine, Surety, Disability, Plate Glass, Liability, Workers' Compensation, Common Carrier Liability, Boiler and Machinery, Burglary, Credit, Sprinkler, Team and Vehicle, Automobile, Aircraft and Miscellaneous in the California Insurance Code. 21st Century Casualty Insurance Company's Certificate of Authority permits the Insurance Subsidiary to write classes of insurance defined as Fire, Plate Glass, Liability, Burglary, Sprinkler, Automobile and Miscellaneous in the California Insurance Code. Schedule 6.10 INDEBTEDNESS ------------ None Schedule 6.14 INVESTMENTS ----------- Borrower's Investments in Subsidiaries and other Investments are as follows: Investment Amount ---------- ------ Capital Stock of 20th Century 3,000,000 Capital Stock of 21st Century 1,300,000 Short Term Investments as of 18,471,790 November 28, 1995 in Commercial Paper* Total 22,771,790 The October 31, 1995 Portfolio Summaries for each Insurance Subsidiary are attached. *This amount is included in "Cash and Equivalents" in the Financial Statement. PORTFOLIO BY CLASS 20TH CENTURY INSURANCE COMPANY MAJOR INVESTMENT CLASS ACTUAL MARKET % AT EST. ANN AV RET AV RET AS OF OCTOBER 31, 1995 COST VALUE MARKET INCOME MARKET COST ---- ----- ------ ------ ------ ---- U.S. GOVT & AGENCY INSTRUMENTS 111,707,357 113,530,731 10.1% 7,886,350 6.95% 7.06% MUNICIPAL BONDS 213,062,337 211,961,208 18.9% 12,171,360 5.74% 5.71% CORP. NOTES & BONDS 759,970,050 788,940,433 70.3% 56,898,125 7.21% 7.49% EQUITIES 539,200 1,188,240 0.1% 4,314 0.36% 0.80% SUB TOTAL LONG TERM INVESTMENTS 1,085,278,944 1,115,618,702 76,960,149 6.90% 7.09% SHORT TERM INVESTMENTS 6,788,282 6,788,282 0.6% 357,063 5.26% 5.26% TOTAL INVESTMENTS 1,092,067,226 1,122,406,984 100.0% 77,317,212 6.89% 7.08% -------------- ------------- ---------- ----- AMORTIZED VALUE OF BONDS 1,084,319,034 MARKET VALUE OF BONDS 1,114,432,462 -------------- UNREALIZED GAIN OR (LOSS) ON BONDS 30,113,426 ----------
PORTFOLIO BY CLASS 21ST CENTURY CASUALTY COMPANY MAJOR INVESTMENT CLASS ACTUAL MARKET % AT EST. ANN AV RET AV RET AS OF OCTOBER 31, 1995 COST VALUE MARKET INCOME MARKET COST ---- ----- ------ ------ ------ ---- U.S. GOVT & AGENCY INSTRUMENTS 0 0 0.0% 0 0.00% 0.00% MUNICIPAL BONDS 1,497,885 1,517,020 59.1 81,500 5.37% 5.44% CORP. NOTES & BONDS 1,017,500 1,036,080 40.4% 80,000 7.72% 7.86% SUB TOTAL LONG TERM INVESTMENTS 2,515,365 2,553,100 161,500 6.33% 6.42% SHORT TERM INVESTMENTS 12,770 12,770 0.5% 672 5.26% 5.26% TOTAL INVESTMENTS 2,528,155 2,565,870 100.0% 162,172 6.32% 6.41% ----------- ---------- ------- ----- AMORTIZED VALUE OF BONDS 2,511,732 MARKET VALUE OF BONDS 2,553,100 ----------- UNREALIZED GAIN OR (LOSS) ON BONDS 41,366 -------
Schedule 6.16 LIENS ----- None QUOTA SHARE REINSURANCE AGREEMENT between 20TH CENTURY INSURANCE COMPANY (hereinafter referred to as the "Company") and AMERICAN INTERNATIONAL INSURANCE COMPANY (hereinafter referred to as the "Reinsurer") **************************************************************** PREAMBLE - - -------- This Agreement replaces that certain agreement dated December 16, 1994 and substitutes American International Insurance Company as Reinsurer for New Hampshire Insurance Company and further incorporates Letter of Credit provisions, effective as of January 1, 1995. The Reinsurer hereby agrees to reinsure the Company in respect of the Company's net liability under all policies, contracts and binders of insurance (hereafter referred to as "policies") issued during the term of this Agreement subject to the following terms and conditions: ARTICLE I --------- TERM - - ---- This Agreement shall be effective from 12:01 A.M., pacific standard time, January 1, 1995 and shall remain continuously in force through December 31, 1999. The Reinsurer has the option to renew this Agreement annually for four additional years by notifying the Company prior to December 31, 1999 or prior to the expiration date of any renewal. ARTICLE II ---------- PARTICIPATION - - ------------- The Company shall cede and the Reinsurer shall accept 10% of the Company's net liability for losses on policies incepting during the term of this Agreement. As consideration, the Reinsurer shall receive a 10% share of the net written premiums, less ceding commission as described in Article III, generated by such policies. In the event the Reinsurer elects to renew this Agreement for annual periods following December 31, 1999 the participation shall be 8% on the first renewal, 6% on the second renewal, 4% on the third renewal and 2% on the fourth renewal. ARTICLE III ----------- COMMISSION - - ---------- The Reinsurer shall allow the Company a commission of 10.8% of the ceded written premium for policies with effective dates from January 1, 1995 and through December 31, 1995. For policies with effective dates in each subsequent underwriting year, the commission shall be equal to the rate of the Company's incurred underwriting expenses (as recorded in the Company's statutory statement) to net written premium for the prior calendar year. QS20CNT8/7/95 QUOTA SHARE REINSURANCE AGREEMENT 20TH CENTURY INSURANCE COMPANY/AIIC Page 2 ----------------------------------- ARTICLE IV ---------- REPORTS AND ACCOUNTS - - -------------------- The Company shall furnish within forty-five days after the close of each calendar quarter an account reflecting the following separately for each underwriting year: A. Net written premium ceded during the quarter (credited). B. Commission on the ceded premium (debited). C. Net paid losses (debited). D. Net paid adjustment expenses (debited). E. Net outstanding losses. F. Net unearned premium. If the balance of A through D is a credit such amount shall be remitted with the account. If the balance of A through D is a debit, the Reinsurer shall remit such amount within 15 days of receipt of the account. Accounts by line of business shall also be provided by the Company including the aforementioned information. ARTICLE V --------- DEFINITION - - ---------- Underwriting year shall mean all policies with effective dates from 12:01 A.M., pacific standard time, January 1st through December 31st of each calendar year. Net written premium or net losses or net liability shall mean the gross amount less deductions for all other reinsurance. CURRENCY - - -------- All premium and loss payments hereunder shall be in United States currency. ARTICLE VI ---------- ACCESS TO RECORDS - - ----------------- The Reinsurer or its duly appointed representatives shall have free access at all reasonable times to such books and records of those Divisions, Departments and Branch Offices of the Company which are directly involved with the subject matter business of this Agreement as shall reflect premium and loss transactions of the Company for the purpose of obtaining any and all information concerning this Agreement or the subject matter hereof. All non- public information provided in the course of the inspection shall be kept confidential by the Reinsurer as against third parties. QS20CNT8/7/95 QUOTA SHARE REINSURANCE AGREEMENT 20TH CENTURY INSURANCE COMPANY/AIIC Page 3 ----------------------------------- ARTICLE VII ----------- INSOLVENCY - - ---------- The portion of any risk or obligation assumed by the Reinsurer, when such portion is ascertained, shall be payable on demand of the Company at the same time as the Company shall pay its net retained portion of such risk or obligation, with reasonable provision for verification before payment, and the reinsurance shall be payable by the Reinsurer on the basis of the liability of the Company under the contract or contracts reinsured without diminution because of the insolvency of the Company. In the event of the insolvency of the Company, this reinsurance shall be payable directly to the Company, or to its liquidator, receiver, conservator or statutory successor. Immediately upon demand, on the basis of the liability of the Company without diminution because of the insolvency of the Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim. It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of a claim against the Company which would involve a possible liability on the part of the Reinsurer, indicating the policy or bond reinsured, within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership. It is further agreed that during the pendency of such claim the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that it may deem available to the Company or its liquidator, receiver, conservator, or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the Court, against the Company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit which may accrue to the Company solely as a result of the defense undertaken by the Reinsurer. ARTICLE VIII ------------ ARBITRATION - - ----------- A. All disputes or differences arising out of the interpretation of this Agreement shall be submitted to the decision of two arbitrators, one to be chosen by each party, and in the event of the arbitrators failing to agree, to the decision of an umpire to be chosen by the arbitrators. The arbitrators and umpire shall be disinterested active or retired executive officials of fire or casualty insurance or reinsurance companies or Underwriters at Lloyd's, London. If either of the parties fails to appoint an arbitrator within one month after being required by the other party in writing to do so, or if the arbitrators fail to appoint an umpire within one month of a request in writing by either of them to do so, such arbitrator or umpire, as the case may be, shall at the request of either party be appointed by a Justice of the Supreme Court of the State of New York. B. The arbitration proceeding shall take place in the city in which the Company's Head Office is located. The applicant shall submit its case within one month after the appointment of the court of arbitration, and the respondent shall submit its reply within one month after the receipt of the claim. The arbitrators and umpire are relieved from all judicial formality and may abstain from following the strict rules of law. They shall settle any dispute under the Agreement according to an equitable rather than a strictly legal interpretation of its terms. QS20CNT8/7/95 QUOTA SHARE REINSURANCE AGREEMENT 20TH CENTURY INSURANCE COMPANY/AIIC Page 4 ----------------------------------- C. Their written decision shall be provided to both parties within ninety days of the close of arbitration and shall be final and not subject to appeal. D. Each party shall bear the expenses of his arbitrator and shall jointly and equally share with the other the expenses of the umpire and of the arbitration. E. This Article shall survive the termination of this Agreement. ARTICLE IX ---------- ERRORS AND OMISSIONS - - -------------------- Any inadvertent delay, omission or error shall not relieve either party hereto from any liability which would attach to it hereunder if such delay, omission or error had not been made, provided such delay, omission or error is rectified immediately upon discovery. ARTICLE X --------- LOSS & LOSS ADJUSTMENT EXPENSE - - ------------------------------ The Company alone and at its full discretion shall adjust, settle or compromise all claims and losses. All such adjustments, settlements, and compromises shall be binding on the Reinsurer in proportion to its participation. The Company shall likewise at its sole discretion commence, continue, defend, compromise, settle or withdraw from actions, suits or proceedings and generally do all such matters and things relating to any claim or loss as in its judgment may be beneficial or expedient, and all payments made and costs and expenses incurred in connection therewith or in taking legal advice therefor shall be shared by the Reinsurer proportionately. The Reinsurer shall, on the other hand, benefit proportionately from all reductions of losses by salvage, compromise or otherwise. ARTICLE XI ---------- EXTRA CONTRACTUAL OBLIGATIONS - - ----------------------------- This Agreement shall protect the Company where the ultimate net loss includes any extra contractual obligations. The term "extra contractual obligations" is defined as those liabilities not covered under any other provision of the Contract and which arise from the handling of any claim on business covered hereunder, such liabilities arising because of, but not limited to , the following: failure by the Company to settle within the policy limit, or by reason of alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trail of any action against its insured or reinsured or in the preparation of prosecution of an appeal consequent upon such action. The Reinsurer's liability for extra contractual obligations shall not exceed their participation of the maximum limit of liability on the policy from which the extra contractual obligation arises. The date on which any extra contractual obligation is incurred by the Company shall be deemed, in all circumstances, to be the date of the original disaster and/or casualty. However, this Article shall not apply where the loss has been incurred due to fraud or a member of the Board of Directors or a corporate officer of the Company acting individually or collectively or in collusion with any individual or corporation or any other organization or party involved in the presentation, defense or settlement of any claim covered hereunder. QS20CNT8/7/95 QUOTA SHARE REINSURANCE AGREEMENT 20TH CENTURY INSURANCE COMPANY/AIIC Page 5 ----------------------------------- ARTICLE XII ----------- OFFSET - - ------ Each party hereto shall have, and may exercise at any time and from time to time, the right to offset any undisputed balance or balances, whether on account of premiums or on account of losses or otherwise, due from such party to the other party hereto under this Agreement. ARTICLE XIII ------------ TERMINATION - - ----------- Either party may terminate this Agreement with thirty days' notice in the event that: 1. One party should at any time become insolvent, or suffer any impairment of capital, or file a petition in bankruptcy, or go into liquidation or rehabilitation, or have a receiver appointed, or be acquired or controlled by any other insurance company or organization, or 2. Any law or regulation of any Federal or any State or any Local Government of any jurisdiction in which the Company is doing business should render illegal the arrangement made herein, or 3. With the agreement of the other party. In the event of termination, the Reinsurer shall refund to the Company the applicable unearned premium minus the ceding commission and shall continue to remain liable for all losses occurring prior to the date of termination. However, if this Contract shall terminate while a loss occurrence covered hereunder is in progress, it is agreed that, subject to the other conditions of this Contract, the Reinsurer is responsible for its proportion of the entire loss. ARTICLE XIV ----------- TAX - - --- In consideration of the terms under which this Agreement is issued, the Company undertakes not to claim any deduction of the premium hereon when making tax returns, other than income or Profits Tax returns, to any State or Territory of the United States or to the District of Columbia. ARTICLE XV ---------- LETTER OF CREDIT - - ---------------- The Reinsurer agrees to provide and maintain in place a Letter of Credit, acceptable to the Company, for the benefit of the Company equal to its share of assumed liability which shall include unearned premium reserve, calculated on a monthly pro rata basis, and outstanding loss and loss adjustment reserve, including incurred but not reported losses calculated on the basis of the requirement of the California Department of Insurance and/or other applicable insurance regulatory agencies. QS20CNT8/7/95 QUOTA SHARE REINSURANCE AGREEMENT 20TH CENTURY INSURANCE COMPANY/AIIC Page 6 ----------------------------------- The initial Letter of Credit shall be provided written 60 days of the first accounting report submitted to the Reinsurer by the Company in the amount specified in the preceding paragraph. Subsequent adjustments, when requested by the Company, shall be made to the Letter of Credit for any subsequent accounts within 60 days of the submission of such account. In the event the Letter of Credit and/or requested adjustments are not received by the due date the Company may withhold amounts due the Reinsurer until such Letter of Credit is received. Notwithstanding any other provisions in this agreement the Company may draw on this Letter of Credit at any time, however only for one or more of the following: 1. to reimburse the Company for the Reinsurer's share of premiums returned to the owners of policies reinsured under the reinsurance agreement on account of cancellations of such policies, 2. to reimburse the Company for the Reinsurer's share of losses paid by the Company under the terms and provisions of the policies reinsured under the reinsurance agreement, 3. to fund an account with the Company in an amount at least equal to the deduction, for reinsurance ceded, from the Company's liabilities for policies ceded under the agreement. Such amount shall include, but not be limited to, amounts for policy reserves, claims and losses incurred and unearned premium reserves, and 4. to pay any other amounts the Company claims are due under the reinsurance agreement. ARTICLE XVI ----------- COUNTERPARTS - - ------------ This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives. 20TH CENTURY INSURANCE COMPANY Date:September 13, 1995. By:William L. Mellick Title:President ------------------ ------------------ --------- AMERICAN INTERNATIONAL INSURANCE COMPANY Date: 8/8/95 By: J. Ernst Hansen Title:President ------------------ ------------------ --------- QS20CNT8/7/95 QUOTA SHARE REINSURANCE AGREEMENT between 21ST CENTURY CASUALTY COMPANY (hereinafter referred to as the "Company") and AMERICAN INTERNATIONAL INSURANCE COMPANY (hereinafter referred to as the "Reinsurer") **************************************************************** PREAMBLE - - -------- This Agreement replaces that certain agreement dated December 16, 1994 and substitutes American International Insurance Company as Reinsurer for New Hampshire Insurance Company and further incorporates Letter of Credit provisions, effective as of January 1, 1995. The Reinsurer hereby agrees to reinsure the Company in respect of the Company's net liability under all policies, contracts and binders of insurance (hereafter referred to as "policies") issued during the term of this Agreement subject to the following terms and conditions: ARTICLE I --------- TERM - - ---- This Agreement shall be effective from 12:01 A.M., pacific standard time, January 1, 1995 and shall remain continuously in force through December 31, 1999. The Reinsurer has the option to renew this Agreement annually for four additional years by notifying the Company prior to December 31, 1999 or prior to the expiration date of any renewal. ARTICLE II ---------- PARTICIPATION - - ------------- The Company shall cede and the Reinsurer shall accept 10% of the Company's net liability for losses on policies incepting during the term of this Agreement. As consideration, the Reinsurer shall receive a 10% share of the net written premiums, less ceding commission as described in Article III, generated by such policies. In the event the Reinsurer elects to renew this Agreement for annual periods following December 31, 1999 the participation shall be 8% on the first renewal, 6% on the second renewal, 4% on the third renewal and 2% on the fourth renewal. ARTICLE III ----------- COMMISSION - - ---------- The Reinsurer shall allow the Company a commission of 10.8% of the ceded written premium for policies with effective dates from January 1, 1995 and through December 31, 1995. For policies with effective dates in each subsequent underwriting year, the commission shall be equal to the rate of the Company's incurred underwriting expenses (as recorded in the Company's statutory statement) to net written premium for the prior calendar year. QS21CNT8/7/95 QUOTA SHARE REINSURANCE AGREEMENT 21ST CENTURY CASUALTY COMPANY/AIIC Page 2 ----------------------------------- ARTICLE IV ---------- REPORTS AND ACCOUNTS - - -------------------- The Company shall furnish within forty-five days after the close of each calendar quarter an account reflecting the following separately for each underwriting year: A. Net written premium ceded during the quarter (credited). B. Commission on the ceded premium (debited). C. Net paid losses (debited). D. Net paid adjustment expenses (debited). E. Net outstanding losses. F. Net unearned premium. If the balance of A through D is a credit such amount shall be remitted with the account. If the balance of A through D is a debit, the Reinsurer shall remit such amount within 15 days of receipt of the account. Accounts by line of business shall also be provided by the Company including the aforementioned information. ARTICLE V --------- DEFINITION - - ---------- Underwriting year shall mean all policies with effective dates from 12:01 A.M., pacific standard time, January 1st through December 31st of each calendar year. Net written premium or net losses or net liability shall mean the gross amount less deductions for all other reinsurance. CURRENCY - - -------- All premium and loss payments hereunder shall be in United States currency. ARTICLE VI ---------- ACCESS TO RECORDS - - ----------------- The Reinsurer or its duly appointed representatives shall have free access at all reasonable times to such books and records of those Divisions, Departments and Branch Offices of the Company which are directly involved with the subject matter business of this Agreement as shall reflect premium and loss transactions of the Company for the purpose of obtaining any and all information concerning this Agreement or the subject matter hereof. All non- public information provided in the course of the inspection shall be kept confidential by the Reinsurer as against third parties. QS21CNT8/7/95 QUOTA SHARE REINSURANCE AGREEMENT 21ST CENTURY CASUALTY COMPANY/AIIC Page 3 ----------------------------------- ARTICLE VII ----------- INSOLVENCY - - ---------- The portion of any risk or obligation assumed by the Reinsurer, when such portion is ascertained, shall be payable on demand of the Company at the same time as the Company shall pay its net retained portion of such risk or obligation, with reasonable provision for verification before payment, and the reinsurance shall be payable by the Reinsurer on the basis of the liability of the Company under the contract or contracts reinsured without diminution because of the insolvency of the Company. In the event of the insolvency of the Company, this reinsurance shall be payable directly to the Company, or to its liquidator, receiver, conservator or statutory successor. Immediately upon demand, on the basis of the liability of the Company without diminution because of the insolvency of the Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim. It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of a claim against the Company which would involve a possible liability on the part of the Reinsurer, indicating the policy or bond reinsured, within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership. It is further agreed that during the pendency of such claim the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that it may deem available to the Company or its liquidator, receiver, conservator, or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the Court, against the Company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit which may accrue to the Company solely as a result of the defense undertaken by the Reinsurer. ARTICLE VIII ------------ ARBITRATION - - ----------- A. All disputes or differences arising out of the interpretation of this Agreement shall be submitted to the decision of two arbitrators, one to be chosen by each party, and in the event of the arbitrators failing to agree, to the decision of an umpire to be chosen by the arbitrators. The arbitrators and umpire shall be disinterested active or retired executive officials of fire or casualty insurance or reinsurance companies or Underwriters at Lloyd's, London. If either of the parties fails to appoint an arbitrator within one month after being required by the other party in writing to do so, or if the arbitrators fail to appoint an umpire within one month of a request in writing by either of them to do so, such arbitrator or umpire, as the case may be, shall at the request of either party be appointed by a Justice of the Supreme Court of the State of New York. B. The arbitration proceeding shall take place in the city in which the Company's Head Office is located. The applicant shall submit its case within one month after the appointment of the court of arbitration, and the respondent shall submit its reply within one month after the receipt of the claim. The arbitrators and umpire are relieved from all judicial formality and may abstain from following the strict rules of law. They shall settle any dispute under the Agreement according to an equitable rather than a strictly legal interpretation of its terms. QS21CNT8/7/95 QUOTA SHARE REINSURANCE AGREEMENT 21ST CENTURY CASUALTY COMPANY/AIIC Page 4 ----------------------------------- C. Their written decision shall be provided to both parties within ninety days of the close of arbitration and shall be final and not subject to appeal. D. Each party shall bear the expenses of his arbitrator and shall jointly and equally share with the other the expenses of the umpire and of the arbitration. E. This Article shall survive the termination of this Agreement. ARTICLE IX ---------- ERRORS AND OMISSIONS - - -------------------- Any inadvertent delay, omission or error shall not relieve either party hereto from any liability which would attach to it hereunder if such delay, omission or error had not been made, provided such delay, omission or error is rectified immediately upon discovery. ARTICLE X --------- LOSS & LOSS ADJUSTMENT EXPENSE - - ------------------------------ The Company alone and at its full discretion shall adjust, settle or compromise all claims and losses. All such adjustments, settlements, and compromises shall be binding on the Reinsurer in proportion to its participation. The Company shall likewise at its sole discretion commence, continue, defend, compromise, settle or withdraw from actions, suits or proceedings and generally do all such matters and things relating to any claim or loss as in its judgment may be beneficial or expedient, and all payments made and costs and expenses incurred in connection therewith or in taking legal advice therefor shall be shared by the Reinsurer proportionately. The Reinsurer shall, on the other hand, benefit proportionately from all reductions of losses by salvage, compromise or otherwise. ARTICLE XI ---------- EXTRA CONTRACTUAL OBLIGATIONS - - ----------------------------- This Agreement shall protect the Company where the ultimate net loss includes any extra contractual obligations. The term "extra contractual obligations" is defined as those liabilities not covered under any other provision of the Contract and which arise from the handling of any claim on business covered hereunder, such liabilities arising because of, but not limited to , the following: failure by the Company to settle within the policy limit, or by reason of alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trail of any action against its insured or reinsured or in the preparation of prosecution of an appeal consequent upon such action. The Reinsurer's liability for extra contractual obligations shall not exceed their participation of the maximum limit of liability on the policy from which the extra contractual obligation arises. The date on which any extra contractual obligation is incurred by the Company shall be deemed, in all circumstances, to be the date of the original disaster and/or casualty. However, this Article shall not apply where the loss has been incurred due to fraud or a member of the Board of Directors or a corporate officer of the Company acting individually or collectively or in collusion with any individual or corporation or any other organization or party involved in the presentation, defense or settlement of any claim covered hereunder. QS21CNT8/7/95 QUOTA SHARE REINSURANCE AGREEMENT 21ST CENTURY CASUALTY COMPANY/AIIC Page 5 ----------------------------------- ARTICLE XII ----------- OFFSET - - ------ Each party hereto shall have, and may exercise at any time and from time to time, the right to offset any undisputed balance or balances, whether on account of premiums or on account of losses or otherwise, due from such party to the other party hereto under this Agreement. ARTICLE XIII ------------ TERMINATION - - ----------- Either party may terminate this Agreement with thirty days' notice in the event that: 1. One party should at any time become insolvent, or suffer any impairment of capital, or file a petition in bankruptcy, or go into liquidation or rehabilitation, or have a receiver appointed, or be acquired or controlled by any other insurance company or organization, or 2. Any law or regulation of any Federal or any State or any Local Government of any jurisdiction in which the Company is doing business should render illegal the arrangement made herein, or 3. With the agreement of the other party. In the event of termination, the Reinsurer shall refund to the Company the applicable unearned premium minus the ceding commission and shall continue to remain liable for all losses occurring prior to the date of termination. However, if this Contract shall terminate while a loss occurrence covered hereunder is in progress, it is agreed that, subject to the other conditions of this Contract, the Reinsurer is responsible for its proportion of the entire loss. ARTICLE XIV ----------- TAX - - --- In consideration of the terms under which this Agreement is issued, the Company undertakes not to claim any deduction of the premium hereon when making tax returns, other than income or Profits Tax returns, to any State or Territory of the United States or to the District of Columbia. ARTICLE XV ---------- LETTER OF CREDIT - - ---------------- The Reinsurer agrees to provide and maintain in place a Letter of Credit, acceptable to the Company, for the benefit of the Company equal to its share of assumed liability which shall include unearned premium reserve, calculated on a monthly pro rata basis, and outstanding loss and loss adjustment reserve, including incurred but not reported losses calculated on the basis of the requirement of the California Department of Insurance and/or other applicable insurance regulatory agencies. QS21CNT8/7/95 QUOTA SHARE REINSURANCE AGREEMENT 21ST CENTURY CASUALTY COMPANY/AIIC Page 6 ----------------------------------- The initial Letter of Credit shall be provided written 60 days of the first accounting report submitted to the Reinsurer by the Company in the amount specified in the preceding paragraph. Subsequent adjustments, when requested by the Company, shall be made to the Letter of Credit for any subsequent accounts within 60 days of the submission of such account. In the event the Letter of Credit and/or requested adjustments are not received by the due date the Company may withhold amounts due the Reinsurer until such Letter of Credit is received. Notwithstanding any other provisions in this agreement the Company may draw on this Letter of Credit at any time, however only for one or more of the following: 1. to reimburse the Company for the Reinsurer's share of premiums returned to the owners of policies reinsured under the reinsurance agreement on account of cancellations of such policies, 2. to reimburse the Company for the Reinsurer's share of losses paid by the Company under the terms and provisions of the policies reinsured under the reinsurance agreement, 3. to fund an account with the Company in an amount at least equal to the deduction, for reinsurance ceded, from the Company's liabilities for policies ceded under the agreement. Such amount shall include, but not be limited to, amounts for policy reserves, claims and losses incurred and unearned premium reserves, and 4. to pay any other amounts the Company claims are due under the reinsurance agreement. ARTICLE XVI ----------- COUNTERPARTS - - ------------ This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives. 21ST CENTURY CASUALTY COMPANY Date:September 13, 1995. By:William L. Mellick Title:President ------------------ ------------------ --------- AMERICAN INTERNATIONAL INSURANCE COMPANY Date: 8/8/95 By: J. Ernst Hansen Title:President ------------------ ------------------ --------- QS21CNT8/7/95

Basic Info X:

Name: has been effected against which reinsurers contract
Type: Contract
Date: March 29, 1996
Company: 21ST CENTURY INSURANCE GROUP
State: California

Other info:

Date:

  • August 30th , 1995
  • August 17 , 1995
  • August 1 , 1995
  • January 19 , 1996
  • January 1 , 1996
  • April 10 , 1995
  • October 17 , 1994
  • Saturday
  • Sunday
  • January , April
  • April 1 , 1996
  • July 1 , 1996
  • October 1 , 1996
  • April 1 , 1997
  • July 1 , 1997
  • October 1 , 1997
  • April 1 , 1998
  • July 1 , 1998
  • October 1 , 1998
  • January 1 , 1999
  • April 1 , 1999
  • July 1 , 1999
  • October 1 , 1999
  • January 1 , 2000
  • April 1 , 2000
  • July 1 , 2000
  • October 1 , 2000
  • January 1 , 2001
  • April 1 , 2001
  • October 1 , 1994
  • last day of each three-month
  • July 1988
  • July 1 , 1995
  • September 30 , 1995
  • June 1
  • February
  • Within 20 days
  • March 1
  • June 30 , 1996
  • January 1 , 1997
  • July 30 , 2001
  • 20th Century
  • January 1 , 1998
  • fiscal quarter
  • June 30 , 1994
  • last day of the
  • December 7 , 1995
  • December 31 , 1996
  • September , 1997
  • March , 1998
  • October , 1991
  • October 8 , 1993
  • November 30 , 1995
  • November 5 , 1993
  • January 27
  • January 28 , 1995
  • August 29 , 1995
  • September 22 , 1995
  • December 31 , 1994
  • November 28 , 1995
  • OCTOBER 31 , 1995
  • December 16 , 1994
  • December 31 , 1999
  • January 1 , 1995
  • December 31 , 1995
  • September 13 , 1995

Organization:

  • Omissions Clause Extended Expiration Clause Guy Carpenter Intermediary Clause
  • Renaissance Reinsurance Company
  • Auto Physical Damage
  • Gross Net Earned Premium Income for Homeowners
  • Net Retained Lines Clause Service of Suit Clause Several Liability Notice
  • Folksamerica Reinsurance Company Folksamerica Reinsurance Company
  • Frankona America Reinsurance Company 0.3611 % Hartford Reinsurance Management Company
  • General Reinsurance Company of America 0.3231 % Nationwide Mutual Insurance Company
  • Sydney Reinsurance Corporation
  • Toa-Re Insurance Company of America
  • General Reinsurance Company of America Transatlantic Reinsurance Company
  • Vesta Fire Insurance Corporation
  • Zenith Insurance Company
  • Carpenter Bowring Australia Ltd.
  • REAC Carpenter Bowring Bermuda Ltd.
  • Ocean Re Central Reinsurance Corporation
  • Copenhagen Reinsurance Company Ltd.
  • Global Capital Reinsurance Ltd.
  • Nissan Fire & Marine Insurance Company Limited
  • Sirius International Insurance Corporation Sweden
  • Compagnie Transcontinentale de Reassurances
  • Par Societe Parisienne de Souscription France
  • CNA International Reinsurance Company Limited
  • England The Copenhagen Reinsurance Company U.K.
  • England QBE International Insurance Limited 1.1918
  • England Sphere Drake Insurance UK
  • England St. Paul Reinsurance Company Limited 0.5369
  • England Zurich Reinsurance UK
  • Syndicates Exclusion Clause
  • Third Party Bodily Injury or Death Liability
  • Third Party Personal Injury Liability
  • Third Party Property Damage Liability and Medical Payments
  • Exess of Original Policy Limits
  • International Property Catastrophe Reinsurance Company Ltd.
  • CARPENTER Guy Carpenter & Company , Inc.
  • 20th Century Insurance Company 6301 Owensmouth Woodland Hills
  • 20th Century Insurance Company 21st Century Casualty Company Woodland Hills
  • Pacific Standard Time of
  • CLAUSES Extended Expiration Clause Original Conditions Clause Extra Contractual Obligations Clause
  • Policy Limits Clause Access to Records Clause Errors
  • Omissions Clause TaxFederal Excise Tax Statutory Amount Service of Suit Clause Arbitration Clause Insolvency Clause Guy Carpenter Intermediary Clause
  • Reassureds Personal Excess Liability Policy P.E.L.P.
  • Original Conditions and Liability of Reinsurer Article
  • Borrower UNION BANK
  • American International Group , Inc.
  • Federal Reserve Bank of New York
  • National Association of Insurance Commissioners
  • Federal Reserve System
  • Board of Governors
  • Comprehensive Environmental Response
  • Minimum Amount of Each Advance
  • Continuation of Outstanding Advances
  • Eurodollar Advance and Floating Rate Advance
  • Federal Funds Effective Rate
  • United States Internal Revenue Service
  • Capital Adequacy Regulations
  • Basle Committee on Banking Regulation and Supervisory Practices
  • Types of Advances
  • Survival of Indemnity
  • Gibson Dunn & Crutcher
  • g Other Loan Documents
  • Payment of Certain Amounts
  • the Insurance Subsidiaries
  • Insurance Department of the State of California
  • Agreement Accounting Principles
  • Federal Trade Commission
  • Title IV of ERISA
  • Federal Reserve Regulations
  • A.M. Best & Co.
  • Securities and Exchange Commission
  • Notice of Default and Other Matters
  • Property constituting Investments
  • Poor 's Rating Group
  • Moody 's Investors Service , Inc.
  • Insurance Company Financial Covenants
  • Earthquake Insurance Coverage
  • Material Adverse Effect
  • California Insurance Code Section
  • First Chicago and Union Bank
  • Numbers of Documents
  • Prior Credit Agreement
  • Instructions of Lenders
  • Agents and Counsel
  • First National Plaza Chicago
  • First Union Center TW19 Charlotte
  • Sanwa Bank Plaza
  • 8th Floor 601 South Figueroa Street Los Angeles
  • Facility Termination Date
  • Par Value % of Outstanding Corporation Name of Domicile Stock Certificate Shares Per Share Capital Stock
  • 20th Century Insurance Company California 1
  • 21st Century Casualty Company California 1
  • Consolidated Investments of Insurance Subsidiaries
  • ii Aggregate Surplus as Regards Policyholders
  • Consolidated Statutory Net Income of Insurance Subsidiaries
  • Applicable Eurodollar Margin
  • Aggregate Revolving Credit Commitment to Surplus as Regards Policyholders of 20th Century
  • Restated Credit Agreement
  • b. Assignee 's Percentage of Facility
  • c. Amount of Assigned Share in Facility
  • Administrative Information Sheet
  • Notice of Assignment
  • Aggregate Loans Principal Repayment Loan Balance After Giving Outstanding Under Prior Loan
  • First National Bank of Chicago
  • First Union National Bank
  • Shawmut Bank Connecticut
  • 2,444,444.45 22,555,555.55 Bank of America 0
  • the IRS District Director
  • California State Board of Equalization
  • 20th Century Commissioner
  • Century Casualty Co.
  • the Insurance Party
  • Convertible Preferred Stock
  • 20th Century Industries Pension Plan
  • 20th Century Insurance Company California 21st Century Casualty Company California Each Insurance Subsidiary
  • Century Insurance Company 's Certificate of Authority
  • Common Carrier Liability
  • Century Casualty Insurance Company 's Certificate of Authority
  • the Insurance Subsidiary
  • Borrower 's Investments
  • 20th Century 3,000,000 Capital Stock of 21st Century 1,300,000 Short Term Investments
  • American International Insurance Company as Reinsurer for New Hampshire Insurance Company
  • Justice of the Supreme Court of the State
  • Company 's Head Office
  • Board of Directors
  • District of Columbia
  • California Department of Insurance

Location:

  • Tornado
  • China
  • Denmark
  • Japan
  • France
  • U.K.
  • England
  • Bermuda
  • LAE
  • MANHATTAN BANK
  • Delaware
  • United States Code
  • ERISA
  • Interest Rate
  • State of California
  • novation
  • Bank One Texas
  • Transferee
  • Owensmouth Avenue Woodland Hills
  • 4th Floor Dallas
  • Hartford
  • Connecticut
  • South LaSalle Street Chicago
  • Illinois
  • Suite 1640 San Francisco
  • South Grand Avenue
  • Los Angeles
  • United States of America
  • Date Hereof
  • North Carolina Sanwa Bank California
  • 8,555,555.56 Chase Manhattan
  • U.S.
  • 12:01 A.M.
  • Lloyd
  • London
  • New York

Money:

  • $ 2,500,000
  • $ 7,500,000
  • $ 625,000
  • $ 156,250
  • $ 90,000,000
  • $ 10,000,000
  • $ 10,440,000
  • $ 13,050,000
  • $ 3,262,500
  • $ 103,095.00
  • $ 143,070.41
  • $ 600,000
  • $ 175 million
  • $ 17,000,000
  • $ 2,000,000
  • $ 100,000,000
  • $ 350,000,000
  • $ 250,000,000
  • $ 6,000,000
  • $ 500,000
  • $ 1,000,000
  • $ 50,000,000
  • $ 32,000,000
  • $ 0
  • $ 25,000,000
  • $ 19,000,000
  • $ 8,000,000
  • $ 11,000,000
  • $ 29,000,000
  • $ 225,000,000
  • $ 300.00 100 %
  • $ 1,000.00 100 %
  • $ 15,000,000
  • $ Ratio
  • $ 30,000,000 $ --
  • $ 5,111,111.11 $ 24,888,888.89
  • $ 175,000,000.00 $ 45,888,888.89 $ 45,888,888.89 $ 175,000,000.00
  • $ 83,670
  • $ 1.00
  • $ 224,950,000
  • $ 442,221,498
  • $ 5,000,000

Person:

  • Fothergill
  • Hartung
  • Timothy J. Brophy
  • John R. Bollington
  • VIII
  • Paul T. Schultz
  • Robert C. Dawson
  • Christine M. Herrick
  • D. Keith Thompson
  • Bill A. Shirley Title
  • Tammy F. Anderson
  • John C. Hyche
  • John Hyche
  • James H. Steane
  • Gary R. Pett
  • Colleen Mullins
  • William J. Fischer
  • Richard H. Palmer
  • Richard Palmer
  • Jill D. Schildkraut
  • Chuck
  • Quackenbush
  • William L. Mellick
  • J. Ernst Hansen

Time:

  • 12:01 A.M.
  • 11:00 a.m.
  • 2:00 p.m.
  • 10:00 a.m.

Percent:

  • 1.07 %
  • 90.00 %
  • 22.32 %
  • 0.1112 %
  • 0.2565 %
  • 0.5000 %
  • 0.7518 %
  • 1.3889 %
  • 0.5258 %
  • 0.2344 %
  • 3.2157 %
  • 0.0863 %
  • 0.1944 %
  • 4.4444 %
  • 0.1000 %
  • 12.8824 %
  • 1.1850 %
  • 7.7778 %
  • 0.0556 %
  • 9.4800 %
  • 0.5777 %
  • 3.8889 %
  • 5.8047 %
  • 2.4042 %
  • 0.2222 %
  • 11.1111 %
  • 0.1333 %
  • 13.1559 %
  • 4.4445 %
  • 0.2924 %
  • 0.1667 %
  • 1.1112 %
  • 61.8112 %
  • 0.8052 %
  • 0.2818 %
  • 15.6117 %
  • 20.3064 %
  • 100.0000 %
  • 0.9395 %
  • 0.8053 %
  • 0.1879 %
  • 0.4027 %
  • 0.4026 %
  • 1.3421 %
  • 1.6105 %
  • 0.1610 %
  • 0.2014 %
  • 0.4687 %
  • 0.2013 %
  • 0.0682 %
  • 0.4698 %
  • 0.1073 %
  • 0.0536 %
  • 0.2416 %
  • 0.0537 %
  • 0.0601 %
  • 2.6843 %
  • 0.0204 %
  • 0.4778 %
  • 0.1074 %
  • 0.0483 %
  • 1.2079 %
  • 0.5369 %
  • 0.0859 %
  • 0.1342 %
  • 0.0215 %
  • 0.0671 %
  • 0.2684 %
  • 7.4800 %
  • 9.1559 %
  • 11.8047 %
  • 60 %
  • 40 %
  • 22.5 %
  • 15.0 %
  • 30.0 %
  • 60.0 %
  • 1.25 %
  • 1.00 %
  • .75 %
  • 20 %
  • 66-23 %
  • .375 %
  • one percent .50 %
  • pay %
  • 2.37 %
  • 2.46 %
  • 100 %
  • 10.1 %
  • 6.95 % 7.06 %
  • 18.9 %
  • 5.74 % 5.71 %
  • 70.3 %
  • 7.21 % 7.49 %
  • 0.36 % 0.80 %
  • 6.90 % 7.09 %
  • 0.6 %
  • 6.89 % 7.08 %
  • MARKET %
  • 0.00 % 0.00 %
  • 5.37 % 5.44 %
  • 40.4 %
  • 7.72 % 7.86 %
  • 6.33 % 6.42 %
  • 0.5 %
  • 5.26 % 5.26 %
  • 100.0 %
  • 6.32 % 6.41 %
  • 10.8 %